E-Commerce

UNIT – 1 INTRODUCTION TO E-
COMMERCE

STRUCTURE
1.0 Objectives
1.1 Introduction
1.2Meaning and concept
1.3 Electronic commerce versus traditional commerce
1.4 Media convergence and e- business
1.5 Channels of e-commerce
1.6 Business applications of e- commerce
1.7 Need for e-commerce
1.8 Let Us Sum Up
1.9 Key Words
1.10Some Useful Books
1.11 Answer to check your progress
1.12 Terminal Questions

1.0 OBJECTIVES

After studying this unit, you will be able to:

 Describe the nature of E-commerce

 Identify the scope of Organization Applications
 State the need and comparison of traditional commerce and
electronic commerce
 List the Channels of E-Commerce

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1.1 INTRODUCTION

E-commerce, also known as electronic commerce or internet commerce,

refers to the buying and selling of goods or services using the internet,
and the transfer of money and data to execute these transactions. e-
commerce is often used to refer to the sale of physical products online,
but it can also describe any kind of commercial transaction that is
facilitated through the internet.
Whereas e-business refers to all aspects of operating an online business,
e-commerce refers specifically to the transaction of goods and services.
The history of e-commerce begins with the first ever online sale: on
August 11, 1994, a man sold a CD by the band Sting to his friend
through his website NetMarket, an American retail platform. This is the
first example of a consumer purchasing a product from a business
through the World Wide Web—or “e-commerce” as we commonly know
it today.
Since then, e-commerce has evolved to make products easier to discover
and purchase through online retailers and marketplaces. Independent
freelancers, small businesses, and large corporations have all benefited
from e-commerce, which enables them to sell their goods and services on
a scale that was not possible with traditional offline retail.
Electronic commerce (e-commerce) refers to companies and individuals
that buy and sell goods and services over the Internet. E-commerce
operates in different types of market segments and can be conducted over
computers, tablets, smartphones, and other smart devices. Nearly every
imaginable product and service is available through e-commerce
transactions, including books, music, plane tickets, and financial
services such as stock investing and online banking. As such, it is
considered a very disruptive technology.
As noted above, e-commerce is the process of buying and selling
tangible products and services online. It involves more than one party
along with the exchange of data or currency to process a transaction. It is
part of the greater industry that is known as electronic business

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(ebusiness), which involves all of the processes required to run a

company online.
E-commerce has helped businesses (especially those with a narrow reach
like small businesses) gain access to and establish a wider market
presence by providing cheaper and more efficient distribution channels
for their products or services. Target (TGT) supplemented its brick-and-
mortar presence with an online store that allows customers to purchase
everything from clothes and coffeemakers to toothpaste and action
figures right from their homes.
Providing goods and services isn't as easy as it may seem. It requires a
lot of research about the products and services you wish to sell, the
market, audience, competition, as well as expected business costs.
Once that's determined, you need to come up with a name and set up a
legal structure, such as a corporation. Next, set up an e-commerce site
with a payment gateway. For instance, a small business owner who runs
a dress shop can set up a website promoting their clothing and other
related products online and allow customers to make payments with a
credit card or through a payment processing service, such as PayPal.
History of e-commerce
Most of us have shopped online for something at some point, which
means we've taken part in e-commerce. So it goes without saying that e-
commerce is everywhere. But very few people may know that e-
commerce has a history that goes back before the internet began.
E-commerce actually goes back to the 1960s, when companies used an
electronic system called the Electronic Data Interchange to facilitate the
transfer of documents. It wasn't until 1994 that the very first transaction.
took place. This involved the sale of a CD between friends through an
online retail website called NetMarket.
The industry has gone through so many changes since then, resulting in a
great deal of evolution. Traditional brick-and-mortar retailers were
forced to embrace new technology in order to stay afloat as companies
like Alibaba, Amazon, eBay, and Etsy became household names. These
companies created a virtual marketplace for goods and services that
consumers can easily access.
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New technology continues to make it easier for people to do their online

shopping. People can connect with businesses through smartphones and
other devices and by downloading apps to make purchases. The
introduction of free shipping, which reduces costs for consumers, has
also helped increase the popularity of the e-commerce industry.

1.2MEANING AND CONCEPT

E-commerce means using the Internet and the web for business
transactions and/or commercial transactions, which typically involve the
exchange of value (e.g., money) across organizational or individual
boundaries in return for products and services. Here we focus on digitally
enabled commercial transactions among organizations and individuals.
E-business applications turn into e-commerce precisely, when an
exchange of value occurs. Digitally enabled transactions include all
transactions mediated by digital technology and platform; that is,
transactions that occur over the Internet and the web.
Hence, e-tailing is a subset of e-commerce, which encapsulates all
“commerce” conducted via the Internet. It refers to that part of e-
commerce that entails the sale of products merchandise and does not
include sale of services, namely railway tickets, airline tickets and job
portals.
There are three types of destinations that cater to retail sales:
i. Traditional retail- brick-and-mortar
ii. Corporatized retail- brick-and-mortar
iii. Corporatized retail- e-tailing
The term electronic commerce or e-commerce refers to any sort of
business transaction that involves the transfer of information through the
internet. By definition, it covers a variety of business activities which use
the internet as a platform for either information exchange or monetary
transactions or both at times.
For example, the numbers of consumer brand retail sites like
Amazon(dot)com and Flipkart(dot)com, which normally provide

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information about products and also allows monetary transactions to

happen over the internet.
On the contrary, there are the auction sites like Quickr(dot)com and
Ebay(dot)com where information about certain listed products and
services isprovided, but the monetary transactions normally happen
physically.
Apart from these two categories of e-commerce sites, there are some
sites which enable businesses to exchange trading goods and also
services between two or more companies. All of these forms of internet
based business platforms are known as e-commerce.
Over the last decade, the advent of e-commerce has actually transformed
the manner in which people use the internet. People now not only just
using the internet for gathering information, leisure or socializing online,
but also, at the same time, they are seeking measures to conduct business.
Even popular social networking sites like Facebook(dot)com are
allowing people to promote and sell products and services online and the
introduction of computer and mobile-based e-commerce application
software like Shopify provides evidence of how e-commerce has boomed
over the past 5 years.

