Contents

Block 1 - E-Commerce Concepts and Models .............................................................................................. 3

Unit 1 - Introduction to E-Commerce ...................................................................................................... 3
E-Commerce – Page 6 ......................................................................................................................... 3
Workflow of E-Commerce with Diagram – Page 7 .............................................................................. 3
E-Commerce Trade Cycle – Pages 8-9 ................................................................................................. 3
Transplanted Real World Business Models – Pages 10-11 .................................................................. 3
Native Internet Business Models – Page 11 ........................................................................................ 4
Benefits of E-Commerce to orgs, customers, and society – Pages 11-12 ............................................ 4
Impact of E-Commerce in Marketing – Page 12 .................................................................................. 5
Impact of E-Commerce in Finance and Accounts – Page 13................................................................ 5
Unit 2 - Elements of E-Commerce ........................................................................................................... 6
Strategies to increase visibility of an E-Commerce website – Page 16................................................ 6
Categories of Search Engine – Page 17 ............................................................................................... 6
Online Payment Systems and Services – Pages 19-21......................................................................... 6
Security Features for E-Commerce – Pages 21-22 .............................................................................. 7
Working of SSL with diagram – Page 23 .............................................................................................. 7
Unit 3 - Electronic Data Interchange and Electronic Payment Systems .................................................. 9
EDI Definition – Page 25 ...................................................................................................................... 9
EDI Architecture with Diagram – Pages 26-27 .................................................................................... 9
EDI Standards – Pages 27-29 ............................................................................................................... 9
Unit 4 - Introduction to E-Commerce Models ....................................................................................... 11
Inter-organizational E-Commerce – Page 33 ..................................................................................... 11
Difference between inter-organizational and intra-organizational e-commerce – Page 33 ............. 11
Block 2 – Practices in E-Commerce ........................................................................................................... 12
Unit 5 – E-Business................................................................................................................................ 12
Advantages and Disadvantages of Web Based Bookshop – Pages 6-7 .............................................. 12
E-Paper – Page 10 ............................................................................................................................. 12
Advantages and Disadvantages of E-Paper – Page 11 ....................................................................... 12
Procedure for Online Auction – Page 12 ........................................................................................... 12

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 Advantages and Disadvantages of Online Auctions – Pages 12-13 ................................................... 13
Online Trading – Page 13 .................................................................................................................. 13
How online trading performed – Page 13-14 .................................................................................... 14
Online Trading Advantages and Disadvantages – Pages 14-15 ......................................................... 15
Unit 6 – E-Security and Legal Issues ...................................................................................................... 16
Security Concerns in E-Commerce – Page 18-19............................................................................... 16
SSL – Page 20-21 ............................................................................................................................... 16
Digital Signature – Page 22 ............................................................................................................... 16
Verification of Digital Signature – Page 22 ........................................................................................ 17
Cyber Crime – Page 24 ...................................................................................................................... 17
Categories of Cyber Crime – Page 24-25 ........................................................................................... 17
Cyber Crimes and Related Penalties under IT Act, 2000 – Pages 25-26 ............................................ 17
Unit 7 – M-Commerce........................................................................................................................... 19
M-Commerce - Page 29 .................................................................................................................... 19
Key Drivers from M-Commerce – Pages 29-30 ................................................................................. 19
Attributes of M-Commerce – Page 30............................................................................................... 19
M-Commerce Application Flow – Page 33-34 ................................................................................... 19
Emerging Trends in M-Commerce – Pages 34-35 ............................................................................. 20
Unit 8 – Online Shopping Portal: An E-Commerce Case Study .............................................................. 22

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Block 1 - E-Commerce Concepts and Models

Unit 1 - Introduction to E-Commerce

E-Commerce – Page 6
- A type of business model, or segment of a larger business model, that enables a firm or
individual to conduct business over an electronic network, typically the Internet.

