BCM 305

E-COMMERCE
BY
MAUMITA CHOUDHURY
ASSISTANT PROFESSOR
USTM
 WHAT IS E-COMMERCE/
ELECTRONIC COMMERCE?

• E-Commerce or 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.
• Transaction of money, funds, and data are also considered as E-commerce.
• Electronic commerce is a modern business methodology that addresses
the needs of organizations, merchants and consumers to cut costs while
improving the quality of goods and services and increasing the speed of
service delivery.
ELECTRONIC COMMERCE VERSUS
TRADITIONAL COMMERCE
Traditional Commerce E-Commerce

Information sharing is made easy via electronic

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

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

Communications of business depends upon In E-Commerce or Electronic Market, there is no

individual skills. human intervention.
 E-Commerce and E-Business
• In e-commerce, information and communications technology (ICT) is
used in inter-business or inter-organizational transactions (transactions
between and among firms/organizations) and in business-to-consumer
transactions (transactions between firms/organizations and individuals).

• In e-business, on the other hand, ICT is used to enhance the business. It

includes any process that a business organization conducts over a
computer-mediated network (either for profit, governmental or non-
profit entity).
 NEED/ REASON BEHIND USING E-COMMERCE
• Improved productivity
• Cost savings
• Streamlined business processes
• Better customer service
• Freedom of choice
• Opportunities for new business
 Advantages of E-Commerce
• Benefits to Organization
– Global Reach
– Reduction in Paper Costs
– Reduction in Inventories
– Customization of Products or Services
– Reduced Production Cycle Time
– Improved Customer Service
– Lower Sales and Marketing Costs
– Lower Telecommunication Costs
– Faster Access to Information
 Advantages OF E-Commerce
• Benefits to Consumers
– Increased Choice of Vendors and Products
– Convenience of Shopping at Home
– More Competitive Prices and Increased Price
Comparison Capabilities
– Greater Customization in the Delivery of Services
– Access to Greater Amounts of Information on Demand
 APPLICATIONS OF E-COMMERCE
• E-commerce application in Manufacturing
– Enhancing efficiency
– Reducing cost/cycle time
– Providing accuracy and flexibility
– Supporting inventory levels
• E-commerce Application in Wholesale
– Low operational costs
– Access to information
– Quick response
• E-Commerce Application in Retail
• E-commerce application in service sector
PROCESS OF CUSTOMER ELECTRONIC
SHOPPING
 FORCES BEHIND E COMMERCE/ FACTORS FUELING E
COMMERCE

• Economic Factors: Economic efficiency is one of the most apparent benefits of e-

commerce. It can be achieved by decreasing communications costs, faster and more
economic electronic transactions with suppliers, lower global information sharing and
advertising costs, and cheaper customer service alternatives.

• Market and Customer Interaction Factors: Organizations are encouraged to use e-

commerce in product promotion and marketing to capture international markets.