The various objectives of e-commerce can be laid down as follows:

1. Development of Business-Relationship:
Business development can be done through e-commerce being the
primary and the basic object. As their direct contact in between the
company and the consumer, their business relationship will be enhanced.
Hence the area of the market can be increased.
2. Better-Customer Service:
As it is done round the clock, the customer will always have online help
regarding the products. As all the information is furnished to the
customer, it becomes easy for him to choose the best product from all
other alternatives. As even the service can also be done through the net
immediately, the customer service will be increase. By highlighting
customer service, the companies are trying to subjugate a lion-share in
the market.

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3. Getting more customers:

Thesedays, it has become the mandate of companies to double its
customers, and this can be done by rendering the value-add service and
maintaining the quality. Hence, it is also one of the primary objectives of
the companies which supply impetus for the robust growth in sales and
overall profit.
E-Commerce has key features which are explained as follows:
Feature # 1. E-Commerce is Technology-Enabled:
Traditional commerce is taking place since times immemorial but E-
commerce is result of integration of digital technology with business
processes and commercial transactions. The technological foundations of
E-commerce are internet, WWW and various protocols.
Feature # 2. Technology Mediated:
In E-commerce, buyers and sellers meet in cyber space rather than in
physical place. Hence E-commerce does not involve face-to face contact.
Feature # 3. Universality:
Buying and selling take place through websites in E-Commerce. The
websites can be accessed from anywhere around the globe at any time
therefore it possess the feature of universality.
Feature # 4. Intercommunication:
E-commerce technology ensures two-waycommunication between buyer
and seller. On the one hand, by using E- commerce, firms can
communicate with customers through E-commerce enabled websites. On
the other end, customers can also fill out order forms, feedback forms
and can communicate with business operating firms.
Feature # 5. Delivery of Information:
E-commerce serves as the best channel of communication. E-commerce
technologies ensure speedy delivery of information at a very low cost
and considerably increase information density as well.
Feature # 6. Electronic Completion of Business Processes:
By using E- commerce we can perform business transactions like
accounting and inventory through computers at global level.

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Feature # 7. Virtual Communities:

Virtual Communities are online communities created by means such as
chat rooms and specifically designed sites like, where people can interact
with each other having common interests using the internet.
Feature # 8. Inter-Disciplinary in Nature:
Implementation of E-Commerce needs a lot of knowledge of managerial,
technological, social and legal issues. Besides this, understanding of
consumer behaviour, marketing tools and financial aspects is as crucial
as designing interactive E- Commerce websites.
Feature # 9. Customization:
With the use of E-commerce technology, the world is moving from
mass-production to mass-customization. Product customization ensures
that goods are tailor made as per the requirements and preferences of
customers.
Like Dell Computer Website WWW(dot)dell(dot)com enables the
consumers to mention the configuration of a computer and then the
product is made available and delivered as per the configuration ordered
by the customer.

1.3 ELECTRONIC COMMERCE VERSUS

traditional commerce
Gone are the days when the commercial activities like the exchange of
goods and services for money, between parties, took place only in the
traditional mode, i.e. the customer has to go to the market, look at the
variety of products, choose the required stuff and purchase them by
paying the specified amount. But with the advent of e-commerce, people
can buy goods, pay bills, or transfer money in just one click.
Many people, still prefer traditional commerce over e-commerce, due to
their dogma that the latter is not safe, However, this is just a myth. Both

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modes have their pros and cons, so we have simplified the difference
between traditional commerce and e-commerce.

Definition of Traditional Commerce

Traditional Commerce or Commerce is a part of business, which
encompasses all those activities that facilitate exchange. Two kinds of
activities are included in commerce, i.e. trade and auxiliaries to trade.
The term trade refers to the buying and selling of goods and services for
cash or kind and auxiliaries to trade, implies all those activities like
banking, insurance, transportation, advertisement, insurance, packaging,
and so on, that help in the successful completion of exchange between
parties.
In finer terms, commerce encompasses all those activities that simplify
the exchange of goods and services, from manufacturer to the final
consumer. When the goods are produced, theydo not reach the customer
directly, rather theyhave to pass from various activities, which are
included in commerce. Its main function is to satisfy the wants of
consumers by making goods available to them, at the right time and
place.
Definition of e-Commerce
e-Commerce or electronic commerce refers to the exchange of goods and
services, funds or information, between businesses and consumers using
the electronic network, i.e. internet or online social network. e-
Commerce means trading and providing assistance to trading activities,
through the use of the electronic medium, i.e. all the activities like
purchasing, selling, ordering and paying are performed over the internet.

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Comparison Chart

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Table :1.1 Key Differences Between Traditional Commerce and e-

e
Commerce

The following points are noteworthy so far as the difference between

traditional commerce and e-commerce is concerned:

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1. A part of business, that focuses on the exchange of products and

services, and includes all those activities which encourage
exchange, in some way or the other, is called traditional
commerce. e-Commerce means carrying out commercial
transactions or exchange of information, electronically on the
internet.
2. In traditional commerce, the transactions are processed manually
whereas, in the case of e-commerce, there is automatic processing
of transactions.
3. In traditional commerce, the exchange of goods and services, for
money can take place, only during working hours. On the other
hand, in e-commerce, the buying and selling of goods can occur
anytime.
4. One of the major drawbacks of e-commerce is that the customers
cannot physically inspect the goods before purchase, however, if
customers do not like the goods after delivery they can return it
within the stipulated time. Conversely, in traditional commerce
physical inspection of goods is possible.
5. In traditional commerce, the interaction between buyers and
sellers is direct, i.e. face to face. As against this, there is indirect
customer interaction, in the case of e-commerce, because it may
be possible that the customer is miles away from where they
place an order for the purchase of goods.
6. The scope of business in traditional commerce is limited to a
particular area, i.e. the reach of business is limited to the nearby
places where it operates. On the contrary, the business has
worldwide reach in case of e-commerce, due to its ease of access.
7. As there is no fixed platform for information exchange in
traditional commerce, the business has to rely on the
intermediaries for information fully. Unlike e-Commerce,
wherein there is a universal platform for information exchange,
i.e. electronic communication channel, which lessen the
dependency on persons for information.