Workflow of E-Commerce with Diagram – Page 7

- Diagram on Page 7

E-Commerce Trade Cycle – Pages 8-9

- A trade cycle is a series of exchanges that take place between a customer and supplier when a
commercial deal is executed.
- A general trade cycle consists of the following phases:
o Pre-sales (finding a supplier and agreeing terms)
o Execution (selecting goods and taking delivery)
o Settlement (invoice if any and payment)
o After-Sales (following up complaints or providing maintenance)
- EDI is the e-commerce technology appropriate to C2B transactions.
- The trade cycle includes the following operations: search, negotiate, order, deliver, invoice, and
after-sales

Transplanted Real World Business Models – Pages 10-11

- These are business activities which occur naturally in real-world and have been transplanted
onto the internet.
- The following models fall into this category
- Mail-Order Model:
o A web site shop is employed to sell physical goods which are then delivered
- Advertising Based Model:
o Advertising revenues support the operation of free service

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 - Subscription Model
o Users subscribe for access to a database of digital products
- Free Trial Model
o Software is available for free but will work only for a limited period after which it needs
to be purchased
- Direct Marketing Model
o Use of e-mail based direct marketing which often ends up as spam
- Real Estate Model
o Sell web space, domain names, and e-mail addresses
- Incentive Scheme Models
o Opportunities to win prizes or the like are used to entice people to accept advertising or
answer surveys
- B2B
o Business Transaction between corporate entities via the Internet, including financial,
research, legal and employment services

Native Internet Business Models – Page 11

- These are the business activities that have evolved in the internet environment and are native to
it
- Library Model
o Web sites offer free information
- Freeware Model
o Provides free software or open source software
- Information Barter Model
o Some exchange of information between individual or organizations over the internet
- Digital Products Model
o Images, movies, animation, audio, etc. will be available as product
- Digital Delivery Model
o Takes place when digital products are purchased
- Access Provision Model
o Provides access to internet from enterprises called Internet Service Providers (ISPs)
- Website Hosting and Other Internet Services
o Hosting web servers, email addresses as well as URL and email redirection services

Benefits of E-Commerce to orgs, customers, and society – Pages 11-12

- Benefits to organizations
o Expands a company’ marketplace to national and international markets
o Enables companies to procure material and services from other companies rapidly and
at lower costs
o Enables a very specialized niche market
o Reduces telecommunication costs as internet tools are used
- Benefits to customers

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 o Enables customer to shop or make transactions 24x7 from any location
o Allows consumers to conduct quick online comparisons
o Makes electronic auctions possible
o Allows consumers to interact with electronic communities and to exchange ideas and
compare experiences
- Benefits to society
o Enables individuals to work from home and do less travelling
o Allows merchandise to be sold at lower prices, thereby increasing the standard of living
o Enables people in developing countries and rural areas to enjoy products an services
that are otherwise difficult to buy
o Facilitates delivery of public services such as government entitlements, reducing cost of
distribution and increasing the quality of social services

Impact of E-Commerce in Marketing – Page 12

- In the past, marketing was mainly door-to-door, home parties and mail order using catalogues
or leaflets
- This then moved to telemarketing and TV selling with the advances in telephone and television
technology
- It finally developed into e-marketing spawning ‘e-CRM’ (Electronic Customer Relationship
Management), data mining, etc. by creating new channels for direct sales and promotion

Impact of E-Commerce in Finance and Accounts – Page 13

- Online banking has become popular with complex transactions becoming possible without going
to bank

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Unit 2 - Elements of E-Commerce

Strategies to increase visibility of an E-Commerce website – Page 16

- Increasing traffic
o It is paramount to create and maintain your brand positioning on social media.
o Upload contents like special offers, news, pictures, any eye catching information for the
regular followers
o Learn about competitors, do research and check what the competitors are uploading,
their offers and number of posts they are doing
- Easy URL
o The website URL must be simple and catchy so that it can be easily remembered by
users
- Adding icons of social networks
o It helps users/followers and other potential customers to know about your site and
business
- Advertising
o Conventional media such as TV, newspapers, etc. are powerful
o Customers always trust recommendations and advice from friends and peers
o So taking advantage of the power of supporters of your brand can be useful
- Search engine optimization
o It is a process of imposing the visibility of website in the search engine’s results
o The higher the appearance of your website in the search engine, the higher the
probability of increase of number of customers

Categories of Search Engine – Page 17

- Crawler based search engine
o These are called robot or bots.
o They general index sites based on the content of and the links to your website
o E.g., Google, Alta Vista
- Human powered directories
o These are actually compiled by human reviewers who examine and evaluate description
of website and then they rate contents using their own criteria
o Normally, this type of combination is done for listing by paid search engines

Online Payment Systems and Services – Pages 19-21

- Credit Cards
o One of the most frequently used mode as it is the most convenient method
o Advantages: ease of use, more secure than carrying cash
o Disadvantages: Cost of processing is high sometimes, peer to peer transactions not
possible
- Debit Cards
o Similar to credit cards as in they are both cards issued by bank to customers

