E-COMMERCE

UNIT-1
Introduction: Meaning, Nature, Concepts,
advantages and reasons for transacting online
The fast and dramatic changes in information technology specially in last one decade has
given new concept of marketing in which buyer and seller do not see each other face to face
nor see the goods physically; the whole transaction is carried out with the help of ‘on line’
communication. The entire deal is carried out with the help of computer – telecommunication
and net working with associated hardware.

In the e – commerce internet provides information about goods and services “It is” a way of
conducting imaging and executing business transactions and services through electronic
media and networking in computers and communication network, websites, e-mail are
resorted.

Customers know about goods and services sitting at home. The manufacturers, distributors,
suppliers and services providers let the consumers know about their products quality, price,
size, color etc. through multi-colored catalogues on website. The consumers can ‘surface
various web sites and compare their relative prices, quality characteristic, features etc.

These details can be obtained from suppliers around the globe. The websites are available
beside for goods for direct selling, context selling, financial and other services such as
hospitals, education, training, advertisements, property, entertainment, product
demonstrations, bill payment, exchange and all other services which one can think of.

The types of selling through the use of internet and other electronic devices can be of
following types:

1. Business to Business (B2B):

This implies selling by one business manufactures to other business manufactures, trade,
wholesaler or retailer. In India as yet most of the e-commerce is B2B. The number of
companies like TELCO, IBM, C1TI BANK, BHEL, ESSAR, TVS, MARUTI, BAJAJ, and
many others are doing B2B. In 1998 out of total e-commerce of us$ 210 billion us$ 100
billion was accounted for B2B.

2. Business to Consumer (C2B):

When business sells to customers/consumers it is called B2C and is most important from our
point of view. The products include items sold in departmental stores, chemist shops, grocery
stores, books, stationery, clothes, vegetables, fruits and what not. As yet in India such sales
are only of US$ 100 billion but are expected to go up to US$ 900 billion by 2005 i.e. the
growth of 9000 percent. Many service sectors are adopting this mode.
3. Consumer to Consumer (C2C):

Under this system when some consumer want to dispose off his old items, he can take the
help of selling through internet. But this type of e-commerce is not very common at least in
India and the business is negligible.

4. Business to Government (B2G):

Business house or on individual business has to file income tax and sales tax returns and
various types of other returns. As yet this requires filing of return in respective office and
apply for approval in concerned office. But now many countries allow this type of activity
through e-mail/e-commerce. However, as yet this is not being done in India.

5. Government to Consumer (G2C):

In order to provide facilities to public and speed up information and records government in
many cases provide record of information, through this system; sale of documents, passport
forms, copies of returns etc are supplied through e-mail. The main features of e-commerce is
that one does not physically feel an item nor sees it and places order on the basis of
information supplied through website or in response to consumers inquiry, as yet e-commerce
has last preference for daily consumption items.

It is largely limited to durable goods like computers, TV’s, automobiles, books, travel
reservation. In case of service it is becoming popular for banking and share purchases. The
growth of E-commerce is restricted as given in Table 20.1

Key players in e-commerce are consumers and sellers.

E-mail net work:

E-commerce requires visit of website, selection of products, select a payment mode,

realization of money (which is done before dispatch) and dispatch of goods.

The process may be depicted as under:

1. Visit of website:

Selection of a product
 Selection of payment mode

1. Credit card
2. E-banking
3. VP/courier (who collects the payment at the time of delivery, but this is discouraged.
4. Placement of order through e-mail
5. Realization of money.

Dispatch to the customer can be on line or through courier.

In order that consumer may visit particular website, sellers have to advertise about their
website so that consumer may visit the website. The consumer decides which websites have
to be visited and after getting the information from various sites he makes a choice and
decides which one should be purchased. He then places an order intimating the mode of
payment which is generally through credit card or e-banking and advise the bank where he
has credit card to debit the amount to his account.

After the seller realizes the amount for the goods order he dispatches the goods. In most of
the cases whole process takes couple of minutes and goods reaches the consumer within half
an hour to one hour if he is a local consumer, it is claimed so by sellers. In India in this
business Rediff(dot)com is most popular and sells products worth Rs. 1340 million every
month.

Advantage to Consumers:
The consumer has number of advantages and convenience and therefore the system is
becoming popular.