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8. Traditional commerce is concerned with the supply side. In

contrast, the resource focus of e-commerce is the demand side.
9. In traditional commerce, the business relationship is vertical or
linear, while in the case of e-commerce there is directness in
command leading to a horizontal business relationship.
10. In traditional commerce, due to standardisation, there is mass/one
way marketing. However, customization exists in e-commerce
leading to one to one marketing.
11. Payment for transactions can be done by paying cash, cheque or
via credit card. On the other hand, payment in e-commerce
transactions can be done through online payment modes like
credit card, fund transfer, etc.
12. The delivery of goods is immediate in traditional commerce but
in the case of e-commerce, the goods are delivered at the
customer’s place, after some time, usually within a week.
Therefore, with the above discussion, it is quite clear that both the
methods have their advantages and disadvantages. e-Commerce is just
like the traditional commerce, i.e. when you log in to the website, you
enter into the e-world for shopping, wherein you choose a category,
specifications and you get the desired results. e-Commerce is not suitable
for perishable goods and also for high-value items, while traditional
commerce is not suitable for purchasing software or music.
CheckYourProgress- 1

1. Explain Key Differences Between Traditional Commerce and e-

Commerce

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2. State the features of electronic commerce

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3. Define Traditional commerce

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1.4 MEDIA CONVERGENCE AND E- BUSINESS

Media Convergence simply refers to the merging of different types of

mass media such as Traditional Media, Print Media, Broadcast
Media, New Media and the Internet as well as portable and highly
interactive technologies through digital media platforms. This results in
the combination of 3Cs, i.e. Communication, Computing and Content as
all three are integrated through technology. The most relevant example of
media convergence is a Smartphone that blends together various media,
i.e. print media (e-books, news apps), broadcast media (streaming
websites, radio, music apps) as well as new media (the internet) into a
single device that performs various functions from calling and texting to
photography, videography, gaming and so much more.

Examples
The most popular examples of Media Convergence are:
 Smartphones (converging cameras, music, the internet, books,
and all other media together)
 Online Radio (converging radio with the Internet)
 E-books (converging paperbacks with digital technology)
 News Websites and Apps


Advantages

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Media convergence has proved to be beneficial in the digital era which is

filled with content seeking our attention continuously. Here are the most
important advantages of Media Convergence:
 The instant availability of news and moment-based content is one
of the top advantages of media convergence between traditional
media and new media.
 The content producers can specifically target the best audience or
group they are aiming towards by publishing customized content.
 With media convergence, the audience has also become the
creator themselves. From memes to social media posts, media
convergence has truly been beneficial to integrate audience on a
global level.
 Another important benefit of media convergence that it has
broadened the limitations of traditional media by blending it with
new media, thus providing instant and latest content on an
international level.
 With the media convergence between traditional media and new
media, the cost of digital marketing has also become economical
thus making this process beneficial and affordable.
Types of Media Convergence
Media convergence is an umbrella term that can be defined in the context
of technological, industrial, social, textual, and political terms.
The three main types of Media Convergence are:
 Technological Convergence
 Economic Convergence
 Cultural Convergence
Technological Convergence

Technological convergence is a term that describes the layers of

abstraction which enables different technologies to interoperate
efficiently as a convergent system. It is when new technologies are
created and take over from past technologies and perform the same task
in a more efficient manner. Technological convergence is the
combination of computing, communication, and content around
networked digital media platforms. It further aims to convert existing

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media into a digital form of technology, for example, viewing a book

online (E-books, Kindle). We have compiled some of the basic
fundamentals of Technological convergence below:

 Technologies convergence is when new technologies are created

that mostly take over or get upgraded from past technologies and
perform the same task but in a more advance manner, for
example, people used to listen to music using the radio but now
technological convergence but now the convergence has evolved
majority use smartphones.
 Technological convergence is the tendency that as technology
sometimes evolves towards performing a similar task.
Economic Convergence

Just like the general definition of Economic convergence which suggests

that countries with lower GDPs are going to grow faster than countries
with higher GDP, the Economic media convergence allows a single
company to target larger interest groups through various kinds of media.
Some of its key features are:

 In Economic convergence large companies use old and new

media to their advantage by selling merchandise or the rights of the
product.
 It is the horizontal integration of the entertainment industry
companies such as Sony, AOL, Time Warner now has an interest
in film, TV books, games, and the internet, music real estate, etc.
Cultural Convergence

This concept of media convergence occurs when two or more cultures

adopt each other’s traits and become more alike. Those Increasing
similarities between cultures are not limited to beliefs of consumer
brands and media. Some of the major forms of cultural media
convergence are:

 Acculturation: When weaker among two cultures adopt traits

from more dominant culture e.g Indians mostly speaking the
English language.

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 Assimilation: When original traits of weaker culture are

completely erased and replaced by traces of more dominant
culture e.g war immigrants no longer speak the native language.
Importance of Media Convergence

Wondering why media convergence is important? It is important because

it blends together content, communication technologies and computer
networks thus leading to the immediate transformation of many
established industries, services as well as work practices and through all
this, new forms of content are born.
Here are the key points why Media Convergence is important:

 It transforms the modes of communication, news reporting, and

journalism. For example, Media journalism.
 It led to cross-media since a huge amount of content is now being
accessed through portable devices. For instance, news
organizations no longer simply rely on print or AV transmission.
 Many new media forms are born like news portals, podcasts,
news feeds, blogging, websites and mobile applications.
 The newly converged media platforms provide online access to
the archives, and endless opportunities for users to comment on
the story or provide links to relevant material.