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 o Amount is immediately deducted from the account
o A: Chances of becoming bankrupt are less
o D: Pay now option i.e. no grace period for paying your amount, security is major task
- Smart Cards or Stored Value Cards
o Similar to credit and debit cards but have extra microprocessor chip
o This chip stores customer details and digital cash value in encrypted form
o A: Anonymous in nature, good for small transactions
o D: Due to transaction limit, not suitable for B2B or B2C; Due to high interface cost, not
suitable for C2C
- EFT
o Computer based system that transfers the money from electronically from one account
to another
o Sometimes known as e-cheque
o A: Money transfer is fast as it is done within 24 hours; process is secured when
compared to cheques which can be stolen or lost
o D: Limited to large companies; transactions are irreversible
- PayPal
o Also electronic payment system in which money is transferred between the accounts
o Analogous to net banking
o A: Easy to use; No credit card is required

Security Features for E-Commerce – Pages 21-22

- Following security features can be implemented for success of e-commerce:
- Identification or Authentication:
o The person/entities with whom we are communication are really who they say they are.
- Confidentiality:
o Content of the message or transaction is kept confidential
o Should only be read by the intended sender and receiver
- Integrity
o The content of the message or transaction is not tampered
- Non-Repudiation
o Sender and receiver cannot deny sending and receiving the information respectively
- Access Control
o Access to the protected information is only realized by the intended person or entity

Working of SSL with diagram – Page 23

- Figure on Page 23

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Unit 3 - Electronic Data Interchange and Electronic Payment Systems

EDI Definition – Page 25

- Basically, an EDI is a structured, machine readable document used in business exchanges.
- EDI may be defined as computer-to-computer interchange of strictly formatted documents
other than monetary documents.

EDI Architecture with Diagram – Pages 26-27

- EDI layered architecture essentially consists of four main layers.
- Application Layer
o This layer consists of business applications which use the EDI
o These applications can be internal enterprise systems or other B2B systems
- Format Layer
o This layer processes the documents in EDI formats
o Two popular industry wide EDI standard formats are ANSI X12 and EDIFACT
- Data Transport Layer
o This layer is responsible for automatically transferring the EDI
o It includes transport mechanisms such as e-mail, FTP, HTTP, HTTPS, etc.
- Data Connection Layer
o This layer consists of enterprise network infrastructure which is used to transport data
o This includes, dial-up modem based connections, Internet, point-to-point
communication, etc.
- Figure on Page 27

EDI Standards – Pages 27-29

- These are the two most popular EDI standards

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 - ANSI X12
o This is most popular in North American region
o It defines standards for various business transactions such as order processing, material
handling, etc.
o X12 standard uses transaction set to identify each business transaction and each
transaction set is by a numeric code
- EDIFACT
o EDIFACT is an EDI standard format developed under UN (United Nations). Hence it is
also denoted as UN/EDIFACT.
o This is the international standard which consists of the following four key elementsL
▪ Syntax which defines the message structure
▪ Data elements within the document
▪ Segments which groups the date elements
▪ Messages which are an ordered group of segments and symbolize a business
transaction

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Unit 4 - Introduction to E-Commerce Models

Inter-organizational E-Commerce – Page 33

- When e-commerce transaction involves multiple organizations, then it is termed as inter-
organizational e-commerce

Difference between inter-organizational and intra-organizational e-commerce – Page 33

Inter-organizational Intra-Organizational

1) E-commerce transaction involves multiple 1) E-commerce does not involve multiple

organizations organizations

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Block 2 – Practices in E-Commerce

Unit 5 – E-Business

Advantages and Disadvantages of Web Based Bookshop – Pages 6-7

Advantages

- Web Bookshops act as a database of a vast amount of information about books currently
available in the market
- Online bookshops are open 24x7
- User can take time in searching and selecting books
- In most instances, there is a discount on the price of the book

Disadvantages:

- Some users may not have an online payment service at their hands
- There may be abnormal delays in shipping
- Most web bookshops charge extra as packaging and shipping charges
- Security issues while making payments online are a big concern

E-Paper – Page 10
- Electronic newspaper is the newspaper which exits on the Internet either separately or as online
version of printed periodical
- Electronic newspaper is normally called e-paper.

