Unit - 1

Introduction of E-Commerce

1)-Definition of E- Commerce: -
E-commerce (electronic commerce) refers to commercial activities including the electronic buying or
selling products and services which are conducted on online platforms or over the Internet. E-commerce
draws on technologies such as mobile commerce, electronic funds transfer, supply chain
management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory
management systems, and automated data collection systems. E-commerce is the largest sector of
the electronics industry and is in turn driven by the technological advances of the semiconductor industry.

Advantages and Disadvantages: -

Store and product listing creation
A product listing is what the customer sees when they search for an item. This is one advantage in
ecommerce meant for the seller. This online business plus point is that you can personalise your
product listing after creating them
Cost reduction
One of the biggest advantages of ecommerce to business that keep sellers interested in online
selling is cost reduction. Many sellers have to pay lots to maintain their physical store. They may
need to pay extra up front costs like rent, repairs, store design, inventory etc. In many cases, even
after investing in services, stock, maintenance and workforce, sellers don’t receive desired profits
and ROI
Affordable advertising and marketing
Sellers don’t have to spend a lot of money to promote their items. The world of ecommerce has
several affordable, quick ways to market online. Ecommerce marketplaces are visual channels –
and sellers can really show off their product. For example, Amazon sellers can use Advertising
tools to add videos, infographics, good quality resolution images.
Flexibility for customers
An important advantage of ecommerce to business is that sellers can provide flexibility to
customers. One highlight is that the product and services are ready 24x7. The result is that seller
can offer his item any place, any time.
Product and price comparison
In ecommerce, sellers can compare the products using tools or on their own. This gives them a
good idea of product alternatives available, the standard rates, if a product need is unfulfilled.
No reach limitations
A seller with a physical store may only be able to reach a certain number of buyers. They can
deliver to the customers’ homes but there can be distance limitations. Several e-commerce
marketplaces have their own logistics and delivery system
Faster response to buyer/market demands
Every interaction is faster when you begin selling online. Ecommerce marketplaces offer you a
streamlined logistics or delivery system. What this means is that the buyers order gets delivered
efficiently. Product returns management is one more plus point that can be handled quickly – you
either refund the payments or give a replacement
Several payment modes
Buyers like personalisation – the same goes for paying for their orders. Ecommerce marketplaces
permit multiple payment modes that include UPI, cash on delivery, card on delivery, net banking,
EMIs on credit or debit card and pay-later credit facility.
Enables easy exports

E-commerce exports assist sellers to directly sell to international customers in

global marketplaces, allowing them to transcend beyond national boundaries and
expand abroad. With e-commerce, sellers don’t have to invest in a physical setup to
reach customers. Instead, they can use attractive product listing and acquire new
customers internationally with ease.

Disadvantages of E-commerce
Lack of Social Interaction
One disadvantage is that there is a lack of social interaction, as people cannot see or touch the
product before they buy it. This may lead to dissatisfaction with the purchase if the product is not
what was expected.
Security Risks
Another disadvantage is that there are security risks, as sensitive financial information can be
stolen by hackers. This can result in loss of money and identity theft. There may also be risks
involved with buying and selling products online, as there is no guarantee of product quality or
authenticity.
Difficulties with Returns
Another disadvantage is that it can be difficult to return products that have been bought online.
This is because businesses often require the product to be returned in its original packaging,
which may not be possible if the product has been used. There may also be shipping costs
involved in returning the product.
Lack of Trust
There may be a lack of trust among consumers when it comes to buying goods and services
online. This is because they may be afraid of being scammed or not receiving the product that
they ordered.
Limited customer experience
Online shopping can't replicate all the elements of shopping in a physical store
Technical difficulties
Setting up an online store can be difficult for people without technical experience
Competition
There’s a lot of competition in the world of e-commerce because it’s so easy for anybody to
create an online store. This is one of the biggest e-commerce disadvantages because it means you
have to work extra hard to make sure you’re promoting your store and driving traffic to your
website. Certain niches are also very crowded, so you may have a tough time selling your product
depending on your industry and products.
2)-Traditional Commerce :
Traditional commerce refers to the commercial transactions or exchange of information, buying
or selling product/services from person to person without use of internet which is a older method
of business style and comes under traditional business. Now a days people are not preferring this
as it is time taking and needs physical way of doing business.
Example includes physical market/bazaar.
3)-Basic Requirements of E-Commerce: -
User-friendly design on website and mobile
If your store is simple to use, you will have a better chance of generating a sale right away. The
homepage should be engaging and should entice users to click on items or categories they want to
buy. Categories should be clear and divided into subcategories to allow visitors to quickly explore
their desired products.
Product catalog
Once you’ve decided on a platform for your store, think of other ecommerce functional
requirements to organize your products. Create product categories and enable your website
admins to add, remove, and update products in the catalog. Note that you need a detailed page for