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3Cs of Media Convergence

Fig :1.13Cs
3Cs of Media Convergence
The 3Cs of Media Convergence Are Computing, Communications,
and Content.
ontent. Media Convergence unites these 3Cs of Computing,
Communications and Content and is an immediate result of digitization
and promotion of the Internet. To put it even more simply, the
convergence of Content with Communication tech
technologies and
Computer Networks is what leads to Media Convergence.
Disadvantages of Media Convergence
While the advantages of this form of convergence focus on content
integration, faster access and international reach, disadvantages highlight
the impact off convergence on consumers as well as technology. Here are
the major disadvantages of media convergence:
 Difficulty in assessing consumer responses and
reactions scattered across diverse converged platforms.
 More competition for consumer’s time and attenti
attention with
various media platforms in one device.
 Audiences often feel overwhelmed with massive amounts of
information overload.
 The older generation and the disabled sections of the
community find it hard to learn the digital skills to use different
types of media

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 Highly relied on technology and the internet, thus the areas

deprived of these two aspects can face issues with using online
information.
 Prone to cyber-attacks and malfunctioning.
Universalization
Universalization is another lesser-known aspect of mass media that has
been highlighted with convergence. Media convergence has led to the
promotion of diversity and inclusion in our world as we get to know
about various cultures, their traditions and values and further learn to
imbibe a respect for every culture. Globalisation has played a central role
in universalization of cultures through media as the world is striving to
become more inclusive of everyone, irrespective of their culture,
religion, gender, etc. Here’s how media convergence has led to
universalization of popular culture:
 By providing open access to cultures around the world
 Increased cross-cultural consumption through digital media
 Promotion of pop culture on the Internet
 Diversity and inclusion in media (be it through the content we
consume or content creators)
 The internet is a hybridization of cultures and identities as we
consume content from around the world and learn about diverse
cultures.

1.5 CHANNELS OF E-COMMERCE

An "ecommerce channel" is a route through which an ecommerce

business sells or promotes its goods and services to its customers. Sales
channels are those in which a customer may select and pay for goods and
services. The ecommerce website is an ecommerce sales channel, as is
the mobile App. Marketing channels are used for promotion of a
business, for example pay-per-click advertising (paying to have your
website featured in a search engine's search results) is an example of an
ecommerce marketing channel.

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Retail makes use of many sales and marketing channels beyond

ecommerce. A physical retail store is a sales channel, as is a contact
center where orders are placed over the phone with a sales agent,
whereas outdoor media (such as billboards) is an example of a marketing
channel.
E-Commerce Sales Channels
There are several ecommerce sales channels. For most businesses, the
primary ecommerce sales channel is the website, the other channels
being a mobile App, ecommerce marketplaces, EDI and white label
websites. Social shopping, including live stream shopping, is an
emerging and growing area of interest.
1. e-Commerce website
The most common form of ecommerce sales channel is the ecommerce
website, very familiar to everyone as a website on which a customer can
view product information and place an order. This includes both B2C
and B2B ecommerce websites.
2. Mobile App
A mobile App is another common ecommerce sales channel, which has a
similar function to the website, but is installed and then accessed as an
App on a customer's mobile device (smartphone or tablet). Many
businesses' Apps appear and operate in a very similar way to their
ecommerce website.
3. Marketplace
When a business sells individual products to customers through a third
party website, this is called marketplace sales. For example, Amazon
operates as a marketplace, allowing retailers to sell individual products
on their website either handling the fulfillment of the orders or passing
them back to the retailer for fulfillment. This channel is different to the
concept of wholesale, where a brand sells a bulk quantity of a product to
a retailer that the retailer can then sell in individual units to a consumer.
Amazon is also a retailer and therefore buys product wholesale in this
way, but its marketplace business is a larger than its retail business.
4. EDI

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Electronic data interchange (EDI) is a method through which two

businesses agree to pass information between them in order to transact
orders between systems they each control. By placing orders
electronically, the human effort involved in creating an ecommerce order
is removed. For example a manufacturer's system might use EDI to
transmit automatically a re-order request for a raw material when
inventory becomes low at one of its plants.
5. White label website
A "white label" website is one that is constructed and operated by a
business on behalf of a corporate customer and designed to match the
customer's brand, not its own. For example a cellphone distributor can
offer to set up and run a website for a retailer who wants to offer
cellphones to its customers without the operational complexity inherent
in doing so. The distributor charges a commission to the retailer for
running the website and the retailer provides the service to its customers,
branded as if it were being operated by that retailer. By creating largely
cookie-cutter websites for each retailer, the distributor in this example is
able to gain economies of scale and the additional business generated by
these new customers. The white label website is an example of B2B2C
commerce.
6. Social and Live-Stream Shopping
Many retailers are experimenting with selling products directly from
social networking sites and Apps, including Facebook, Instagram and
TikTok. Many ecommerce platforms (BigCommerce and Shopify as
examples) includingintegration to these social networking apps to enable
this.
Live stream shopping is an ecommerce channel where influencers with a
strong social media following perform live shows to their audiences
to promote products that viewers can buy from within the live stream
App.
E-Commerce Marketing Channels
Another term often used in ecommerce is "marketing channel" or "digital
marketing channel". A marketing channel is a route through which a
business drives demand for its products and services by communicating

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with customers and prospective customers. Traditional examples include

TV, radio, print-media (e.g. newspaper advertising) and direct mail. E-
Commerce (or digital) marketing channels are channels that are online or
electronic in nature and therefore lend themselves well to promoting
ecommerce sales.
1. Email Marketing
The most common ecommerce marketing channel is email marketing,
as it is simple and very low cost. Over 300 billion emails are sent
worldwide every day, the vast majority of which are marketing, spam
and other business emails. Travelocity alone sends 3 billion emails per
year. To send marketing emails, a business must contract with an Email
Service Provider (ESP), if only to avoid limits on number of emails that
can be sent with other services, for example Google restricts Gmail users
to sending 500 emails per day.
Popular choices of email service provider range from Campaign
Monitor and Mailchimp for small businesses up to Adobe Marketing
Cloud and Salesforce Marketing Cloud for large enterprises.
2. Pay Per Click Marketing
Pay Per Click (PPC) is a marketing channel in which a business places
concise advertisements onhigh-traffic web properties and payment is due
to that website owner each time a visitor both sees and clicks on that
advertisement. Google and other search engines provide opportunities for
businesses to "bid" for keywords and promote their content and products
within the search results. In the example below, the red box highlights
PPC adverts, the green box the organic results.
3. Banner Advertising

The banner advertising marketing channel involves a business paying

to place a marketing image on a website that receives traffic from the
types of people it wishes to attract as customers. For example, a
cosmetics company may pay to show a marketing image on a popular
website that describes makeup tips and techniques. When a visitor clicks
on the banner, they are redirected to a so-called "landing page" on the
website of the company that is advertising.