Advantages and Disadvantages of E-Paper – Page 11

Advantages:

- It is accessible 24x7
- Content can be updated any number of times in a day
- It is more environment friendly than getting a printed newspaper
- The reader can select the news of interest and leave the rest

Disadvantages:

- A newspaper company should be prepared for reduced revenues if it provides e-paper free of
cost

Procedure for Online Auction – Page 12

- Seller registers a particular item at the online auction website
- Bidders registered at that online auction website get opportunity to search and browse all active
auctions

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 - Bidders start bidding at the auction in which they are interested
- At the time set, the bidding process ends
- The buyer pays the price and the seller dispatches the item
- Figure on Page 12

Advantages and Disadvantages of Online Auctions – Pages 12-13

Advantages:

- May get goods cheaply

Disadvantages

- There are chances of the product being a stolen or pirated one

- Sellers will not always accept all forms of payment
- There is always a risk of item not being of the value for which it is bought

Online Trading – Page 13

- Online trading in securities refers to the opportunity to an investor to place orders using
internet as a trading platform as offered by the broker

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 - The transactions of buying and selling are made through internet
- The investor gets updated information online
- The transaction is dealt at a price at a moment checked in an online trading platform rather than
issuing instructions for execution to brokers by phone or by person

How online trading performed – Page 13-14

- Find an online brokerage house
- Make an application to open a demat account
- Once demat account is opened, bank account is to be linked with it. Credentials to operate are
received from online brokerage house
- Allocate the funds from the bank account to the trading account
- Go to the trading page of your account.
- Buying or selling stocks is done by placing ‘Orders’
- After you have confirmed the order, it is placed in the stock exchange through the online trading
system
- Confirmation of placement order is received
- Stocks are actually bought or sold once this order gets executed in the exchange
- Confirmation of execution of order is received
- Online trading is complete
- Figure on page 14

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Online Trading Advantages and Disadvantages – Pages 14-15
Advantages:

- It leads to paperless transactions

- Investor can manage his own stock portfolios
- It helps in improving market transparency
- It helps in smooth market operation while retaining the flexibility of conventional trading
practices

Disadvantages:

- There are chances of losing a trade if online trading system fails

- The scope of manipulation, speculation, and malpractice is more due to the security issues
associated with Internet
- Due to the policy of online brokerage house, some stocks may not be available for trading online
for whom the customer may need to contact other brokerage houses

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Unit 6 – E-Security and Legal Issues

Security Concerns in E-Commerce – Page 18-19

- Security Concerns of the client
o Active Content
▪ Active Content is the program embedded transparently in web pages which can
cause actions to occur.
▪ It creates a security risk because malicious programs inside a web page can
reveal and destroy sensitive information in form of cookies
o Virus, Worms and Trojans
▪ Virus is a piece of software that replicates itself into other programs and corrupt
the computer’s memory
▪ Worm is like a virus but it can also spread from one computer to another
through a network
▪ A trojan is a program that appears to have a useful function but contain a
hidden harmful function
o Masquerading
▪ This occurs when one person uses the identity of another to gain access to a
computer
- Security concerns of the communication channel
o The data or message being transferred through the network must be secured from any
unauthorized disclosure or alterations
o Any theft of a sensitive or personal information may become a significant danger
- Security concerns of server
o Database on the server contains valuable and sensitive information which if lost can
cause irreparable damages
o The more complex the server side software becomes, the higher is the probability that
errors exist in the code.

SSL – Page 20-21

- SSL is a web security protocol developed by Netscape
- It operated between the application and transport layers
- It is commonly used to manage the security of message transmission on the internet
- It establishes an encrypted link between a web server and a web browser to exchange sensitive
information
- It is a solution to authentication, privacy, and integrity problems
- SSL has universally accepted on the World Wide Web (WWW).

Digital Signature – Page 22

- As per IT Act, 2000, Digital Signature may be defined as authentication of any electronic record
by a subscriber by means of an electronic method or procedure in accordance with the provision
of concerned sections of the Act.