each product with its short and detailed description, images, characteristics, pricing, and
availability.
Checkout process
Make your checkout process as simple as possible to get the highest conversion rate. While
working with a purchase form, double-check its usability; nothing should prevent or distract users
from this process. Among the best recommendations for an ecommerce website is guest checkout,
which allows users to purchase without signing in
Secure payment gateways
Ensure your payment system is secure
Speed loading
Page speeds have a great impact on the user’s experience as lightning-speed load times can
leverage user satisfaction. Or else, it can cause many unexpected troubles, resulting in revenue
loss. Here are a few statistics to help you understand how important this impact is:
• 79% of customers “dissatisfied” with a site’s performance are less likely to buy from
them again
• 64% of smartphone users expect a website to load in four seconds or less
• 47% of online shoppers expect web pages to load in two seconds or less
Cyber security
As the frequency of cyber-attacks has significantly climbed up recently, the concern about cyber
security becomes more vital than ever. Especially with e-commerce, where consumers directly
make payments and provide personal information such as bank account ID, address, etc, the
importance of cyber security cannot be underestimated.
Stability
If your store closes unexpectedly while your clients are shopping, you will lose a lot of money
and possibly your reputation. For eCommerce, digital storefronts must be operational at all times,
unless they are under maintenance.
Clear brand information page
The homepage, category pages, and product pages are the most significant for an online e-
commerce platform because they highlight features of your products.
A complete checkout process
The checkout process is the set of actions a customer takes in an e-commerce store to purchase
the products in their shopping cart. This encompasses all of the steps a customer takes to get to
the checkout page. A flawless checkout sequence will deliver a seamless consumer experience.
4)-Architectural frameworks: -
The architectural framework of e-commerce refers to the structural design and components that
collectively enable the functionality of an e-commerce system. It involves various layers and
elements working together to provide a seamless and secure online shopping experience for both
businesses and customers. An overview of the key architectural components of e-commerce:
1. User Interface (UI) Layer:
 o Web or Mobile Interface: This is the front-end layer that customers interact
with. It includes the website or mobile app where users can browse products,
add items to the cart, and complete transactions.
o User Experience (UX) Design: Design elements such as layout, navigation,
and user-friendly interfaces are crucial to providing a positive shopping
experience.
2. Presentation Layer:
o Content Management System (CMS): A CMS manages the presentation of
content, product listings, and images on the e-commerce platform.
o Templates and Themes: Customizable templates and themes help in
designing the visual appearance of the online store.
3. Application Layer:

