E-Commerce

Module 2

1.
LAUNCHING AN E-BUSINESS:

1. Identify a Product or Service to Sell:

This is the most important step in starting an online business. You need to choose a
product or service that is in high demand, offers good profits, and is something you can
manage. Looking at past and current trends can help you find the right product or
service. Picking the right trend at the right time can help your business succeed.

2. Background Check:
Ideas only work if you can put them into action. You need to check if your business idea
is practical and sustainable. Consider factors like where to source your product (locally
or internationally), production costs, quality, packaging, and supply chain management.
Balancing demand and production capacity is crucial for success.

3. Business Model:
A business model outlines how your business will operate. It should include ways to
make money, who your customers are, what products you offer, and how you will finance
your business. It describes how you create value for both the company and the
customer. Your business model should cover startup costs, sources of funding,
marketing strategies, competition analysis, and expected revenues and expenses.

4. Branding Decisions:
Choose a brand name that is simple and memorable. Make sure the domain name
(website address) and social media handles are available. Your brand name should
connect with your business and resonate with customers. Also, ensure it doesn’t violate
any existing trademarks.

5. Developing and Launching the Website:

Creating a website is essential for your online presence. Your website needs to be
dynamic and reliable. Poorly designed websites can lead to high bounce rates and low
user engagement. Make sure your site is user-friendly on both mobile and desktop
devices, generates leads effectively, and has attractive, useful content. Testing your
website before launching it is crucial.
2.
DATA WAREHOUSE:

Barry Devlin and Paul Murphy introduced the concept of Data Warehousing while working at
IBM in 1988. They developed this idea to manage the growing complexity of handling large
amounts of data.

A data warehouse is a large collection of corporate data used to help organizations make
decisions. It serves as a reporting and analysis system that gathers data from various sources
within a company. Reports generated from the data warehouse help in making business
decisions by running complex queries on the data.

Data in a data warehouse comes from many sources, such as:

● Internal applications like marketing, sales, and finance

● Customer-facing applications
● External partner systems

Data warehouses use Online Analytical Processing (OLAP) to store large amounts of data and
to process it quickly. By comparing data from different sources, data warehouses provide
deeper insights into a company’s performance.

For a data warehouse to be effective, the data must be stored securely and be easily retrievable
and manageable. It also ensures:

● Higher data quality

● Data integrity, which leads to better decision-making

A data warehouse helps decision-makers get accurate results and avoid mistakes. However,
scaling data warehouses can be expensive, and they can struggle with handling raw,
unstructured, or complex data.
3.
SUPPLY CHAIN MANAGEMENT (SCM):

A supply chain is a network of organizations that help transfer information, products, and money
between suppliers and final customers. It includes both internal and external processes and
aims to remove barriers in moving people, materials, machines, and goods.

A Supply Chain Management (SCM) system is an IT application designed to optimize the entire
supply chain. SCM focuses on integrating activities within and between organizations.
Information technology (IT) is essential in SCM as it enables supply chain integration (SCI).

Benefits of SCM Systems:

● Smooth Delivery:

Ensures products reach customers on time.

● Inventory Management:

Helps manage stock levels effectively.

● Cost Management:

Reduces costs in purchasing, production, and distribution.

● Efficient Use of Processing Time:

Maximizes productivity during production.

● Avoiding the Bullwhip Effect:

Prevents small changes in demand from causing larger fluctuations in supply.

4.
ENTERPRISE RESOURCE PLANNING (ERP):

ERP (Enterprise Resource Planning) systems are tools that help businesses manage their
information using one main database. This means that everyone in the company can access the
same accurate and up-to-date information.

Key Features:

● Automation:

ERP systems help automate tasks, making it easier and faster for departments to work.
For example, when someone places an order, it automatically updates the finance
department without needing to enter the information manually.

● Dashboards:

Many ERP systems include dashboards that show important business metrics, helping
employees understand how the company is performing.

Benefits of ERP:

● Better Information:

Helps the company make better decisions with accurate data.

● Lower Costs:

Saves money by making processes more efficient.

● Team Collaboration:

Improves teamwork between different departments.

● More Productivity:

Helps employees work faster and accomplish more.

● Reliable System:

Provides a stable and secure way to manage data.

● User-Friendly:

Easy for employees to learn and use.

● Less Risk:

Reduces mistakes and keeps data safe.

5.
BRICK AND MORTAR MODEL OF BUSINESS:

The term "brick and mortar" was first used by Charles Dickens in his novel Little Dorrit.

It refers to businesses that operate in a physical location, like stores or offices, where
customers can interact face-to-face with employees. This traditional business model allows
customers to see, touch, and try products before buying, providing immediate satisfaction.

Examples: Common examples of brick-and-mortar businesses include banks, grocery stores,

restaurants, and schools.

For instance, popular brands like SBI, Big Bazaar, and cinema chains like PVR operate in this
model. However, the rise of online businesses, like Netflix, has made it challenging for
traditional stores, as more people prefer instant access to services online.