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Banner advertising is a relatively simple method of promoting a business,

albeit one where it is easy to spend money without making a clear return.
A business must track conversion rates of traffic from each website and
from each banner in order to refine where, when and what it shows.
Another issue with banner advertising is widespread use of ad blocking
software and browser plug-ins which prevent banners being shown.
While the number of people using ad blocking software is unknowable, it
is clearly a significant percentage of all Internet users.

4. Content Marketing
Producing high quality, informative or entertaining content as a means to
promote a business is called content marketing. content is useful for
encouraging website visitors to buy, i.e. improving conversion rate, as
well as to spending more time on the website and returning more
frequently. Good content encourages people to view a company as more
trustworthy and more authoritative in a field and are therefore more
likely to accept their recommendations and to buy from them. Content
marketing is not the same as simply writing about a product. Content
marketing focuses on positioning the business as an expert in their sector,
for example by producing informative how-to guides, care instructions,
expert reviews of products, or lifestyle information that relates to
situations in which the products they sell are useful.
5. Search Engine Optimization (SEO) Marketing
Publishing content on a business's website can help with improving its
visibility in search engine results, in particular in the billions of
searches (Source: Google Blog, Oct 2019) conducted on Google every
day, of which 15% have never been searched for before. However,
improving the ranking of that content on Google and other search
engines is an art and science in its own right, one that is called search
engine optimization. Google takes into account a vast array of data in its
algorithms used to present search results for any given query. Ranking as
high as possible in those results for the search terms that your
prospective customers will be searching is the ultimate goal of SEO.
6. Social Marketing

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 E-Commerce

Social marketing refers to unpaid marketing activities a business

conducts on social media networks such as Facebook, Twitter, YouTube,
Instagram, Pinterest, Snapchat, TikTok or LinkedIn. Social networks are
chosen that work most effectively for a business's product and its
customers. Social media usage outside the US varies tremendously and
reaching international audiences demands additional care.
As an example, at time of writing, Saks 5th Avenue on Facebook had 1.2
million "likes". When it posts content to this page, potentially this many
people are notified.
7. Influencer Marketing
Whereas social marketing relies on the word-of-mouth of ordinary
customers, influencer marketing seeks to promote a business through
people with an established fan base and widespread appeal. An
influencer can be a major celebrity (e.g. a TV personality, sports star or
well-known musician), or people whose social media activities are
known to a smaller but no less passionate audience in a specific niche,
for example owners of YouTube channels, Instagram accounts, TikTok
creators and so on. Influencers are paid (or provided with free products)
in return for talking about those products on their social channels,
thereby promoting them to their followers. In the US influencers must
declare when they are promoting products, as the FTC guide for social
media influencers makes clear.
Influencers are sometimes also used as "the talent" in live stream
shopping, which can be considered both a marketing channel (building
awareness of the brand and its products) and a sales channel (actually
selling products during the live stream).
8. Re-targeting Marketing
Re-targeting is a marketing channel that attempts to re-engage with a
prospective customer that has been to a website and shown interest in a
product but has since left the site. It is distinct from banner advertising in
that to be shown re-targeting ads, the visitor must have already been to
the site of the business that is paying to show this marketing, whereas in
banner advertising any visitor to the website can be shown the content.

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E-Commerce

If a known customer has placed an item in the ecommerce cart without

buying it, a so-called "abandoned cart email" is a simple form of re-
targeting. By emailing the customer a few hours to a few days later, the
customer is encouraged to re-visit the site and complete their purchase,
potentially with the addition of an incentive such as a discount coupon or
code.
For other customers who have looked at products on an ecommerce site,
they can be shown display advertisements for those same products when
they later visit an unrelated website. This is enabled by dynamic re-
targeting technology operated by companies such as Adroll and Criteo.
These re-targeting companies contract with large numbers of ecommerce
businesses as well as businesses looking to sell advertising space on their
websites. By tracking visitors across these two types of website,
advertisements can be shown on websites that are otherwise unrelated.
Check Your Progress-2
1. Discuss social marketing

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2. What is PPC?

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1.6 BUSINESS APPLICATIONS OF E- COMMERCE

E-commerce applications is a bit misleading terminology, as it leads to

two possible perceptions: one, where it refers to the use of e-commerce
as a medium of marketing; retail and wholesale; auctioning; e-banking;
booking and so on.

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The second idea one gets is that of a software application like Amazon,
eBay, Groupon, etc. It may be a web application or mobile application
(now popularly known as m-commerce applications). Mobile e-
commerce applications are nothing but an extension of e-commerce.
Mobile app ideas are the driving force behind every successful business
app, be it an Uber-like taxi app or a DoorDash like a food delivery app.
The picture below describes the two meanings accurately. The orange
color implicates the use of e commerce applications with the first
intention, and the green shows the use for the second.

Fig :1.2Most Common E-Commerce Applications

1. Retail and Wholesale

E-retailing or online retailing refers to the transaction of goods and

services through online stores from businesses to consumers. It is
achieved through means such as virtual shopping carts and e-catalogs.
The applications of e-commerce in this sector is numerous.

2. Finance

Finance and e-commerce is more connected today than ever. Banks and
stock markets use e-commerce significantly in their operation. Online
banking provides provisions such as balance check, bill payment, money
transfer, etc. Online stock trading enables people to carry out trading

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E-Commerce

electronically by giving information about stocks such as performance

reports, analysis, charts, etc. through websites.

3. Manufacturing

In manufacturing, e-commerce forms a medium for companies to execute

the electronic exchange. Combined buying and selling, sharing market
status, inventory check information, etc. enables groups of companies to
fluidly carry out their operations.

4. Auctioning
Applying e-commerce to auctions takes it to a more significant level
where people can participate without any geographical boundaries. That
leads to more participation, more negotiation, and helps to make auctions
successful.
5. Marketing
Marketing activities such as pricing, product features, and building
customer relationships can be strengthened using e-commerce to provide
users with an enhanced and customized shopping experience. Digital
marketing strategies has become a significant way to promote
businesses.
6. Online Shopping

The shopping preferences of people have undergone a massive change in

the last few years. “Go online” has become a mantra for all businesses to
succeed. Online shopping is comfortable, convenient, and at most times,
cost effective. The prosperity of online shopping apps such as Flipkart,
Amazon are proof of this.