o Shopping Cart: The shopping cart module manages items added by

customers for purchase. It calculates totals, taxes, and shipping costs.
o Payment Processing: This component handles secure payment transactions,
connecting to various payment gateways for credit card processing, digital
wallets, and other payment methods.
o Order Management: It manages the lifecycle of orders, including order
placement, processing, tracking, and order history.
o Inventory Management: This module tracks product availability, restocking,
and inventory levels.
o Search and Navigation: Implementing efficient search functionality with
filters, sorting options, and product categorization.
o User Accounts: Managing customer accounts, profiles, preferences, and order
history.
o Personalization: Utilizing data analytics and algorithms to provide
personalized product recommendations and content to users.
4. Middleware Layer:
o Integration Services: Middleware connects various components and third-
party services, such as payment gateways, shipping carriers, and inventory
systems.
o APIs (Application Programming Interfaces): APIs facilitate communication
between different systems, allowing for the seamless exchange of data.
5. Data Layer:
o Database Management System (DBMS): The DBMS stores product
information, customer data, orders, and other relevant data.
o Data Warehousing: Storing and processing large volumes of data for
analytics and reporting.
o Caching Mechanisms: Implementing caching strategies to improve website
performance.
6. Security Layer:
o SSL/TLS Encryption: Secure Sockets Layer (SSL) or Transport Layer
Security (TLS) encryption is used to protect data in transit.
o Firewalls and Intrusion Detection Systems (IDS): These security measures
help safeguard the system against unauthorized access and cyber threats.
o Authentication and Authorization: Managing user access rights and
permissions to ensure data security.
o Secure Payment Processing: Ensuring the security of payment transactions
and customer payment data.
7. Infrastructure Layer:
o Server Infrastructure: Hosting services, load balancers, and server clusters
are used to handle website traffic.
o Content Delivery Network (CDN): CDNs improve page load times by
distributing content geographically.
o Scalability and Redundancy: Ensuring the system can handle increased
traffic and that redundant systems are in place for failover.
o Cloud Services: Many e-commerce businesses use cloud platforms for
scalability and flexibility.

5)-Impact of E-commerce on business: -

1. Global Reach
Businesses can now reach a global audience, breaking down geographical barriers. This has
opened up markets that were previously inaccessible.
2. Cost Reduction

E-commerce reduces the need for physical stores, which cuts down on overhead costs such as
rent, utilities, and staffing.
3. Convenience for Customers
Customers can shop anytime and from anywhere, offering unparalleled convenience. This has
led to increased sales and customer satisfaction.
4. Personalization
With data analytics, businesses can offer personalized shopping experiences. Tailored
recommendations and targeted marketing have become common practices.
5. Increased Competition
The ease of setting up an online store has led to increased competition. Businesses must
innovate and differentiate themselves to stand out.
6. Supply Chain Improvements
E-commerce has forced businesses to improve their supply chains to meet the demands of online
shoppers. Faster and more reliable shipping options have become a necessity.
7. Data-Driven Decisions
E-commerce platforms collect vast amounts of data. Businesses use this data to make informed
decisions about inventory, marketing, and customer preferences.
8. Customer Reviews and Feedback
Online reviews and feedback have become crucial. Positive reviews can drive sales, while
negative ones can harm a business's reputation.
9. Digital Marketing
The rise of e-commerce has led to a surge in digital marketing strategies. Social media, search
engine optimization (SEO), and pay-per-click (PPC) advertising are now essential for online
success.
10. Challenges in Security and Privacy
With the increase in online transactions, there are heightened concerns about security and
privacy. Businesses must invest in robust security measures to protect customer data.
6)-Technology and prospects of e commerce: -

Prospects of e commerce: -
1. Continued Growth
E-commerce is expected to continue its rapid growth, driven by increasing internet penetration,
smartphone usage, and consumer preference for online shopping. This growth will create new
opportunities for businesses of all sizes.
2. Innovation in Payment Systems
Advancements in payment technologies, such as digital wallets, cryptocurrencies, and biometric
authentication, will make online transactions more secure and convenient. This will enhance
customer trust and drive higher conversion rates.
3. Expansion of AI and Machine Learning
AI and machine learning will become even more integral to e-commerce, enhancing everything
from personalized shopping experiences to inventory management and customer service.
Businesses that leverage these technologies will gain a competitive edge.
4. Rise of Social Commerce
Social media platforms are increasingly integrating shopping features, allowing users to make
purchases directly through social media. This trend, known as social commerce, will blur the
lines between social interaction and online shopping.
5. Growth of Markets
As e-commerce continues to expand, there will be more opportunities for niche markets to
thrive. Businesses that cater to specific customer segments with specialized products and
services will find success in the digital marketplace.
6. Enhanced Customer Experiences