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 - Digital signature authenticates the identity of the sender of a message or signature holder of the
document

Verification of Digital Signature – Page 22

- The following are various steps in the working of a digital signature
o Senders creates the message (electronic record)
o Electronic record is converted into message digest by using a mathematical function
known as hash function
o The message digest is encrypted with the sender’s private key
o Sender sends the message
o Receiver receives the message
o Receiver decrypts the message by the sender’s public key
o Receiver verifies the message

Cyber Crime – Page 24

- Any offence or crime in which a computer is used is a cyber crime.
- Cyber crimes refer to any act of causing financial, emotional or psychological distress to any
other part with the use of computer or cyber medium

Categories of Cyber Crime – Page 24-25

- Against Person
o Harassment via e-mails
o Email spoofing: Emailing messages with a forged address
o Cheating and Fraud
o Cyber defamation: causing injury to someone’s reputation with the help of internet
- Against Property
o Transmitting virus
o Unauthorized control / access of a computer system
o Intellectual property crimes: patent violation, copyright infringement, etc.
- Against Government/Corporate Entities
o Possession of information in an unauthorized manner
o Cyber terrorism
o Distribution of pirated software
- Against Society at Large
o Pornography
o Polluting youth through indecent exposure
o Sale of illegal articles like narcotics, weapons, etc.
o Online gambling

Cyber Crimes and Related Penalties under IT Act, 2000 – Pages 25-26
- Hacking a computer system – Imprisonment up to 3 years or Fine up to 5 lakh rupees or both

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 - Identity Theft: Fraudulently or dishonestly making use of electronic signature, password or any
other unique identification feature of any other person – Imprisonment up to 3 years or fine up
to 1 lakh rupees
- Cyber Terrorism: Whoever uses cyber space with intent to threaten the unity, integrity, security
or sovereignty of India or to strike terror in the society or any section of the people-
Imprisonment which may extend to life imprisonment
- Cheating by impersonation by using computer resource – Imprisonment up to three years and
fine up to one lakh rupees
- Publishing or transmitting obscene material in electronic form – First conviction: Imprisonment
up to three years and fine up to 5 lakh rupees, Subsequent convictions: Imprisonment up to 5
years and fine up to 10 lakh rupees

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Unit 7 – M-Commerce

M-Commerce - Page 29
- M-commerce stands for Mobile Commerce
- It is all about doing commerce through mobile devices
- Explosion and popularity of mobile devices provide huge opportunities for business enterprises
and consumers to sell and purchase on-the-go using mobile devices such as PDA, smart phones,
and other hand-held devices
- M-commerce is making the commerce anywhere anytime concept a reality using a host of
technologies

Key Drivers from M-Commerce – Pages 29-30

- Popularity of mobile devices
o Hand held devices are quickly overtaking the traditional desktops and laptops and are
becoming the primary channel for access
- Wireless bandwidth advancements
o Mobile devices can now leverage enhanced bandwidths offered by 3G (Third
generation) and 4G networks in addition to Wi-Fi and Wi-Max technologies
- Location based services
o M-Commerce also offers unique ability to get the offers and promotions based on the
current location of the subscriber
- Convenience and Affordability of mobile devices

Attributes of M-Commerce – Page 30

- Ubiquity
o Transaction service access from anywhere in real-time
o E.g., Weather and Stock Updates
- Convenience
o Mobile devices enable access from anywhere and anytime
- Interactivity achieved through responsive user experience
- Personalization
o It’s possible to personalize the experience based on user identification and preference
as well as location.
o E.g., Flashing advertisements and recommendations
- Context-aware localization
o Using GPS and triangulation techniques, it is possible to identify the location of the user
and push relevant promotions and offers.
o E.g., Directory Services

M-Commerce Application Flow – Page 33-34

- End user uses one of the mobile devices to perform e-commerce transaction such as buying the
product

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 - The transaction is supported by the wireless network provider by providing wireless network
bandwidth and signal coverage.
- The mobile request will then be intercepted by mobile middleware which authenticates the user
and the web site through validation of certificate
- The request reaches the e-commerce store which does a variety of tasks:
o Gets inventory and pricing information from the internal ERP systems
o Gets product metadata from product database
o Gets product attributes from product catalogue
o Uses payment gateway to execute the financial transaction
- Figure on Page 34

Emerging Trends in M-Commerce – Pages 34-35

- M-Wallet
o Using mobile devices for various ranges of financial transactions
- Near Field Communications (NFC) enable radio communication between smart phones and
other similar devices which are in proximity
- Mobile coupons are expected to become popular at retail stores
- Mobile shopping is going to play a major role in the shopping space
- In-store personalization based on mobile app which indicates the available sales and acts as a
smart store guide
- Social commerce enablement through mobile devices

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 - Mobile inventory management using RFID on products and track the inventory in real time.

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Unit 8 – Online Shopping Portal: An E-Commerce Case Study

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