7. Mobile and Web Applications

Popularly called mobile commerce or m-commerce applications, this is a

subset of retail e-commerce. Mobile or web application
development has become a staple for brands to showcase their business
capabilities. The consumer carries out purchases through mobile or web
applications that are optimized for the retailer. These applications also
ensure payment security through safe e-payment methods.

8. Online Booking

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 E-Commerce

Travel and tourism is a thriving industry today, and online booking is an

ecommerce application that is growing as a result of it. Online booking
helps people book travel essential services like train/flight tickets, hotel
rooms, tourism packages, transportation services, etc. It makes travel
very convenient and easy for people as everything can be set from the tip
of the fingers.

9. Online Publishing

Digital magazines and e-books are slowly replacing traditional printed

books. It has several advantages such as portability, lightweight,
accessible from everywhere, etc. They are also environment friendly as
they help in reducing paper and saving trees. Due to these reasons, online
publishing or e-publishing has been seeing a rise in popularity.

10. E-banking

E-banking or internet banking, is an e-commerce application that has

simplified time-consuming and complex banking processes for people. It
enables bank users to perform transactions easily online without having
to wait in long queues in banks. Every major bank has its own online
application today to provide virtual banking services to its customers.

Types of E-Commerce Applications

We can classify e-commerce applications in many ways, but here we

present a classification that is in line with the mobile app
development of e-commerce.

1. B2B (Business- to – Business)

A B2B e commerce application is concerned with providing goods and

services between two businesses. Hence, the products they are selling
will be such that it becomes a raw material for another industry. Mobile
apps that sell spare automobile parts, machine parts, etc. come into this
category of apps. Boodmo is an example of such an app.

2. B2C (Business- to – Consumer)

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It represents the majority of the mobile apps that we use today. It

connects a business offering a product or service to an individual
customer. The dealing here is direct with the consumer. PIU, a taxi
booking solution, is an example of such an app.

3. C2C (Consumer -To- Consumer)

Here the exchange happens between two or more consumers. The best
example of such dealings are the apps that facilitate the auctioning of
products.

4. C2B (Consumer -to -Business)

Though thesekinds of apps are very few, agencies like Clutch and
GitHub are building foundations for such possibilities. Designers,
content writers, or experts in various fields can offer their masterpieces
to businesses through such C2B e-commerce applications. If you have
such amazing mobile app ideas, don’t just wait, start working upon
them.

The Anatomy of Ecommerce Applications

How do these e-commerce applications work? What are the different

elements that constitute an e-commerce application? Let us take a look at
their anatomy and discuss them in some detail.

1. Multimedia content for e-commerce applications

Multimedia content is the life of e-commerce applications that makes

them unique and innovative. It basically involves the use of content in
several formats, such as images, animations, audio, video, text, etc. The
idea behind the use of multimedia content is to increase the interactivity
of users by making digital content imitate everyday human
communication.

2. Multimedia storage servers and e-commerce applications

Powerful servers are the lifeline of e-commerce applications as they aid

the storage and distribution of digital content to people. These servers
must be capable of storing large and diverse content, must support large
scale distribution, and provide complete security and reliability.

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 Client-server architecture: The architecture followed by all e-

commerce applications, the client-server model implements a standard
called message passing to execute the interaction between client and
server. This interaction takes the form of a “request-reply” sequence.
While the client device handles the user interface, the server handles the
tasks, storage, security, and scalability.
 Internal processors of multimedia servers: Multimedia servers take
raw data as input and give legible information as output. The internal
processes that deal with the storage and manipulation of data are crucial
for e-commerce applications. It requires cutting edge symmetric
multiprocessors and enormous parallel systems to handle thousands of
users and manage their executions simultaneously.
 Video servers and e-commerce: On-demand videos are an integral
feature of e-commerce applications. These will include
telecommunicating, video-conferencing, corporate multimedia servers,
shopping kiosks, etc. These video servers must be capable of delivering
information to thousands of users simultaneously.
3. Information transport and ecommerce applications

In e-commerce applications, telecommunication, cables, and wireless

services are the primary transportation providers. Telephone lines, local
and long-distance, are managed by telecommunication companies, while
cellular, paging, and radio are managed by wireless communications.
Cable operators manage coaxial, optical fiber, satellite lines, and
computer-based services to handle the internet and related services.

4. Consumer access devices

The way users access e-commerce applications is dependent on the

devices that they use. Access devices can be videophones, personal
computers, consumer electronics like television and game boxes, digital
assistants like voice-driven, pen-based computing, etc.

Why You Need Ecommerce Applications for Your Business?

According to statista.com, the number of consumers who will be making

digital means to shop for their essentials will be exceeding 65% by 2021.

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This alone is a good reason enough for you to switch our business to e-
commerce applications. Another reason is that by the end of this year,
almost 75% of the US population is bound to be smartphone users.
A well-fitting e-commerce app will give you a cutting-edge over your
competitors. It does so through by providing :
1. Mobility
You cannot take your store from one town to another, but you can
definitely refer a mobile app from one smartphone user to another. And
that is possible with a simple share button from the USA to Japan, from
Finland to Papua New Guinea within seconds. This is the power of
mobile apps. It adds infinite mobility to your store small or big, size just
doesn’t matter at all.
2. One-to-One Marketing
Before the progress in the e-commerce app development, it was
impossible to think that you can market to every person in a town
personally. But today it is possible. The other side of this is that you can
target the customer one to one. New analytic tools like Big Data and
others in the stream help you reward, persuade, and win customers who
are most loyal to you and impress new ones as well.
3. Faster Payment
E-commerce apps come with integrated features like in-app payments.
The digital banking boom and m-banking in particular is the new style of
paying the debts. An e commerce app will help your customers get easy
refunds and pay you faster. A surprise cashback offer kicks off best when
it is an app that gives them the good news!!!
4. Fit to Need
How often can you arrange the things in your shopping complex? Maybe
in a year, at max quarterly. Imagine you can do it every week or if your
resources permit even daily. A new look awaits your customers every
single day. Well, this happens only in a mobile app. The feedback you
receive can be turned into actions to show how responsive to customers
you are. What can be a better way to build brand loyalty?