The focus on customer experience will intensify, with businesses investing in technologies such
as AR/VR, AI-powered chatbots, and personalized recommendations to create seamless and
engaging shopping experiences.
Technology of e commerce: -
Email marketing
Email marketing tools for eCommerce enable online businesses to design, automate and deliver
email campaigns directly to their consumers.
Email marketing for eCommerce involves sending customized messages, promotional content,
and transactional information to targeted audiences with the aim of increasing customer
engagement, driving sales, and building brand loyalty.
Image search engines
Customers can utilize Google Images to search for products by capturing images and using
reverse image search to find related photos, a feature that enhances the online shopping
experience.
Website Platforms
Think Shopify, WooCommerce, Magento. These platforms help create and manage online
stores.
Payment Gateways
Such as PayPal, Stripe, and Razor pay. These gateways securely process online payments.
Customer Relationship Management (CRM)
Tools like Salesforce and HubSpot help manage customer interactions and data.
Inventory Management Systems
They keep track of stock levels and manage inventory across multiple sales channels.
Analytics
Tools like Google Analytics provide insights into customer behaviour, helping businesses make
data-driven decisions.
Cybersecurity
Essential for protecting customer data and ensuring secure transactions. Think SSL certificates,
firewalls, and encryption.
7)-E-commerce Framework: -
An e-commerce framework, in the context of online retail and business, is a foundational
software structure that provides the necessary tools and infrastructure for creating and managing
an e-commerce website or online store. It serves as a pre-built platform that simplifies the
process of setting up and running an online business. An e-commerce framework typically
includes features and functionalities for product management, shopping cart functionality,
payment processing, order fulfilment, inventory management, and more.
E-commerce frameworks come in various forms, including open-source solutions, SaaS
(Software as a Service) platforms, and headless commerce systems. Each type of framework has
its own characteristics and advantages, and businesses can choose the one that best aligns with
their specific needs and goals. These frameworks provide the structure and tools needed to build
a visually appealing and fully functional online store, making it easier for businesses to enter the
world of e-commerce and start selling products or services online.
Key Features of an E-commerce Framework
Product Management
Effective tools for adding, organizing, and managing product listings, including support for
product attributes, categories, and stock levels. This feature is essential for maintaining an up-to-
date product catalogue.
Secure Checkout Process
A secure and user-friendly checkout process with support for various payment methods and
encryption protocols. Security is paramount to protect customer data and build trust.
Mobile Optimization
Mobile-friendly design and responsive layout to ensure seamless shopping experiences on
smartphones and tablets. With the growing use of mobile devices for online shopping, mobile
optimization is critical.