1. Consumer has wider choice not from his town or country but also round the globe
unless there are import restrictions.
2. Customized or personalized product and service. For instance if some lady wants a
bra of exact size, her size can be measured through internet and stored and she will be
supplied bra of her requirement.
3. In case of purchase, one is not required to go from store to store to see the products to
collect their details, prices etc. Sitting at home he gets all the required information and that
too very fast without spending much time.
4. There is absolute flexibility of time, place and distance is no hurdle; one can open the
site any time day or night to get details, there is no problem of shops/stores opening/closing
hours. Website can be opened any time. In physical sales place and distance is also a problem
which is no problem in e-commerce because one can see sites all over the world without
moving out of the house.
5. Goods are available at cheaper price because there are lot of economies of space, rent,
interest to the seller Further, he manages with much lesser number of outlets and cost of
marketing is reduced. Part of these savings is passed on to consumer and therefore, he gets
the products cheaper than from conventional shops/departmental stores, grocers etc.
6. It helps to globalize retail trading. One can buy things without geographical
boundaries.
7. It eliminates with the system of distributors, authorized dealers and retailers, the
manufacturer can deal with large territory with one store.
8. The inventory is reduced, and so the cost of carrying goods and distribution cost.
9. Exports to final consumers is possible through e-commerce, not only-just sales but
procurement, accounts, logistics product development and other related services are also
possible through e-commerce
10. The net enables suppliers to introduce and promote new markets and new products to
meet the needs of individual buyers.
11. Long distance, travelling and delays, pollution all are avoided because one has not to
travel to the shop.
12. Consumer is better informed about products, price etc and therefore can make better
choice.
13. Suppliers, competitors and customers come under one roof through internet websites
and massive exhibition of various items is possible.

Disadvantages:

1. The biggest disadvantage of e-commerce is that one is not able to see and feel the
product.
2. Since consumers are not able to feel and touch the products and therefore business is
on trust and as yet business is largely limited to travel, automobiles, PC’s, services, books
and CD’s entertainment. As yet sales of apparel, food products is largely small percentage of
total e-business. For instance in 1999 the maximum ownership of internet was 50 percent in
USA, in other countries it varied between 1.8 percent to 45 percent (Table 20.2) But
gradually this disadvantage is being reduced but still there is large percentage of population

which does not own internet.

3. There is a big problem in on-line payment. It is with regard to time and legality of
order to complete the transaction. As yet satisfactory system of payment has not been
developed by banks and financial institutions in large number of countries.
4. The electronic signatures acceptance has been legalized by large number of countries
but still many more have to take steps in this direction. Further, there are great chances of
fraud in-spite of all the precautions.
5. The. e-commerce requires large investment to build a brand image on internet which
is estimated around us$ 100 million or around Rs. 500 crores which can be invested only by
big players. Thus small suppliers cannot get business through internet.
6. The market is restricted to high income and educated population who own and know
the use of internet. Thus in poor, illiterate or less educated countries it has limited access.
7. Sometimes there could be flood of orders for any particular product which makes
problem of timely supply to consumer. In 2000 there was YK2, problem and customers had
to wait to get product of their choice.
8. Consumer has number of problems. He has to search internet/websites information on
internet, make the purchase domain and the payment. There are difficulties in searching,
surfing, browsing and wandering around the internet which costs both time and money.
9. Privacy of consumer is adversely affected specially in the matter of accounts; he is
required to tell his credit card number to supplier or e-banker.
10. E-commerce is good for branded products like automobiles, electronic goods,
computers, electrical goods, branded garments, branded food products, music, books etc. If
middle class or lower middle class want to buy non branded products which are generally
cheaper, they cannot be bought through e-commerce.

In other words e-commerce is for effluent society i.e. why population in USA use is 50%, in
Europe 13 percentage, in poor countries only 1-2 percent and in some countries it is
negligible. Thus e-commerce is for classes and not for masses.

Categories of e-commerce
In E-Commerce business is possible in various combinations like:

(i) B2B – Business to Business

(ii) B2C – Business to Consumer

(iii) C2B – Consumer to Business

(iv) B2E – Business to Employee

(v) C2C – Consumer to Consumer

(i) B2B – Business to Business:

E-Commerce has been in use for quite a few years and is more commonly known as
EDI (electronic data interchange). In the past, EDI was conducted on a direct link of
some form between the two businesses where as today the most popular connection is
the internet. B2B E-Commerce could be used as a significant enabler in their move
towards greater trading partner collaboration. E-Commerce technologies have allowed
even the smallest businesses to improve the processes for interfacing with customers.
They are now able to develop services for individual clients rather than provide a
standard service.

The two businesses pass information electronically to each other.

Typically in the B2B environment, E-Commerce can be used in the following

processes:

(i) Procurement

(ii) Order fulfillment.

(iii) Managing trading-partner relationships.

B2B is helpful in reduction in transaction costs and improvement of product quality and
customer service and insistence by large businesses that all of their suppliers link into
their e-commerce system as a condition of doing business. In addition, there is greater
demand by final consumers for fast order fulfillment and the ability to track an order as it
is being processed and delivered.