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1.7 NEED FOR E-COMMERCE

We all are living in the age of e-commerce and digital marketing, where
people prefer to shop more online rather than visiting any physical stores
to buy the products of their choice. Though for generations the concept
and mindset of people remain the same that, people who want to buy
something they usually should visit any local store near his/her home.
Well, we don’t need to mention here that time has changed
tremendously. And with the rising popularity of e-commerce websites
people have started purchasing online and this trend is increasing at a
booming pace. In this regard, many small business owners have already
dived into this fast-growing sector to woo the generation x and y with
lucrative deals and offers online. As per the data revealed by some
leading market research firms now the retailers have to make a strong
presence across the online community, if they desire to retain their
current market position in the future, and that’s why there has been rising
popularity of digital marketing services as well.
Reason for Growing Number of Online Shoppers
The reason behind this massive online shopping trend is that, here
customers get great deals with fast, sometimes even free shipping with
simple cost comparisons, different paying options. This is why many
people are shifting to online shopping stores from the traditional retail
market.
In the given context, it is worth noting that, on 6th October
2014 Flipkart held a flash sale campaign called “Big Billion Day” and
registered a record sale, where their server got crashed as it received
millions of hits in a very short range of time.
So, you can see e-commerce has been gaining such popularity with time.
It gives you the advantage to shop online in the comfort of your home
and also provides you with unlimited buying choices and several paying
methods.
On any physical store, the number of stocks is limited, but in an online
store, you get a huge range of products to choose from with stock alerts.

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Then all these online shopping site offers easy shipping of goods straight
to your home where you can pay in cash on delivery basis.
Thus, all these factors are the fundamental reasons on which small
business owners must focus to boost their sales volume. These online
shopping websites allow even a small vendor to reach a wider mass and
sell their products on a national or international level.
Here, people get to shortlist items from an array of products based on
their preferred brand, quality, price or features and hence it’s much easier
to start shopping online rather than visiting any nearby physical stores.

Why There Is A Need & Emergence of E-commerce?

It gives a seller an opportunity to grab all online buyers to promote or
sell their products easily online.
Further, to add more this industry has come up with a great opportunity
for all small business owners to sell their products online.
It lets buyers choose from an unlimited number of attractively designed
product pages and almost never ending stocks, which drive the customers
to take action and buy from your links.
With the advent of E-commerce and online shopping sector, people are
getting more inclined towards your services and training that you are
going to promote.
Thus, E-commerce has emerged as a boon disguised for marketers and
business owners whose products got listed and then sold to target
customers. The customer buys the product at his/her personal
convenience. It is really a win-win situation for both the sellers and the
buyers.
Advantages to Organizations
Using e-commerce, organizations 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.

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E-commerce helps organizations 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 makes them
faster and efficient.
E-commerce reduces the paper work.
E-commerce increases the productivity of organizations. 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
It provides 24x7 support. Customers can enquire about a product or
service and place orders anytime, anywhere from any location.
E-commerce application provides users with more options and quicker
delivery of products.
E-commerce application provides users with more options to compare
and select the cheaper and better options.
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 purchase.
E-commerce provides options of virtual auctions.
It provides readily available information. A customer can see the relevant
detailed information within seconds, rather than waiting for days or
weeks.
E-Commerce increases the competition among organizations and as a
result, organizations provides substantial discounts to customers.
Advantages to Society
Customers need not travel to shop a product, thus less traffic on road and
low air pollution.

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E-commerce helps in reduce the cost of products, so less affluent people

can also afford the products.
E-commerce has enabled rural areas to access services and products,
which are otherwise not available to them.
E-commerce helps the government to deliver public services such as
healthcare, education, social services at a reduced cost and in an
improved manner.

1.8 LET US SUM UP

E-commerce is the buying and selling of goods and services over the
Internet.It is conducted over computers, tablets, smartphones, and other
smart devices.Almost anything can be purchased through e-commerce
today; for this reason, e-commerce is often highly competitive.It can be a
substitute for brick-and-mortar stores, though some businesses choose to
maintain both.
E-commerce operates in several market segments, including business-to-
business, business-to-consumer, consumer-to-consumer, and consumer-
to-business.E-business models are used by companies to create value
and become profitable online. These models have taken advantage of the
proliferation and technological advancement of the internet, rendering
offline models almost obsolete.
Most e-business models will incorporate four components: value
proposition, customer relationships, revenue streams, and activities,
capabilities, and resources.Various e-business model types have been
developed over the years. In terms of functionality, some examples
include the community model, advertising model, and brokerage model.

1.9 KEY WORDS

1. Electronic commerce: Electronic Commerce means buying and

selling of goods, products, or services over the internet. E-commerce is
also known as electronic commerce or internet commerce. These services
provided online over the internet network. Transaction of money, funds,
and data are also considered as E-commerce.
2. Virtual auction: A virtual auction is simply a charity auction that is
hosted online instead of in person.

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3. Customization: Customerization is a strategy by which an

organization's products or services are individualized through personal
engagement and dialogue with its customers. In
contrast, customization is a modification made to a product or service to
suit a specific purpose.
4. Media- coverage: Media coverage can be defined as the way in which
a particular piece of information is presented by media either as news,
entertainment or as infotainment. It can affect the extent of information
dissemination as well as influence the audience opinion while giving out
the information.
5. Mobility: Mobility is a term used to describe something's ability to
move or be moved. When assessing an individual's physical capabilities,
mobility refers to his or her ability to move in a given environment.

1.10 SOME USEFUL BOOKS

1. Agrawala k.n and deeksha agrawala: Business on the net: What’s how
of e-commerce; macmillan, new delhi.
2. Janal d.s.: Online marketing handbook, wiley, new york.
3. Agrawala k.n. anddeeksha agrawala: Business on the net: Bridge to
the online storefront: Macmillan, new delhi.
4. Cady, glcc harrab and mogregor pat: Mastering the internet, bpb publi
cation, new delhi.
5. Diwan prag and sunil sharma: Electronic commerce-a manager’s
guide to e-business, vanity books international delhi.
6. Kosice david: Understanding electronics commerce, microsoft press,
washington.
7. Minoli and minoli; web commerce technology handbook, tata mcgraw
hill, new delhi.

