E-Commerce

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

need of business organizations.
E-Commerce or Electronics Commerce is a methodology of modern business which
addresses the need of business organizations, vendors and customers to reduce cost and
improve the quality of goods and services while increasing the speed of delivery.
E-commerce refers to paperless exchange of business information using following
ways.

 Electronic Data Exchange (EDI)

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

Features
E-Commerce provides following features

 Non-Cash Payment − E-Commerce enables use of credit cards, debit cards, smart cards, electronic fund
transfer via bank's website and other modes of electronics payment.

 24x7 Service availability − E-commerce automates business of enterprises and services provided by them
to customers are available anytime, anywhere. Here 24x7 refers to 24 hours of each seven days of a week.

 Advertising / Marketing − E-commerce increases the reach of advertising of products and services of
businesses. It helps in better marketing management of products / services.
  Improved Sales − Using E-Commerce, orders for the products can be generated any time, any where
without any human intervention. By this way, dependencies to buy a product reduce at large and sales
increases.

 Support − E-Commerce provides various ways to provide pre sales and post sales assistance to provide
better services to customers.

 Inventory Management − Using E-Commerce, inventory management of products becomes automated.

Reports get generated instantly when required. Product inventory management becomes very efficient and
easy to maintain.

 Communication improvement − E-Commerce provides ways for faster, efficient, reliable communication
with customers and partners.

Traditional Commerce v/s E-Commerce

Sr. Traditional Commerce E-Commerce
No.

1 Heavy dependency on information Information sharing is made easy via electronic

exchange from person to person. communication channels making little dependency
on person to person information exchange.

2 Communication/ transaction are done in Communication or transaction can be done in

synchronous way. Manual intervention is asynchronous way. Electronics system
required for each communication or automatically handles when to pass communication
transaction. to required person or do the transactions.

3 It is difficult to establish and maintain A uniform strategy can be easily established and
standard practices in traditional commerce. maintain in e-commerce.

4 Communications of business depends In e-Commerce or Electronic Market, there is no

upon individual skills. human intervention.

5 Unavailability of a uniform platform as E-Commerce website provides user a platform

traditional commerce depends heavily on where al l information is available at one place.
personal communication.

6 No uniform platform for information E-Commerce provides a universal platform to

sharing as it depends heavily on personal support commercial / business activities across the
communication. globe.

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

 Advantages to Organizations
 Advantages to Consumers
 Advantages to Society
E-Commerce disadvantages can be broadly classified in two major categories:

 Technical disadvantages
 Non-Technical disadvantages
Technical Disadvantages
 There can be lack of system security, reliability or standards owing to poor implementation
of e-Commerce.
 Software development industry is still evolving and keeps changing rapidly.
 In many countries, network bandwidth might cause an issue as there is insufficient
telecommunication bandwidth available.
 Special types of web server or other software might be required by the vendor setting the e-
commerce environment apart from network servers.
 Sometimes, it becomes difficult to integrate E-Commerce software or website with the
existing application or databases.
 There could be software/hardware compatibility issue as some E-Commerce software may be
incompatible with some operating system or any other component.

Non-Technical Disadvantages
 Initial cost: The cost of creating / building E-Commerce application in-house may be very
high. There could be delay in launching the E-Commerce application due to mistakes, lack
of experience.
 User resistance: User may not trust the site being unknown faceless seller. Such mistrust
makes it difficult to make user switch from physical stores to online/virtual stores.
 Security/ Privacy: Difficult to ensure security or privacy on online transactions.
 Lack of touch or feel of products during online shopping.
 E-Commerce applications are still evolving and changing rapidly.
 Internet access is still not cheaper and is inconvenient to use for many potential customers
like one living in remote villages.

E-Commerce or Electronics Commerce business models can generally categorized in

following categories.

 Business - to - Business (B2B)

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

Business - to - Business (B2B)

Website following B2B business model sells its product to an intermediate buyer who then
sells the product to the final customer. As an example, a wholesaler places an order from a
company's website and after receiving the consignment, sells the end product to final
customer who comes to buy the product at wholesaler's retail outlet.
Business - to - Consumer(B2C)
Website following B2C business model sells its product directly to a customer. A customer
can view products shown on the website of business organization. The customer can choose
a product and order the same. Website will send a notification to the business organization
via email and organization will dispatch the product/goods to the customer.

Consumer - to - Consumer (C2C)

Website following C2C business model helps consumer to sell their assets like residential
property, cars, motorcycles etc. or rent a room by publishing their information on the
website. Website may or may not charge the consumer for its services. Another consumer
may opt to buy the product of the first customer by viewing the post/advertisement on the
website.
Consumer - to - Business (C2B)
In this model, a consumer approaches website showing multiple business organizations for a
particular service. Consumer places an estimate of amount he/she wants to spend for a
particular service. For example, comparison of interest rates of personal loan/ car loan
provided by various banks via website. Business organization who fulfills the consumer's
requirement within specified budget approaches the customer and provides its services.

Business - to - Government (B2G)

B2G model is a variant of B2B model. Such websites are used by government to trade and
exchange information with various business organizations. Such websites are accredited by
the government and provide a medium to businesses to submit application forms to the
government.
Government - to - Business (G2B)
Government uses B2G model website to approach business organizations. Such websites
support auctions, tenders and application submission functionalities.

Government - to - Citizen (G2C)

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

EDI
EDI stands for Electronic Data Interchange. 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.
EDI Documents
Following are few important documents used in EDI −
 Invoices
 Purchase orders
 Shipping Requests
 Acknowledgement
 Business Correspondence letters
 Financial information letters
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.