(ii) B2C – Business to Consumer:

Business to Consumer e-commerce is where the consumer accesses the system of the
supplier. It is still a two way function but is usually done solely through the Internet.

B2C can also relate to receiving information such as share prices, insurance quotes, on-
line newspapers, or weather forecasts. When the product cannot be physically
examined, traditional commerce has no advantage over the convenience of electronic
commerce. The largest business-to-consumer e-commerce involves intangible product
that can be delivered directly to the consumer’s computer cover the network is
composed of five broad categories-entertainment, travel newspaper/magazines, financial
services, and e-mail. Entertainment, online games, music and video, is the largest
category of products sold to consumers.

(iii) C2B – Consumer to Business:

Consumer to Business is a growing area where the consumer requests a specific
service from the business. Like reservation in a hotel in a specific time period.

(iv) B2E – Business to Employee:

Business to Employee e-commerce is growing in use it is in practice in business like
pharmacy marketing, supply chain management, insurance, IT companies etc. This form
of e-commerce is more commonly known as an ‘Intranet’. An intranet is a web site
developed to provide employees of an organization with information. The intranet is
usually access through the organizations network, it can and is often extended to an
entrant which uses the Internet but restricts uses by sign on and password.
(v) C2C – Consumer to Consumer:
These sites are usually some form of an auction site. The consumer lists items for sale
with a commercial auction site. Other consumers access the site and place bids on the
items. The site then provides a connection between the seller and buyer to complete the
transaction.

PLANNING ONLINE BUSINESS

Nature and Dynamics of the internet
E-commerce is the buying and selling of products and services by businesses and
consumers over the Internet and through other electronic media. E-business is when a
company e-enables its processes to do business in a more efficient way using Web
technologies. This might include procuring goods and services, dealing with customers
as well as selling products.

E-commerce is not a new phenomenon. Indeed, IBM is a long-established provider of

communication networks. Organisations have been using these to exchange business
data for many years. The exponential growth of the Internet has driven the accelerated
expansion of this process. Until recently, e-commerce was concentrated on business-to-
consumer activity (B2C) hence the explosion of .com companies. However, the
development of the Web has made business-to-business (B2B) activity possible, leading
to the development of a host of what are termed Internet exchanges.

E-commerce is the buying and selling of products and services by businesses and
consumers over the Internet and through other electronic media. E-business is when a
company e-enables its processes to do business in a more efficient way using Web
technologies. This might include procuring goods and services, dealing with customers
as well as selling products.

E-commerce is not a new phenomenon. Indeed, IBM is a long-established provider of

communication networks. Organisations have been using these to exchange business
data for many years. The exponential growth of the Internet has driven the accelerated
expansion of this process. Until recently, e-commerce was concentrated on business-to-
consumer activity (B2C) hence the explosion of .com companies. However, the
development of the Web has made business-to-business (B2B) activity possible, leading
to the development of a host of what are termed Internet exchanges.

E-commerce is the buying and selling of products and services by businesses and
consumers over the Internet and through other electronic media. E-business is when a
company e-enables its processes to do business in a more efficient way using Web
technologies. This might include procuring goods and services, dealing with customers
as well as selling products.

E-commerce is not a new phenomenon. Indeed, IBM is a long-established provider of

communication networks. Organisations have been using these to exchange business
data for many years. The exponential growth of the Internet has driven the accelerated
expansion of this process. Until recently, e-commerce was concentrated on business-to-
consumer activity (B2C) hence the explosion of .com companies. However, the
 development of the Web has made business-to-business (B2B) activity possible, leading
to the development of a host of what are termed Internet exchanges.

With the advent of the Internet, the term e-commerce began to include:

 Electronic trading of physical goods and of intangibles such as information.

 All the steps involved in trade, such as on-line marketing, ordering payment and
support for delivery.
 The electronic provision of services such as after sales support or on-line legal
advice.
 Electronic support for collaboration between companies such as collaborative on-
line design and engineering or virtual business consultancy

Lower telecommunications cost. The Internet is much cheaper than value added
networks (VANs) which were based on leasing telephone lines for the sole use of the
organisation and its authorised partners. It is also cheaper to send a fax or e-mail via the
Internet than direct dialling.

Digitisation of products and processes. Particularly in the case of software and

music/video products, which can be downloaded or e-mailed directly to customers via
the Internet in digital or electronic format.

No more 24-hour-time constraints. Businesses can be contacted by or contact

customers or suppliers at any time.

Pure online vs. brick and click business

Brick and click business
Brick and mortar businesses have been around since society’s existence and offer many
advantages against an online business, as well as some drawbacks.