Benefits of Brick-and-Mortar Businesses:

1. Touch and Feel Experience:

Customers can try products before buying, which helps them feel confident in their
purchase.

2. Customer Information:

The direct interaction allows businesses to learn about customer preferences, helping
them make better decisions.

3. Customer Service:

Good customer service in-person can lead to higher sales. Many customers are willing to
pay more for a better shopping experience.

4. Local Understanding:

Brick-and-mortar businesses often know the local market well, allowing them to sell the
right products to the right customers.

5. Trust:

Customers usually trust local businesses more than online ones, as they feel safer with
their information and purchases.
 6. Suitability:

This model works for many types of businesses, especially where face-to-face
interaction is important, like food retailing.

7. Low Barriers to Entry and Exit:

Starting a brick-and-mortar business is generally easier because there are fewer

regulations compared to online businesses.

Challenges of Brick-and-Mortar Businesses:

1. Limited Reach:

These businesses can only serve local markets and may struggle to expand.

2. High Investments:

Setting up a physical store requires a lot of money for real estate and ongoing costs, like
inventory.

3. Changing Consumer Trends:

More customers prefer the convenience of online shopping, which can make traditional
shopping seem less appealing.

4. Unorganized Sector:

Many brick-and-mortar businesses in places like India lack regulation, which can hurt
their reputation and sales.

5. Pricing:

Brick-and-mortar stores often can’t match the discounts offered by online stores due to
their higher costs.
6.
BRICK AND CLICK FIRMS:

Brick and click firms are businesses that operate both online and offline.

They take advantage of the benefits of both models—brick-and-mortar (physical stores) and
click-and-mortar (online stores).

This approach is known as omni-channel retailing, which allows for a seamless shopping
experience across various platforms.

Reasons for Adoption: The rise of e-commerce has prompted many traditional businesses to
establish an online presence. Conversely, online companies recognize the importance of
physical locations for customer interaction and product experience.

Benefits of Brick and Click Firms:

1. Increasing Sales:

Customers can shop from anywhere, which increases convenience and purchasing
opportunities. Retailers can show stock availability across multiple channels, enhancing
customer access to products.

2. Better Margins:

An effective online sales strategy can minimize the need for heavy discounting that is often seen
in traditional retail. This allows retailers to sell products at full price nationwide instead of relying
solely on local store sales.

3. Improvement in Consumer Perception and Satisfaction:

The new generation of shoppers, especially millennials, is constantly online. Retailers must
create strategies that allow for easy transitions between online and offline shopping.

4. Better Data Collection:

Omni-channel retailing facilitates the collection of valuable customer data, enabling businesses
to make informed decisions and adapt to changes in consumer behavior.

5. Enhanced Productivity:

Operating in both online and offline spaces improves efficiency and allows businesses to scale
their operations effectively.
7.
E-AUCTION:

An e-auction is an online service that allows participants to sell or bid on goods and services
over the Internet.

These virtual auctions enable transactions between buyers and sellers across various locations,
similar to traditional auctions where multiple bidders compete.

Factors Contributing to Popularity:

● No Fixed Time Limit: Auctions can run for extended periods.

● No Geographical Restrictions: Participants can join from anywhere in the world.
● Extensive Social Interaction: E-auctions facilitate connections among participants.
● High Volume of Sellers and Bidders: This fosters a competitive online marketplace.

Types of Online Auctions:

1. Business to Business (B2B)

2. Business to Consumer (B2C)
3. Consumer to Consumer (C2C)
eBay is a prominent example of a site that incorporates all three types.

TYPES OF AUCTIONS:

1. English Auction:
○ The bidding starts low and increases with each bid.
○ Allows for a reserve price to prevent sales below a set amount.

2. Dutch Auction:
○ The auctioneer starts at a high price and lowers it until a bid is made.
○ Winning bidders can purchase multiple items and pay only the lowest successful
bid amount.

3. Sealed (Confidential) Bid Auctions:

○ Bidders submit their bids without knowing others' bids.
○ The highest bid wins without a competitive bidding process.
ADVANTAGES OF E-AUCTION:

1. Broader Reach:

Eliminates geographical barriers, increasing competition and potentially higher prices.

2. Increased Efficiency:

Faster than traditional auctions, with the entire process conducted online in real time. Reduces
travel and logistical costs for both buyers and sellers.

3. Transparency:

Provides a clear record of the bidding process, enhancing trust and credibility.

4. Enhanced Competition:

Multiple participants create a competitive environment, often leading to better prices for sellers
and deals for buyers. Automatic bidding options keep participants competitive without constant
attention.

5. Time Flexibility:

Allows bidding at participants’ convenience, accommodating different time zones and

schedules.

6. Streamlined Process:

User-friendly platforms simplify browsing, bidding, and transaction management.

7. Access to Detailed Information:

Comprehensive item details and images help bidders make informed decisions, increasing trust
and reducing misunderstandings.