1.11ANSWER TO CHECK YOUR PROGRESS

1. Refer 1 for Answer to check your progress- 1 Q. 1 …

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Answer:The following points are noteworthy so far as the difference

between traditional commerce and e-commerce is concerned:
1. A part of business, that focuses on the exchange of products and
services, and includes all those activities which encourage exchange,
in some way or the other, is called traditional commerce. e-
Commerce means carrying out commercial transactions or exchange
of information, electronically on the internet.
2. In traditional commerce, the transactions are processed manually
whereas, in the case of e-commerce, there is automatic processing of
transactions.
3. In traditional commerce, the exchange of goods and services, for
money can take place, only during working hours. On the other
hand, in e-commerce, the buying and selling of goods can occur
anytime.
4. One of the major drawbacks of e-commerce is that the customers
cannot physically inspect the goods before purchase, however, if
customers do not like the goods after delivery they can return it
within the stipulated time. Conversely, in traditional commerce
physical inspection of goods is possible.
5. In traditional commerce, the interaction between buyers and sellers
is direct, i.e. face to face. As against this, there is indirect customer
interaction, in the case of e-commerce, because it may be possible
that the customer is miles away from where they place an order for
the purchase of goods.
6. The scope of business in traditional commerce is limited to a
particular area, i.e. the reach of business is limited to the nearby
places where it operates. On the contrary, the business has
worldwide reach in case of e-commerce, due to its ease of access.
7. As there is no fixed platform for information exchange in traditional
commerce, the business has to rely on the intermediaries for
information fully. Unlike e-Commerce, wherein there is a universal
platform for information exchange, i.e. electronic communication
channel, which lessen the dependency on persons for information.

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8. Traditional commerce is concerned with the supply side. In contrast,

the resource focus of e-commerce is the demand side.
9. In traditional commerce, the business relationship is vertical or
linear, while in the case of e-commerce there is directness in
command leading to a horizontal business relationship.
10. In traditional commerce, due to standardisation, there is mass/one
way marketing. However, customization exists in e-commerce
leading to one to one marketing.
11. Payment for transactions can be done by paying cash, cheque or via
credit card. On the other hand, payment in e-commerce transactions
can be done through online payment modes like credit card, fund
transfer, etc.
12. The delivery of goods is immediate in traditional commerce, but in
the case of e-commerce, the goods are delivered at the customer’s
place, after some time, usually within a week.

2. Refer 1 for Answer to check your progress- 1 Q. 2 …

Answer:E-Commerce has key features which are explained as follows:
Feature # 1. E-Commerce is Technology-Enabled:
Traditional commerce has taking place since times immemorial but E-
commerce is the result of the integration of digital technology with
business processes and commercial transactions. The technological
foundations of E-commerce are internet, WWW and various protocols.
Feature # 2. Technology Mediated:
In E-commerce buyers and sellers meet in cyber space rather than in
physical place. Hence E-commerce does not involve face to-face contact.
Feature # 3. Universality:
Buying and selling take place through websites in E-Commerce. The
websites can be accessed from anywhere around the globe at any time
therefore it possess the feature of universality.
Feature # 4. Intercommunication:
E-commerce technology ensures two-way communications between
buyer and seller. On the one hand, by using E-commerce firms can
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communicate with customers through E-commerce enabled websites. On

the other end, customers can also fill out order forms, feedback forms
and can communicate with business operating firms.
Feature # 5. Delivery of Information:
E-commerce serves as the best channel of communication. E-commerce
technologies ensure speedy delivery of information at very low cost and
considerably increase information density as well.
Feature # 6. Electronic Completion of Business Processes:
By using E- commerce we can perform business transactions like
accounting and inventory through computers at global level.
Feature # 7. Virtual Communities:
Virtual Communities are online communities created by means such as
chat rooms and specifically designed sites like, where people can interact
with each other having common interests using the internet.
Feature # 8. Inter-Disciplinary in Nature:
Implementation of E-Commerce needs a lot of knowledge of managerial,
technological, social and legal issues. Besides this, understanding of
consumer behaviour, marketing tools and financial aspects is as crucial
as designing interactive E- Commerce websites.
Feature # 9. Customization:
With the use of E-commerce technology, the world is moving from
mass-production to mass-customization. Product customization ensures
that goods are tailor made as per the requirements and preferences of
customers.

3. Refer 1 for Answer to check your progress- 1 Q. 3

Answer :Definition of Traditional Commerce
Traditional Commerce or Commerce is a part of business, which
encompasses all those activities that facilitate exchange. Two kinds of
activities are included in commerce, i.e. trade and auxiliaries to trade.
The term trade refers to the buying and selling of goods and services for
cash or kind and auxiliaries to trade, implies all those activities like
banking, insurance, transportation, advertisement, insurance, packaging,

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and so on, that helps in the successful completion of exchange between

parties.
In finer terms, commerce encompasses all those activities that simplify
the exchange of goods and services, from manufacturer to the final
consumer. When the goods are produced, it does not reach to the
customer directly rather it has to pass from various activities, which are
included under commerce. Its main function is to satisfy the wants of
consumers by making goods available to them, at the right time and
place.

4. Refer 2 for Answer to check your progress- 2 Q. 1 …

Answer :
Social marketing refers to unpaid marketing activities a business
conducts on social media networks such as Facebook, Twitter, YouTube,
Instagram, Pinterest, Snapchat, TikTok or LinkedIn. Social networks are
chosen that work most effectively for a business's product and its
customers. Social media usage outside the US varies tremendously and
reaching international audiences demands additional care.
As an example, at time of writing, Saks 5th Avenue on Facebook had 1.2
million "likes". When it posts content to this page, potentially this many
people are notified.

5. Refer 2 for Answer to check your progress- 2 Q. 2 …

Answer :Pay Per Click Marketing
Pay Per Click (PPC) is a marketing channel in which a business places
concise advertisements in high traffic web properties and payment is due
to that website owner each time a visitor both sees and clicks on that
advertisement. Google and other search engines provide opportunities for
businesses to "bid" for keywords and promote their content and products
within the search results. In the example below, the red box highlights
PPC adverts, the green box the organic results.

1.12TERMINAL QUESTIONS

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E-Commerce

1. Explain the history of E-commerce

2. State the objectives of electronic commerce
3. Determine the essential features of E-commerce
4. Elaborate examples of media coverage, along with its advantages
5. List down the most common examples of e-commerce applications

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