SEO Features
Built-in search engine optimization capabilities, including customizable URLs, meta tags, and
structured data markup, to improve the store’s visibility in search engine results. Effective SEO
is vital for attracting organic traffic.
Third-Party Integrations
Support for third-party plugins and integrations that extend the functionality of the online store.
These integrations can include social media, marketplace connections, and CRM systems,
enhancing the overall shopping experience and expanding the store’s capabilities.
8)-Economic potential of Electronic Commerce: -
E-commerce has transformed the way businesses operate and has unlocked significant economic
potential
Global Reach
E-commerce enables businesses to transcend geographical boundaries, reaching a global
audience. Small businesses can now compete with large corporations, accessing markets
previously unimaginable.
Cost Efficiency
Running an online store is often more cost-effective than maintaining a physical storefront. This
reduction in overhead costs can lead to better pricing for consumers and higher profit margins
for businesses.
Job Creation
The e-commerce industry creates numerous job opportunities, from web developers and digital
marketers to logistics and customer service professionals. It also supports gig economy jobs like
freelance content creation and delivery services.
Consumer Convenience
E-commerce offers unparalleled convenience to consumers, allowing them to shop 24/7 from
the comfort of their homes. This convenience has led to a surge in online shopping, especially
during the COVID-19 pandemic.
Innovation and Technology
E-commerce drives technological innovation. AI, machine learning, blockchain, and other
technologies are being leveraged to enhance the shopping experience, streamline operations, and
secure transactions.
Data-Driven Decisions
E-commerce platforms generate vast amounts of data, which businesses can analyse to
understand consumer behaviour, optimize inventory, and tailor marketing strategies. This data-
driven approach leads to more informed decision-making and better business outcomes.
Economic Growth
The rise of e-commerce contributes to overall economic growth by increasing trade, fostering
entrepreneurship, and driving investment in technology and infrastructure.
Digital Payment Systems
The growth of e-commerce has accelerated the adoption of digital payment systems, reducing
reliance on cash and promoting financial inclusion.
9)-Forces Behind E-Commerce: -
Technological Advancements
• Internet Accessibility: The widespread availability of high-speed internet has made
online shopping more accessible to a larger audience.
• Mobile Technology: Smartphones and tablets have enabled consumers to shop
anytime, anywhere.
• AI and Machine Learning: These technologies help in personalizing shopping
experiences, recommending products, and improving customer service.
Economic Factors
• Cost Savings: E-commerce often requires lower overhead costs compared to brick-
and-mortar stores, leading to better prices for consumers.

• Global Markets: Businesses can reach international markets without the need for
physical presence, increasing sales opportunities.
• Scalability: E-commerce platforms allow businesses to scale up or down quickly in
response to market demands.
Social and Cultural Changes
• Consumer Behaviour: The convenience of online shopping aligns with the fast-
paced lifestyle of modern consumers.
• Social Media Influence: Platforms like Instagram and Facebook have become
powerful tools for marketing and sales, influencing consumer purchases.
• Digital Trust: Increasing trust in online transactions and digital payment methods has
encouraged more people to shop online.
Environmental and Ethical Considerations
• Sustainability: Many consumers prefer eco-friendly products, and e-commerce
platforms are responding by offering sustainable options.
• Ethical Shopping: There's a growing trend towards supporting ethical and fair-trade
brands, which are often more accessible online.
Competitive Landscape
• Market Competition: The competitive nature of e-commerce drives continuous
innovation and improvements in services.
• Customer Expectations: High expectations for fast delivery, easy returns, and
excellent customer service push companies to constantly enhance their offerings.
Regulatory and Policy Changes
• Data Protection Laws: Regulations like GDPR ensure the protection of consumer
data, building trust in e-commerce platforms.
• Trade Policies: Favourable trade policies and reduced tariffs on digital goods can
promote cross-border e-commerce.
Technological Infrastructure
• Cloud Computing: The scalability and flexibility of cloud services support the
infrastructure needs of e-commerce businesses.
• Cybersecurity: Advanced security measures protect online transactions and customer
data, fostering confidence in e-commerce.
Marketing Innovations
• Digital Marketing: Techniques like search engine optimization (SEO), content
marketing, and influencer collaborations are vital for driving traffic to online stores.
• Email Marketing: Personalized email campaigns help retain customers and increase
repeat purchases
10)-E-commerce Organization Applications: -
1. Retail and wholesale
A retailer solely sells products to the final customer as their target market whereas the primary
objective of a wholesaler is to sell products to businesses or retailers who will then resell to
another party.
Online retailing allows customers to browse and purchase goods and services from the comfort
of their own homes using a computer or mobile device. Online stores eliminate the need for
physical storefronts and allows businesses to reach a wider audience, potentially even globally.
You can use various methods to attract and retain customers such as offering discounts, loyalty
programs, and personalised recommendations based on purchase history.
Online wholesaling or e-wholesaling is lucrative for businesses looking for bulk buying or
selling. E-retailing, on the other hand, allows SMEs to reach a larger audience than traditional
retail. With an online store, SMEs can sell their products to customers anywhere in the world.
Moreover, e-retailing helps SMEs save money on rent, utilities, and other expenses as there’re
no overhead costs to maintain a physical store.
2. Online booking