• Technology Factors: The key factor in the growth of e-commerce is the development of
ICT. Technology has played a very important role in digitizing content, compression and
promotion of open systems for the convergence of communication services into one
single platform.
 LIMITATIONS OF E COMMERCE
• Security
• Lack Of Personal Touch
• Lack of privacy
• Complexity In Taxation, Regulations, and Compliance
• Technical limitations
• Huge technological cost
 ECOMMERCE BUSINESS MODELS
• Business - to - Business (B2B)
 Business-to-Business (B2B)
• A type of commercial transaction that exists
between businesses, such as those involving a
manufacturer and wholesaler, or a wholesaler
and a retailer is known as Business-to-Business
(B2B). It refers to business that is conducted
between companies, rather than between a
company and individual consumers.
 SUPPLY CHAIN MANAGEMENT
• It is a management of getting raw material from
manufacturer and sending finished products to the
consumer .Through ecommerce, number of middleman get
reduced. Ordering cost also reduced because whenever
order is placed by the company, it get immediate response.
Due to this company does not need to maintain large
inventory which reduce the carrying cost. EDI is used for
purchase order, shipping bill and other invoices.
SUPPLY CHAIN MANAGEMENT
 Just-in-Time (JIT) Manufacturing
• The JIT management system is based on two principles:
elimination of waste and empowering workers. The first principle
is elimination of all waste (time, materials, labour & equipment)
in the production cycle. The following management practices are
focused factory, reduced set-up times, group technology, total
productive maintenance, multifunction employees, uniform
workloads, IT purchasing, total quality control & quality circles.
JIT purchasing focuses on the reduction of inventories throughout
the logistical systems of the manufacturing firms involved and
provides a careful audit of the production process.
 QUICK RESPONSE RETAILING (QR)
• It is a version of JIT purchasing tailored for retailing. To reduce the risk of being
of out of stock, retailers are implementing QR systems. It provides for a flexible
response to product ordering and lowers costly inventory levels. QR retailing
focuses on market responsiveness while maintaining low levels of stocks. It
creates a closed loop consisting of retailer, vendor, and consumer chain, and as
consumers make purchases the vendor orders new deliveries from the retailer
through its computer network. The bar-coded articles are logged by the cash
registers at the point of sale, the inventory system of the store then determines
the needed supply, and the system transmits as order message to the retailer.
The availability of accurate information with respect to the current sales enables
sophisticated marketing capable of responding to consumers preferences.
Advantages of B2B
• Instant purchases: Online business allows for instant purchases.
Now, companies can get in contact with the company they are
seeking to transact with, make a first time transaction, and then
set up a system for future transactions. This allows for frequent
purchases. Under frequent purchases, prices usually drop.
Therefore, there is saving in time and money.
• Increased revenue: 24/7 online ordering will increase
companies’ revenue. Many different time zones exist in the
world and potential clients might not have the same business
hours as you. By allowing for companies to make transactions
all the time, the time zone becomes irrelevant.
Disadvantages of a B2B
• Limited Market Businesses: selling to other businesses face a much
smaller buying group than businesses selling to consumers. The total
number of prospective buyers may be in thousands, rather than the
potential millions of customers for consumer products. These limited
numbers make every lead and every existing customer more valuable
and the loss of a single, large customer can devastate the bottom line.
• Long Purchase Decision Time: The B2B sales cycle involves a
complicated set of factors, involving multiple stakeholders and
decision-makers, with total decision times that can stretch out for
months. B2B sellers cannot depend on a fast turnaround with new
clients for an influx of working capital and must maintain the financial
solvency to operate with long gaps between sales.
• Business - to - Consumer
 Business - to - Consumer (B2C)

• As the name suggests, it is the model involving business and

consumers over the internet. B2C means selling directly to the end
consumer or selling to an individual rather than a company. Website
following B2C business model sells its product directly to a customer. A
customer can view products shown on the website of business
organization. The customer can choose a product and order the same.
Website will send a notification to the business organization and
organization will dispatch the product/goods to the customer. B2C is
also known as internet retailing or E-tailing. Eg. Flipkart, Myntra
Advantages of B2C
From the consumer side, benefits include:
• Access to goods and services from home or other remote
locations.
• The possibility of lower cost of goods and services.
• Access to a greater variety of goods and services on offer.
• Consumers can shop at any time of day, from the privacy of their
own home.
From the business side, benefits include:
• Lower transaction costs associated with sales.
• Access to global markets and hence to more potential customers.
Disadvantages of B2C

Disadvantage of E-Commerce for B2C Businesses

• The competition is so fast for the web. There can literally be thousands of places a customer
can go and purchase the same product.
• Technology problem can cause problems to operate the site properly, resulting in losing
customers and sales.
• Catalogue Inflexibility: The catalogue needs to regenerate every time when there is some
new information or items to add in.