Location Based Marketing

One of the biggest advantages of owning a brick and mortar business is your physical
location actually serves as marketing in and of itself. In other words, if you pick a good
location, people will drive or walk by your store or business. For many businesses, the
location of the business combined with good word of mouth is all the marketing they
need.

The two big questions you need to ask yourself is (1) what location would be good for
my business and (2) how can I make my products or services appealing enough to
customers so that they will spread the word.

Cheaper rates can be found for locations that have less traffic, so you will have to
determine whether or not your business will benefit enough from a good location to
justify the cost.
Legitimacy
Having a physical presence increase the legitimacy of the business. People are more
willing to trust businesses that have a physical place that they can walk into. Additionally,
being able to speak with your potential customers face to face can be helpful as well.

Higher Startup Cost

Rent and employees can lead to much higher startup costs for brick and mortar
businesses. If you are just starting out, the perhaps you should consider trying out lower
cost alternatives to test the market.

For example, if you are offering dance lessons, rent out a space within another facility.
One successful dance instructor in Philadelphia rents out space at a fitness center,
which is less expensive than renting out a dedicated studio.

For physical products, consider starting out with a kiosk or a flea market.

Long Hours
Another disadvantage is that brick and mortar business owners usually work super long
hours, at least at the beginning. The key to avoiding this is to be able to hand off
responsibilities to your employees and trust them to make the necessary decisions.

Web Based Businesses

I love web based businesses because of their lower start up cost and the ability to reach
tons of people around the world.

Lower Startup costs

Low startup cost is a good reason to get into online business. You can get a simple
website up for a few hundred dollars. In fact, you don’t even need a website to get
started.

Elance, Ebay, and Amazon are just some websites where you can sell products or
services without any large upfront investment. They are inexpensive to try and if you fail,
then you didn’t risk that much upfront to begin with.

Work at Home
Working at home is another great perk of owning a web based business. Not having to
commute saves a lot of time. Even if your commute is short, it usually takes you an hour
or two to prepare and then go to work and back. Working at home offers conveniences
and freedoms that you don’t get from running a brick and mortar business.

Marketing Intensive
One of the biggest drawbacks is that you cannot benefit from people finding out about
you through a physical location. You need to market your services, products, or website
or else no one will know you exist.

This will require you to learn about things like SEO, pay per click advertising, affiliate
marketing, and various other methods of online promotion. Forming relationships with
other people online is also beneficial.
 Assessing requirement for an online business
When you own an online business, you can work from anywhere, set your own hours
and make a living on the Internet. Online businesses can also have extremely low
startup costs—making them perfect for a new entrepreneur without a lot of cash.

Here’s a step-by-step guide on how to start an online business.

Step 1: Choose a Business Structure

When you start a business, you must decide whether you’ll operate as a sole
proprietorship, limited liability company or corporation.

An individual or husband and wife can operate as a sole proprietorship. This is the
simplest type of business structure and you don’t need to file any paperwork to set one
up. However, sole proprietors have no protection from liability for the business’s debts
and obligations.

For this reason, many people who are starting a business choose to form a limited
liability entity such as a limited liability company or a corporation. The owners of these
types of business entities are typically not personally liable for the business’s obligations.

An LLC is generally more flexible and involves less record-keeping and reporting than a
corporation. However, a corporation may be a good choice if you want to bring in money
from outside investors.

Step 2: Decide Where to Form Your Business

You’ll form an LLC or corporation by filing paperwork with the state.

For most small businesses, it’s best to file formation documents in the state where you’re
located. By doing this, you’ll avoid the added costs of registering to do business in your
home state and hiring an out-of-state registered agent. However, if your business will
have significant nationwide activity or you expect to attract venture capital, you might
consider incorporating in Delaware.

Step 3: Choose a Name

It’s worth taking some time to choose a unique name for your online business. A unique
name:

 Helps you market your business

 Minimizes the chance that a similarly named business will accuse you of
trademark infringement
 Increases the chance that you’ll be able to get a domain name that matches your
business name
 Complies with state law requirements that corporation or LLC names be different
than all other entity names registered in your state.

Once you have a name in mind, you can conduct a Google search to see if any similarly
named businesses come up. You can also search trademarked names at the U.S.
Patent and Trademark Office website, and most states allow you to search registered
business names online.

Step 4: Get a Domain Name

As soon as you decide on a name, register a domain name for your business. The
domain name is your Internet address, typically ending in “.com.” You can check your
proposed domain name’s availability by typing it into the address bar of your Internet
browser and seeing if an existing website appears.