8. Real-time Analytics:

Sellers can monitor bidding activity and market trends, allowing them to optimize pricing
strategies and make informed business decisions.
8.
E-Procurement and Its Process

E-Procurement refers to the use of the Internet and other digital platforms to manage the
procurement of goods and services.

This approach helps organizations streamline their purchasing processes, enhance

transparency, and reduce wasteful spending compared to traditional procurement methods.

Components and Process of E-Procurement

E-Procurement consists of several key components, each playing a crucial role in the
procurement process:

1. Indent Administration:

Initiates the procurement process by creating and managing indents and requisitions. Ensures
approval workflows are followed online.

2. RFP Development:

Involves the creation of Requests For Proposal (RFP), Requests For Information (RFI),
Requests For Bids (RFB), and Requests For Quotes (RFQ). Sets standards for commercial
qualifications, inviting multiple bidders.

3. Bid Submission:

Bidders register on the e-Procurement portal to submit their proposals, including necessary
technical and commercial details.

4. Opening and Evaluation of Offers:

Submitted bids are evaluated for validity, ensuring compliance with specified requirements.

5. E-Auction:

Conducts online auctions based on procurement needs, where items for acquisition are put up
for bidding.

6. Selection and Finalization of Vendors:

After the auction, suppliers are selected based on criteria defined during the procurement
process, and purchase orders are issued.
 7. Vendor and Contract Management:

Maintains a database of vendor contact information and compiles commercial details of all
bidders for future reference.

Benefits of E-Procurement

1. Time and Cost Savings:

Streamlines procurement processes, leading to reduced operational costs and time efficiency.

2. Transparency:

Offers visibility into procurement activities, fostering trust among stakeholders.

3. Increased Market Reach:

Expands the pool of potential suppliers, enhancing competition.

4. Prevention of Cartel Formation:

Reduces the likelihood of collusion among suppliers, promoting fair competition.

5. Data Safety and Security:

Protects sensitive procurement information through secure online systems.

6. Simplified Procurement Process:

Automates various procurement steps, making the overall process more efficient.
9.
Electronic Data Interchange (EDI)

Electronic Data Interchange (EDI) refers to the electronic exchange of business documents
between a buyer and seller in a standardized format.

This includes documents such as quotations, purchase orders, invoices, payment notices, and
shipping notices. EDI streamlines operations by eliminating paper trails, reducing human errors,
and enhancing efficiency.

Benefits of EDI

1. Time Savings:

EDI facilitates real-time processing, eliminating delays associated with manual document
handling and transport.

2. Labor Cost Reduction:

Reduces the need for manual data entry and document processing, leading to significant
savings in administrative labor costs.

3. Minimal Paper Usage:

EDI promotes paperless operations, decreasing storage costs and contributing to environmental
sustainability.

4. Higher Efficiency and Productivity:

Automating processes allows employees to focus on higher-value tasks, improving overall

productivity and reducing errors.

5. Enhanced Data Quality:

Streamlined data entry minimizes errors and improves forecasting accuracy, benefiting resource
planning and operational efficiency.

6. Transaction Integrity:

EDI ensures traceability of transactions and protects against data manipulation through
encryption and secure data transmission.
Drawbacks of EDI

1. Cost of Implementation:

The initial costs of integrating EDI systems into existing infrastructure can be high, deterring
some businesses.

2. Electronic System Safety:

Substantial investment in cybersecurity measures is necessary to protect sensitive data from

threats.

3. Time-Consuming Setup:

Implementing an EDI system is not only expensive but also time-consuming, requiring careful
planning and resources.

4. Integration Challenges:

Different organizations may use various standards, complicating seamless data exchange,
especially for smaller businesses.

5. Need for Backup Systems:

Routine maintenance and a reliable backup system are essential to ensure continuous
operation and data security.

Applications of EDI

1. International Marketing:

Facilitates efficient global trade by simplifying transaction processes between countries.

2. Financial Transactions:

Automates payment processing, reducing delays associated with traditional check handling.

3. Healthcare and Insurance:

Enhances data accuracy and administrative efficiency, resulting in significant cost savings.

4. Manufacturing:

Supports Just-In-Time (JIT) inventory practices by enabling real-time order processing based on
production schedules.
 5. Retail Procurement:

Automates supply chain management through Quick Response (QR) systems, enhancing
customer service and inventory management.

Flowchart Comparison

Order Processing Without EDI:

1. Buyer generates a purchase order.

2. Buyer sends the order to the supplier.
3. Supplier receives the order.
4. Supplier enters the invoice into their system.
5. Invoice is created.
6. Invoice is sent to the buyer.
7. Buyer enters the invoice into their system.

Order Processing With EDI:

1. Buyer generates a purchase order.

2. Purchase order is sent directly to the supplier's internal system/ERP.
3. Supplier receives the order electronically.
4. Invoice is generated automatically within the supplier's internal system/ERP.
5. Invoice is sent to the buyer's internal system/ERP.