Disadvantages for the consumer

• Security issue: probably the number one reason why people don’t purchase online. Credit
card information is very sensitive and must be handled by someone the customer can trust.
Scams, frauds and rip-off are not uncommon on the web.
• Customer services: consumer are not always satisfied with their purchases and when buying
online.
• Consumer - to – Consumer
 Customer to Customer (C2C)
• Customer to Customer (C2C), sometimes known as Consumer to
Consumer, E-Commerce involves electronically-facilitated transactions
between individuals, often through a third party. One common
example is online auctions, such as Ebay, where an individual can list
an item for sale and other individuals can bid to purchase it. Auction
sites normally charge commission to the sellers using them. They act
purely as intermediaries who match buyers with sellers and they have
little control over the quality of the products being offered, although
they do try to prevent the sale of illegal goods, such as pirate CDs or
DVDs. Eg. OLX, Ebay
Advantages of C2C E-Commerce
• Consumers selling products to other consumers benefit from the higher
profitability that result from selling directly to one another
• There is a low transaction cost; sellers can post their goods over the
internet at a cheaper rate far better than higher price of renting a space
in a store
• Customer can directly contact sellers and do without an intermediary.
Disadvantages of C2C E-Commerce
• Payment made has no guarantee
• There could be theft as scammers might try to create their website with
names of some famous C2C websites such as eBay to attract customers.
• There is lack of controlling quality of the products.
• Consumer - to - Business
 Customer to Business (C2B)
• Customer to Business (C2B), sometimes known as Consumer to Business,
is the most recent E-Commerce business model. In this model, individual
customers offer to sell products and services to companies who are
prepared to purchase them. This business model is the opposite of the
traditional B2C model. The customers actively contact the enterprises via
the Internet and raise questions, suggestions and ideas that can be used,
for example for product or service innovation. The enterprises can
facilitate the C2B model by setting, for example discussions forums on
their websites or their pages on social networks. In these cases, the Word
Of Mouth Marketing applies. Eg. Examples of C2B applications include
customer reviews, participation in focus groups, or sharing as an
influencer .
Business - to – Government
• Business-to-government (B2G) e-commerce is concerned with
the need for business to sell goods or services to governments
or government agencies. Such activities include supplying the
army, police force, hospitals and schools with products and
services. Furthermore, businesses will often compete in an
online environment for contracts to provide services to the
public on behalf of the government. Such services may include
the collection of taxes, and the supply of public services. Eg.
Small businesses offer consulting and software development
services to government agencies.
 Government - to – Business
• Also known as e-government, the exchange of information, services and products between government agencies
and business organizations. Government sites now enable the exchange between government and business of:
• Information, guidance and advice for business on international trading, sources of funding and support (ukishelp),
facilities (e.g. www.dti. org.uk).
• A database of laws, regulations and government policy for industry sectors.
• On-line application and submission of official forms (such as value added tax).
• On-line payment facilities.

Eg. electronic procurement marketplaces, electronic auctions.

Udyog adhaar, DIC

Treasury Bills
Cash Management Bills
Gold sovereignity bonds
• Government-to-Consumer (G-to-C):
It is also known as e-government. Government sites offering
information, forms and facilities to conduct transactions for individuals,
including paying bills and submitting official forms on-line such as tax
returns.
• Government-to-Government (G-to-G):
It is also known as e-government. Government-to-government
transactions within countries linking local governments together and
also international governments to link up different national systems. Eg.
European Union, which is in the early stages of developing coordinated
strategies
BREXIT Free Trade Agreements
 EVOLUTION OF INTERNET
• The concept of Internet was originated in 1969 and has undergone several technological & Infrastructural changes
as discussed below:

• The origin of Internet devised from the concept of Advanced Research Project Agency Network (ARPANET).

• ARPANET was developed by United States Department of Defense.

• Basic purpose of ARPANET was to provide communication among the various bodies of government.

• Initially, there were only four nodes, formally called Hosts.

• In 1972, the ARPANET spread over the globe with 23 nodes located at different countries and thus became known
as Internet.

• By the time, with invention of new technologies such as TCP/IP protocols, DNS, WWW, browsers, scripting
languages etc., Internet provided a medium to publish and access information over the web.
 INTERNET
• Internet is defined as an Information super Highway, to access information over the web. However, It can be defined
in many ways as follows:

• Internet is a world-wide global system of interconnected computer networks.

• Internet uses the standard Internet Protocol (TCP/IP).

• Every computer in internet is identified by a unique IP address.

• IP Address is a unique set of numbers (such as 110.22.33.114) which identifies a computer location.

• A special computer DNS (Domain Name System) is used to give name to the IP Address so that user can locate a
computer by a name.

• For example, a DNS server will resolve a name http://www.tutorialspoint.com to a particular IP address to uniquely
identify the computer on which this website is hosted.

• Internet is accessible to every user all over the world.