Many companies offer domain name registration—you simply set up an account, identify
the name you want to register and pay an annual fee.

Step 5: File Your Business Formation Papers

Forming a business entity requires filing documents with the state agency that handles
business filings. You’ll also need to pay a filing fee, which varies from state to state.
Once your corporation or LLC is formed, you’ll receive a certificate confirming that your
new business entity exists.

Step 6: Set Up Your Finances

You can obtain a federal tax ID number from the Internal Revenue Service website. If
you’re a sole proprietor or a single-member LLC, you can opt to use your Social Security
number instead.

You’ll also need to open a business bank account when starting an online business and,
if you’re going to be processing transactions through your website, an account with
Paypal or another online payment service.

Step 7: Understand Sales Tax and Licensing Requirements

If you are selling things online, you’ll most likely have to collect and pay sales tax for
transactions in any state where your business has a physical presence. However,
procedures vary from state to state and it’s a good idea to contact your state’s taxation
department and/or an accountant to find out your responsibilities.

You should check with your city or county to find out if you need a business license or
are required to register a fictitious business name or DBA.

Step 8: Set Up Your Website

 To get your website up and running, you’ll need to purchase web hosting, which is
typically offered by the same companies that provide domain registration. Hosting gives
your website a place to live on the Internet.

It’s possible to set up a website yourself, but unless you’re a designer or Web developer,
you can expect a pretty steep learning curve. If you have the budget, consider hiring a
professional to help you with some or all of the following: configuring the site to look the
way you want and include the features you need; creating and inserting a logo;
optimizing the site for search engines; and creating text and images.

Once you’ve chosen a name and business structure, filed paperwork with the state and
set up your website, you’re ready to get going with your online business. Remember that
the Internet is a busy place and you can’t sit back and wait for customers to come to
you. Look for ways to actively promote your business through online advertising, social
media and old-fashioned word of mouth.

Designing, Developing and Deploying the System

1. Identify the product/service, and the customer
Arun Kumar, e-commerce consultant at Embitel Technologies, Bangalore, says, “When e-
commerce an exciting new thing, entrepreneurs were excited to get online, even without
knowing what they wanted to sell. But the products were all restricted to mainstream B2C,
and items that provided ease of doing business.

That’s changed now. Even niche businesses see the advantages of getting online, now that e-
commerce business processes are better established.”

Indeed, one can find e-commerce portals for a variety of businesses today, from school
uniforms to medical equipment, and craft supplies to construction material.

If you are still in the process of identifying products to sell, keep the following points in mind
in order to choose well:

 It’s a crowded market, so it helps to go niche, but not so niche that there isn’t sufficient
demand
 Consider the price of the product—items that are priced very low will make it difficult for
you to get returns, but it also is difficult for people to purchase high-value items without seeing them
first
 Availability of the product and convenience can help a customer decide whether to shop
online or offline. Items that are usually not available too easily in stores tend to rack up more sales
online.
 Do consider the incidental costs. Perishables, fragile goods, voluminous or large goods all
pose shipping challenges and drive up costs.
 Importantly, your enthusiasm for the product you’re selling. As an entrepreneur, you will hit
roadblocks and face business challenges, so it is important to be driven about your products and do
your best to sell them.

Know your e-commerce customer

 It’s vital for any business to understand who their customer is so they can reach out to
him/her in the best way possible. One way to ascertain this is by evaluating the customers of
your competitors. Some parameters to keep in mind are:

 Establish the demographic i.e. gender, age group, income level, education etc.
 Tap social media to identify the people showing interest in your brand/offering through
‘likes’ and ‘follows’
 Interact with customers through feedback, suggestions and reviews to understand the
customer profile better

With the basic questions of what to sell, and whom to sell to answered, it’s time to move to
the next stage: the e-commerce website.

2. Choose the right e-commerce website development platform

An e-commerce platform is a software suite that helps you build your ecommerce store where
you make your products available, and where your customers can conduct transactions.
Choosing the right ecommerce platform is vital to any online business as it is the very
foundation of the business.

To begin with, as the business owner you need to decide whether you’d prefer a self-hosted
platform, or a hosted one. While the requirement for both is different, hosted platforms are
usually preferred as they usually consist of full-features websites and maintenance plans. This
minimizes the scope for error and makes website management much easier.

Even then, there are many platforms to choose from, the most popular include Hybris,
Magento, WooCommerce, or Shopify.

When choosing your e-commerce platform, you need to keep your business requirements as
well as the features on offer in mind. To help you get going, here’s list of things to consider:

 ERP, CRM, Database compatibility and integration

If you already have a business and are now expanding online, you have preexisting systems
and a database. It’s important to ascertain the compatibility of the platform with your existing
systems and the ability to integrate them.