Most of us have booked hotels, vacations, plane tickets, travel insurance, etc. online. An internet
booking engine, or IBE is responsible for these bookings and reservations. Customers can self-
book and pay through website, apps or other channels, to access a business’ products and
services.
For example, BookMyShow, Asia's entertainment platform and ticketing service, enables
customers to book entertainment experiences varying from movies, concerts, travel, comedy
shows, theatre and more. This application improves customer experience as they’re able to make
bookings instantly.
3. Online marketing
Selling online enables you to collect customer data such as buyer’s location, purchasing habits
and average spending. You can use this valuable data to optimise online marketing such as
better targeting of ads, improve messaging and price setting. By gathering this information, you
can improve brand awareness and increase conversions, particularly when selling to overseas
customers.
You can refer to How to create a digital marketing strategy and The 101 Guide to Pricing
Strategy for Businesses for marketing activities such as price setting.
4. Manufacturing
Applications for e-commerce in the manufacturing industry have evolved. SMEs can leverage e-
commerce to effectively handle their supply chains. This includes tasks like sourcing raw
materials, delivering finished products to customers, and facilitating the electronic exchange of
goods. Additionally, e-commerce enables the exchange of market information and provides
back-office support for functions like inventory control.
Furthermore, SMEs can use inventory management tools to track inventory levels, automate
reordering, and manage logistics for their ecommerce business. Such e-commerce tools can help
improve the way to operate online business. They can also use e-commerce platforms to sell
their products and services to other businesses which’ll enable them to expand their customer
base and tap into new markets.
5. E-banking
Internet banking, sometimes referred to as online banking, e-banking, or virtual banking, is a
type of electronic payment system that allows customers of banks and other financial institutions
to carry out a variety of financial transactions via the financial institution's website or app. It
allows bank customers to do transactions online without having to wait in lengthy lines at banks.
Online banking offers a range of convenient services, including balance checks, bill payments,
money transfers, and much more.
With e-banking as an e-commerce application, the web has become a space for SMEs to offer
their customers online shopping and commerce facilities, streamlining the time-consuming and
complex banking operations. It has become extremely convenient for businesses, who were
earlier making frequent visits to banks to deposit cheques, make transactions, and withdraw
money, to complete banking processes thanks to e-commerce. Not just flexibility and hassle-free
payment, e-banking also offer SMEs financial information and resources, such as details of
loans, credit and other account management tips, that were previously unavailable to them.
6. Mobile applications
Mobile or web application development has become a prerequisite for businesses looking to
expand their business into different markets.
Since mobile device sales are dominating the e-commerce sector, there's a fair possibility that a
sizable portion of your customers use their smartphones and tablets for browsing and making
purchases. In fact, mobile devices account for 79 per cent of all global e-commerce sales (as of
2021).
Therefore, the first step in earning e-commerce sales from mobile visitors is having a user-
friendly mobile site. E-commerce mobile apps such as Amazon and Flipkart have significant
benefits over their respective websites that are surfed using search engine such as mobility,
efficiency, offline access and more: app pages load quicker and draw in more users. If a website
takes long to load, chances are the users might visit a competitor. An app also allows users to

save their preferences and items in their shopping carts. By using mobile commerce applications
businesses can retain customers and their data.
7. Online publishing
We’ve seen traditional publishers, such as Forbes, move into online publishing, following the
launch of its Forbes Store; Future Publishing, which generated close to $1 billion in e-commerce
sales in 2020.
All digital newspapers, magazines, newsletters, blogs, e-books, and articles that are capable of
generating income online, are a part of the online publishing industry.
The application refers to digital publication of books, magazines, catalogues, and digital
libraries. This application is growing in popularity since it has multiple advantages, including
portability, accessibility and being lightweight.