ECommerce

MINDWORX ACADEMY
TOPICS TO
COVER

01 02 03
E- E- E-
COMMERCE COMMERCE COMMERCE
OVERVIEW BUSINESS PAYMENT
MODELS SYSTEMS
: 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
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
E-COMMERCE PROVIDES
THE FOLLOWING
FEATURES
Non-Cash Payment
24x7 Service availability
Advertising / Marketing
Improved Sales
Support
Inventory Management
Communication improvement
Traditional Commerce v/s E-
Commerce
E-commerce Advantages

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

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 Business Models

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.
B2C
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.
C2C
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.
E-commerce Payment Systems

E-Commerce or Electronics Commerce sites use electronic payment

where electronic payment refers to paperless monetary transactions.
Electronic payment has revolutionized the business processing by
reducing paper work, transaction costs, labour cost.
Being user friendly and less time consuming than manual processing,
helps business organization to expand its market reach / expansion.
Some of the modes of electronic payments are following.
CLASSEXERCISE -
PRESENTATION
YOUR FACILITATOR SHALL GIVE YOU A TASK TO EACH OF YOU
TO MAKE A SHORT PRESENTATION

DURATION : 30 MINS
Define Terms

Aphane Lerato - Credit Card

Gova Themba - Debit Card
James K - Smart Card
Molaoa Thabang - E-money
Sahadeo Shawny- Secure Socket Layer
Mpenyana Innocentia - Secure Hypertext Transfer Protocol (SHTTP)
Nadine Hoosain - Secure Electronic Transaction
Ramabele Tumi - E-commerce EDI
E-commerce Security Systems

Security is an essential part of any transaction that takes place over the
internet. Customer will loose his/her faith in e-business if its security is
compromised.
Following are the essential requirments for safe e-
payments/transactions:
Confidential - Information should not be accessible to unauthorized person. It
should not be intercepted during transmission.
Integrity - Information should not be altered during its transmission over the
network.
Availability - Information should be available wherever and whenever
requirement within time limit specified.
Authenticity - There should be a mechanism to authenticate user before giving
him/her access to required information.
Non-Repudiabiity - It is protection against denial of order or denial of payment.
Once a sender sends a message, the sender should not able to deny sending the
message. Similary the receipient of message should not be able to deny receipt.
Encryption - Information should be encrypted and decrypted only by authorized user.
Auditability - Data should be recorded in such a way that it can be audited for
integrity requirements.
Measures to ensure
Security
Major security measures are following:
Encryption - It is a very effective and practical way to safeguard the data
being transmitted over the network. Sender of the information encrypt the
data using a secret code and specified receiver only can decrypt the data
using the same or different secret code.
Digital Signature -Digital signature ensures the authenticity of the
information. A digital signature is a e-signature authentic
authenticated through encryption and password.
Security Certificates - Security certificate is unique digital id used to
verify identity of an individual website or user.
Security Protocols in
Internet
Following are the popular protocols used over the internet which
ensures security of transactions made over the internet.
Secure Socket Layer
(SSL)
It is the most commonly used protocol and is widely used across the
industry. It meets following security requirements:
Authentication
Encryption
Integrity
Non-reputability
"https://" is to be used for HTTP urls with SSL, where as "http:/" is to be
used for HTTP urls without SSL.
Secure Hypertext Transfer
Protocol (SHTTP)
SHTTP extends the HTTP internet protocol with public key encryption,
authentication and digital signature over the internet. Secure HTTP
supports multiple security mechanism providing security to end users.
SHTTP works by negotiating encryption scheme types used between
client and server.
Secure Electronic
Transaction
It is a secure protocol developed by MasterCard and Visa in
collaboration. Thereoritically, it is the best security protocol.
It has following components:
Card Holder's Digital Wallet Software - Digital Wallet allows card holder
to make secure purchases online via point and click interface.
Merchant Software - This software helps merchants to communicate
with potential customers and financial institutions in secure manner.
Payment Gateway Server Software - Payment gateway provides
automatic and standard payment process. It supports the process for
merchant's certificate request.
Certificate Authority Software -This software is used by financial
institutions to issue digital certificates to card holders and merchants and
to enable them to register their account agreements for secure electronic
commerce.
E-commerce B2B Model