Imagine having to shift all the data you have built up over the years, or are working with
concurrently, to the new system. To ensure easy integration and prevent downtime during
transition, choose a compatible platform. You will probably need professionals to assist you
in this, but it is well worth the money and time spent to create a stable online store.

 Scope for e-commerce website customization

Even full-feature platforms like Magento come with set features which may not suit the needs
of your business, or you may have requirement for additional capabilities in your webstore.
Moreover, each business has different requirements, and it’s important for the platform to
support these.
 One of our clients had a unique requirement—as a seller of books, they had to abide by their
country’s laws which allowed them to sell certain books only to people over a specified age.
This made it difficult to sell the books online, but the client needed the book to be listed in
the online catalogue to make website visitors aware of its availability.

To suit this unique case, the project developers were able to create an additional restricted
catalog on the e-commerce website, where visitors could view the listing, but not purchase
the books.

Similarly, grocery e-commerce websites require the capability to list product or size variants,
list perishables with unique weight or size measurements, offer features such a shopping lists.
Choosing a platform with good scope for customization makes it possible to enable the
development of such features and deliver a good customer user experience.

 Payment gateway integration

One of the challenges faced by e-commerce businesses in India is the discomfort with online
payments. So it is vital include traditional payment options, such as cash on delivery, along
with regular payment options, such as credit and debit card payments and netbanking. It has
now also become necessary to provide the option of linking to payment wallets.

Your ecommerce platform of choice must support these capabilities.

If you seek international expansion, or cater to customers from various countries, it’s
important to incorporate multiple currency options to facilitate payment for overseas
customers.

 Robust backend

A good online commerce webstore is supported by a robust backend for an organized and
easy-to-use admin experience. A high quality platform will provide several admin features
such as multiple admin logins, easy changes in inventory, taking stock of orders, and so on.

Ensure you check for this because a good customer UX doesn’t count for much if it isn’t
powered by an organized backend.

 Mobile-friendly, or responsive e-commerce

Studies have shown that people are spending more and more time on the mobile phones.
While some businesses do choose to build apps to cater to this growing demand, app
development requires an investment of time and money.

So responsive e-commerce websites, suitable for viewing on mobile phones, are a great
alternative. The importance of a mobile-friendly e-commerce website cannot be ignored as
customers do much more than make purchases through their phones. The easy accessibility
leads to increasing amounts of time spent browsing on the phone, which often leads more
online as well as in-store purchases.
 The platform must support a website that is optimized for a mobile-friendly yet rich UX.

 E-commerce marketing

Do consider the marketing tools offered by the e-commerce platform—some platforms offer
integration with analytics tools, social media websites, promotion tools, etc. Once you go live
with the webstore, marketing will form a significant path of business growth, so anticipate the
needs for these capabilities and choose your platform accordingly.

A handy guide to evaluate e-commerce platforms is Gartner’s Magic Quadrant for digital
commerce. The Magic Quadrant assesses platforms and categorizes them as per the
performance and growth annually.

3. Choose the right e-commerce website hosting platform

Your choice of server and hosting can make or break your e-commerce business. It
determines your website’s accessibility and performance efficiency. It’s imperative to choose
quality over costs saving when it comes website hosting and support. The key parameters to
consider when zeroing in on an e-commerce host are:

 Speed

Your server should have the capacity to deliver good website speed. This is also dependent
on the internet connection speed for your server, so check that too. Providing good speed is
vital as not only do customers have little patience for websites that load slowly, but search
engines also rank slow-loading websites poorly.

 Uptime

A good way to assess the kind of service you will get from the host is to check recent uptime
records of other websites being hosted by the provider. One of the greatest attributes of e-
commerce is any time, any place availability and shopping convenience. This is enabled by
maximizing uptime, so this is a vital check.

 Support

What kind of support services does your host provide? Some just provide the infrastructure,
while some also give managed services that help minimize troubleshooting response time and
improve uptime. Sometimes managed services also cover issue management and upgrades.

 Scalability

Choose servers that can adapt to your business needs. This means your website doesn’t go
down due to an overload in traffic (as the servers scale up to accommodate increased traffic
during peak season or offers), as well and optimizes the costs.

 Security
 As an e-commerce website, you accept payments online so the servers must be PCI-DSS
compliant. It is also important to ensure data security through secure servers.