• Portal
Portal is a term, which may also mean gateway, for a World Wide Web site that
is a major starting site for users when they get connected to the Web. It
includes hyperlinks to news, weather reports, stock market quotes,
entertainment, chat rooms, and so on. A web portal is one specially designed
Web page that brings information together from diverse sources in a uniform
way.
There are general portals and specialized or niche portals. Examples of general
portals: Google, Yahoo, Excite, Netscape, Lycos, CNET, Microsoft Network etc..
Examples of niche portals: Garden.com (for gardeners), Fool.com (for
investors), and SearchNetworking.com (for network administrators).
• WORLD WIDE WEB

World Wide Web (WWW), byname the Web, the leading information retrieval service
of the Internet (the worldwide computer network). The Web gives users access to a
vast array of documents that are connected to each other by means of hypertext or
hypermedia links—i.e., hyperlinks, electronic connections that link related pieces of
information in order to allow a user easy access to them. Hypertext allows the user to
select a word or phrase from text and thereby access other documents that contain
additional information pertaining to that word or phrase. Hypermedia documents
feature links to images, sounds, animations, and movies. The Web operates within
the Internet’s basic client-server format; servers are computer programs that store
and transmit documents to other computers on the network when asked to, while
clients are programs that request documents from a server as the user asks for them.
Browser software allows users to view the retrieved documents.
 HTTP
• The development of the World Wide Web was begun in 1989
by Tim Berners-Lee and his colleagues at CERN, an
international scientific organization based in Geneva,
Switzerland. They created a protocol, HyperText Transfer
Protocol (HTTP), which standardized communication between
servers and clients. Their text-based Web browser was made
available for general release in January 1992.
• A hypertext document with its corresponding text and hyperlinks is written in HyperText Markup
Language (HTML) and is assigned an online address called a Uniform Resource Locator (URL). URL is
an acronym for Uniform Resource Locator and is a reference (an address) to a resource on the
Internet.

• A URL has two main components:

• Protocol identifier: For the URL http://example.com, the protocol identifier is http.
• Resource name: For the URL http://example.com, the resource name is example.com.
• The protocol identifier indicates the name of the protocol to be used to fetch the resource. The
example uses the Hypertext Transfer Protocol (HTTP), which is typically used to serve up hypertext
documents. HTTP is just one of many different protocols used to access different types of resources
on the net. Other protocols include File Transfer Protocol (FTP), Gopher, File, and News.

• The resource name is the complete address to the resource. The format of the resource name
depends entirely on the protocol used, but for many protocols, including HTTP, the resource name
contains one or more of the following components:
• Host Name: The name of the machine on which the resource lives.
• Filename: The pathname to the file on the machine.
• Port Number: The port number to which to connect (typically optional).
• Reference: A reference to a named anchor within a resource that usually identifies a specific
There are two forms of URL as listed below:
• Absolute URL
Absolute URL is a complete address of a resource on the web. This completed address
comprises of protocol used, server name, path name and file name. For example http://
www.tutorialspoint.com / internet_technology /index.htm. where:
• http is the protocol.
• tutorialspoint.com is the server name.
• index.htm is the file name.

• Relative URL
Relative URL is a partial address of a webpage. Unlike absolute URL, the protocol and
server part are omitted from relative URL. Relative URLs are used for internal links i.e. to
create links to file that are part of same website as the WebPages on which you are
placing the link.
Transmission Control Protocol/Internet Protocol
• TCP/IP, or the Transmission Control Protocol/Internet Protocol, is a suite of communication
protocols used to interconnect network devices on the internet. TCP/IP can also be used
as a communications protocol in a private computer network (an intranet or an extranet).
• The entire Internet Protocol suite -- a set of rules and procedures -- is commonly referred
to as TCP/IP. TCP and IP are the two main protocols, though others are included in the
suite. The TCP/IP protocol suite functions as an abstraction layer between internet
applications and the routing/switching fabric.
• TCP/IP specifies how data is exchanged over the internet by providing end-to-end
communications that identify how it should be broken into packets, addressed,
transmitted, routed and received at the destination. TCP/IP requires little central
management, and it is designed to make networks reliable, with the ability to recover
automatically from the failure of any device on the network.
 IP Address

• IP address is a unique logical address assigned to a machine over the network. An IP address exhibits the
following properties:

• IP address is the unique address assigned to each host present on Internet.