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.
B2
B
B2
B
Following are the leading items in B2B e-Commerce.
Electronics
Shipping and Warehousing
Motor Vehicles
Petrochemicals
Paper
Office products
Food
Agriculture
Key technologies
Following are the key technologies used in B2B e-commerce:
Electronic Data Interchange (EDI) - EDI is an inter organizational exchange
of business documents in a structured and machine processable format.
Internet - Internet represents world wide web or network of networks
connecting computers across the world.
Intranet
Intranet represents a dedicated network of computers within a single
organization
Extranet - Extranet represents a network where outside business partners,
supplier or customers can have limited access to a portion of enterprise
intranet/network.
.
Back-End Information System Integration - Back End information systems
are database management systems used to manage the business data.
Architectural Models
Following are the architectural models in B2B e-commerce:
Supplier Oriented marketplace - In this type of model, a common
marketplace provided by supplier is used by both individual customers as well
as business users. A supplier offers an e-stores for sales promotion.
Buyer Oriented marketplace - In this type of model, buyer has his/her own
market place or e-market. He invites suppliers to bid on product's catalog. A
Buyer company opens a bidding site.
Intermediary Oriented marketplace - In this type of model, an intermediary
company runs a market place where business buyers and sellers can
transact with each other.
E-commerce B2C Model
In B2C model, business Website is a place where all transactions take
place between a business organization and consumer directly.
 B2C
In B2C Model, a consumer goes to the website, selects a catalog, orders the
catalog and an email is sent to business organization. After receiving the order,
goods would be dispatched to the customer

Following are the key features of a B2C Model:

Heavy advertising required to attract large no. of customers.
High investment in terms of hardware/software.
Support or good customer care service
Following are the steps used in B2C e-
commerce:
A consumer:
determines the requirement
searches available items on the website meeting the requirment.
compares similar items for price, delivery date or any other terms.
gives the order.
pays the bill.
receives the delivered item and review/inspect them.
consults the vendor to get after service support or returns the productif not
satisfied with the delivered product.
Disintermediation and
Reintermediation

In traditional commerce, there are intermediating agents like

wholesalers, distributors, retailers between manufacturer and consumer.
In B2C website, manufacturer can sell products directly to consumers.
This process of removal of business layers responsible for intermediary
functions is called Disintermediation.
Now-a-days, a new electronic intermediary breed is emerging like e-mall
and product selection agents are emerging. This process of shifting of
business layers responsible for intermediary functions from traditional to
electronic mediums is called Reintermediation.
E-commerce EDI

EDI stands for Electronic Data Exchange. EDI is an electronic way of

transferring business documents in an organization internally between its
various departments or externally with suppliers, customers or any
subsidiaries etc. In EDI, paper documents are replaced with electronic
documents like word documents, spreadsheets etc.
ED
I
ED
I
Following are few important documents used in EDI:
Invoices
Purchase orders
Shipping Requests
Acknowledgement
Business Correspondence letters
Financial information letters
Steps in an EDI
System
Following are the steps in an EDI System.
A program generates the file which contains the processed
document.
The document is converted into an agreed standard format.
The file containing the document is send electronically on network.
The trading partner receives the file.
An acknowledgement document is generated and sent to the
originating organization.
Advantages of an EDI System
Following are the advantages of an EDI System.
Reduction in data entry errors. - Chances of errors are much less being use
of computer in data entry.
Shorter processing life cycle - As orders can be processed as soon as they are
entered into the system. This reduced the processing time of the transfer
documents.
Electronic form of data - It is quite easy to transfer or share data being in
electronic format.
Reduction in paperwork - As lot of paper documents are replaced with
electronic documents there is huge reduction in paperwork.
Cost Effective - As time is saved and orders are processed very effectively, EDI
proves to be higly cost effective.

Standard Means of communication - EDI enforces standards on the content of

data and its format which leads to clearer communication.
THE END –
QUESTIONS ?