4. Choose the right e-commerce development partner

Shopping for e-commerce tech development partners or e-commerce vendors can be

confusing. The market is chockablock with service providers and with each one claiming to
offer the very best, it’s hard to ascertain who is genuine. Look out for these following aspects
to choose your e-commerce development company wisely:

 Location

Contrary to the popular practice of outsourcing to cheaper locations, it makes plenty of sense
to commission e-commerce website development to a local company. With an intensive task
like this, that requires regular and deep involvement, it helps to be in located in the same time
zone in order to speed up communication and coordination. Losing hours, or even a day, sue
to time difference can add significantly to development time and cost.

 Custom development

A great way to ascertain the e-commerce vendor’s level of commitment and quality of output
in the interest shown in your business requirements. Each business has unique needs and
circumstances, and your e-commerce website and development process must be adapted to
suit these needs. A vendor who takes the time to understand your goals, requirements and
hurdles, and takes the time to address them is likelier to deliver a website that will be more to
your expectations and will fuel business growth.

 Approach to processes

E-commerce website development is a lengthy and task-intensive project, with goals and
hurdles that change along the way. Therefore it is very important to partner with a vendor
who follows agile processes that are continuously adapted and improved on the journey to
suit the changing needs. Due diligence for quality assurance in processes also helps deliver
predictable outcomes and more bang for your buck.

 Scalability

E-commerce development, especially if it is multichannel or omnichannel, is carried out

phase by phase, and the resources needed at every phase differ, especially if timelines have to
be met. Choosing an established e-commerce website development partner makes resources
available as per need without much delay. This ability to scale up or down as per project
needs facilitates smooth development and minimizes the time lost to logistic problems.

5. E-commerce website testing – You can never test enough

Upon completion of the website development, or even hand-in-hand with it, the next vital
step is e-commerce website testing. Testing checks usability, customer convenience, checks
for bugs, and is vital to ensuring a good shopping experience. Testing is usually carried out in
 various browsers, across platforms, and across devices. Website testing can be manual, or
automated, or a combination of the two.

The importance of testing cannot be stressed enough—slow-loading websites, poor

navigation, broken links and bugs have been known to cause losses for e-commerce websites
as customers leave dissatisfied.

So what is usually checked in the e-commerce website testing process?

 The visitor/customer flow: Each step and page usually taken by the customer on his/her
visit is tested, starting from home page to menu, search bar and results, product listing … rught up to
payment and checkout, and acknowledgement.
 The functionalities: the pages, the categories, filters, user registration, shopping cart,
payment options, shipping options—all features and functions offered are checked for usability.
 Security: E-commerce website security is vital, not just on the payments page, where
customers share sensitive information like card details and address, but also throughout the rest of
the website. A secure website encourages trust in users.
 Compatibility: With different browsers, on various platforms, and across devices, as mobile
phones and tablets are no longer devices to be ignored when it comes to online shopping.
 Performance and discoverability: To ensure the website load time isn’t too long, catch
broken links, check for SEO ranking in search engines.

As to the amount of time that needs to be devoted to testing, various business experts and
researchers suggest anything between 25% of development time to continuous testing all
through the development stage. You can read these suggestions here and decide what suits
your business the best.

6. Effective Marketing
Congratulations! Your website is now live. But how are people to know about it, and how
will it attract visitors? One needs to have a marketing plan charted out even before launch, so
that as soon you are ready to launch successfully, marketing and promotion can be rolled out.
In a crowded market of business owners vying for customers’ attention, it’s easy to get lost or
go unnoticed. A well-planned marketing strategy that reaches out to the right audience at the
right time and across the right channels can help break through this clutter.

Some of the popular marketing methods used by businesses include:

 Traditional methods: such as flyers, newspaper and magazine ads, etc.

 Email marketing: Work towards building a mailing list. Encourage visitors to your website to
leave their email addresses by offering something (a gift/discount) in exchange. Send out emails at
periodic intervals (but not so often that you’re blocked), to keep existing as well as potential
customers informed of offers, new arrivals, seasonal promotions. When used effectively, email
marketing has proved to deliver great results. Case in point: Edible Arrangements, a US-based gifting
business, experienced an 8% rise in same-day delivery orders after promoting the service through
email marketing.
 Social media marketing: The attention-grabbing nature of social media can be tapped to
create recall for your brand as well as turn your followers/customers into advocates for your brand.
This is often done by contests or activities requiring respondents to share posts, or tag other people
in them, usually in exchange for a gift. Dove, the skin and hair care brand, has used Facebook
 effectively to build a brand identity that tells stories of women, rather than pushing promotional
posts.
 Content marketing: is all about creating shareable information-oriented content in order to
attract visitors to your website. Listicles, infographics, memes, blog posts are all examples fo content
marketing. These work two-fold: they help attract visitors as well as improve SEO ranking.
 Pay per click: Also called PPC, is different from the above methods of marketing as it
requires a monetary investment. These are advertisements displayed to a targeted audience, and
you’d pay for them based on impressions of per click on the advertisement. Well planned PPC
campaigns do usually yield results, but proceed cautiously to understand and control your spends.