• IP address is 32 bits (4 bytes) long.

• IP address consists of two components: network component and host component.

• Each of the 4 bytes is represented by a number from 0 to 255, separated with dots. For example 137.170.4.124

• IP address is 32-bit number while on the other hand domain names are easy to remember names. For example,
when we enter an email address we always enter a symbolic string such as [email protected].
 Domain Name System (DNS)
• The Domain Name System (DNS) is the phonebook of the
Internet. Humans access information online through domain
names, like nytimes.com or espn.com. Web browsers interact
through Internet Protocol (IP) addresses. DNS translates
domain names to IP addresses so browsers can load Internet
resources.
• Each device connected to the Internet has a unique IP address
which other machines use to find the device. DNS servers
eliminate the need for humans to memorize IP addresses such
as 192.168.1.1.
• Domain Name is a symbolic string associated with an IP
address. There are several domain names available;
some of them are generic such as com, edu, gov, net etc,
while some country level domain names such as au, in,
za, us etc.
• Domain names are managed under a hierarchy headed
by the Internet Corporation for Assigned Names and
Numbers (ICANN), which manages the top of the DNS
tree by administrating the data in the root nameservers.
• www.google.com
• The following table shows the Generic Top-
Level Domain names:
Domain Name Meaning
• Com Commercial business
• Edu Education
• Gov government agency
• Net Networking organization
• Org Non profit organization
 STEPS TO BUILDING AN ECOMMERCE SITE
1. Define Your Site’s Purpose and Strategy
2. Research the Latest Web Design Trends
3. Select a domain name and Web host
4. Choose Your Platform (Web management software, web host)
5. Select a Template and Start Customizing
6. Decide on Your Branding
7. Add In and Optimize Your Content
8. Secure and Install Backup Services and Payment service where necessary
9. Publish Your Website
10.Analyze and Improve
 BUILDING A SUCCESSFUL ECOMMERCE
WEBSITE
• Make your site mobile responsive.
• Make it easy to find.
• Place your contact information above the fold.
• Make it easy to navigate.
• Keep your pages uncluttered.
• Make sure it's accurate.
• Respect the need for speed.
• Have a call to action.
• Keep your design simple.
To understand what this site is selling, you have to read lots of text carefully. The
header image shows only packages - could be virtually anything in here! This is
the most common ecommerce design mistakes.
• Bad: Mobile sticky menu blocks everything and won’t hide at
all. It’s impossible to use the site correctly.
• Good: The live chat icon is small enough, and the navigation header is
sticky, but it stays on top and doesn’t interfere with the page content.
• Bad: The upper right blocks were not meant to contain a lot of text and pictures -
this is among widespread ecommerce website mistakes. When you scroll down,
there’s a lot of free space to the left, and you have to scroll a lot to reach the end
of the description.
• Good: The text was divided into tabs, it saves space and reader’s time - you can
quickly move to the needed section without scrolling. It’s good to place more
advanced info to secondary tabs, and the customer will reach it if he needs to
without feeling overwhelmed with information.
• Bad: This is a little recommendation from me: please don’t do tabs with
scrolling! This is one of examples of bad website design that really annoys
customers.
• Bad: The product page - it’s poorly designed (and the image must be replaced), it
could be saved by enlarging the product name, the image, and the add to cart
button. These small enhancements will immediately make your page look better.
• Notice that the green buy button is relatively small, but it really stands out
because it’s bright, and there are no significant and competing elements
of this color on the first screen, too.
• Bad: The slider shows several pictures of (maybe even nice)
products, but the pictures were taken with a mediocre
camera and weren’t retouched.
• Bad: The lines are too long, the font color doesn’t have enough contrast,
and the body text desperately needs enlarging.
OUTSOURCING VS. IN-HOUSE DEVELOPMENT OF
A WEBSITE
Benefits of In house
• Fit the company’s culture
• Face to face communication
• Quick changes
Disadvantages of In-House
• High cost
• Staff turnover
• Lack of expertise
OUTSOURCING VS. IN-HOUSE DEVELOPMENT OF
A WEBSITE
Advantages of Outsourcing
• Cost flexibility
• Expertise
• Technological options
• Quicker results
Disadvantages of Outsourcing
• Security risks
• Communication gaps
• Privacy issue