7. Adapt and grow

Development to going live is a long process, and if your website is up and running
successfully by now, it’s a satisfying achievement. Yet, like all business, you cannot sit back
and relax. It’s necessary to continuously adapt to changing conditions and stay ahead of
competition.

E-commerce has evolved from websites to multichannel, and then omnichannel. In the recent
past, newer features like virtual reality, or augmented reality, or location-based alerts, have
changed the level of personalization and convenience offered. Brands that have managed to
upgrade quickly and enjoyed continued success.

Upgrade your platform regularly to keep your website running smoothly and offer up-to-date
features. Periodically check for security updates and implement them.

Track customer browsing habits, purchase patterns, cart abandonment, and other user
behavior to tweak your offerings and presentation accordingly.

Your e-commerce website and business require nurturing to enjoy healthy growth and deliver
long-term returns on your investment.

One to One enterprise
One-to-one marketing or 1:1 marketing is a type of direct marketing in which a salesperson
communicates directly with somebody. This person is somebody the company targets
deliberately. It is a CRM strategy that focuses on personalized interactions with customers or
potential customers. CRM stands for Customer Relationship Management.

We also use the terms personalized marketing and individual marketing with the same
meaning as one-to-one marketing. Marketing refers to analyzing the market, finding out what
consumers want, and then determining whether you can deliver it. Above all, determining
whether you can deliver it at the right price.

Marketing executives claim that one-to-one marketing generates a better return on marketing
investment. This is due partly to greater customer loyalty. Customer loyalty refers to
customers coming back for more repeatedly.
Martha Rogers and Don Peppers first mentioned the term in their 1994 book ‘The One To
One Future.’ They proposed the idea of one-to-one marketing as a CRM approach.

In a one-to-one marketing dialog, for example, the sales representative listens to the
customer. Specifically, they listen to what the customer needs and then propose services they
can offer.

Providers of both goods and services may use this kind of CRM approach.

One-to-one Marketing Types

In 1:1 marketing, there are basically two types; personalization and customization.

Personalization
The seller finds out what customers’ tastes and personal preferences are. The seller does this
on an individual basis.

Then, the company customizes its marketing plan according to each individual’s taste and
preferences.

Many online retailers do this today. For example, have you noticed how Amazon.com
suggests new products? They are always goods that we have either showed an interest in or
bought.

Customization
The seller gives customers the opportunity to customize the product to their specific tastes. In
this case, the company does not, however, focus on learning what each customer’s
preferences are.

For example, a car manufacturer offers the basic car. The customer then can add features
themselves, such as color, engine size, types of seats, etc.

Additionally, customers can specify what type of wheels they want and whether they want an
automatic or manual vehicle.

There are four important steps for implementing one-to-one marketing.

1. Identifying the customers:
The company must be able to locate and contact a fair number of its customers directly, or at
least a substantial portion of its most valuable customers. It is critical to know customers in as
much detail as possible. The information should contain not only names and addressable
characteristics but their habits, preferences, etc. Snapshot information is not enough. The
company should be able to recognize the customer at every contact point, in every medium
used, at every location and within every division of the company.
2. Differentiating the customers:
Customers are different in two ways. They represent different levels of value to the company
and they have different needs. Once each customer’s needs and value are found out, it is
possible to tailor the company’s behaviour to each customer in order to reflect the customer’s
value and needs.

3. Interacting with customers:

It is important to be both cost-efficient and effective when the company is interacting with its
customers. Cost-efficiency improves by directing customer interaction towards more
automated channels. Providing information on its website would be more economical than
supporting a call centre.

A company can increase the effectiveness of its customer interaction processes by providing
relevant and timely messages to its customers. Its customer interaction processes should
enable it to understand customers’ nuanced needs, and serve them better.

A company should remember its every interaction with a customer, and its every new
interaction with him should take into account every other interaction that it has had with him,
no matter whether the interaction took place on a website or with a salesperson. A new
interaction should be in synchronized continuation with the one that was held earlier with the
customer, which might have been a few moments ago, or a few years ago.

4. Designing and producing a unique product:

A customer’s needs would be unique, i.e., it would be substantially different from those of
other customers. And hence the company would have to design and produce a unique
solution for him. The company would have to learn to mass customize, i.e., design and
produce a unique product for each customer at the cost of a standard product.

The company should follow modular designing to enable production of customized products
from standard components. It is tempting for a company to overlook this critical step, as it
involves investment to make the operations of the company flexible and responsive. But one-
to-one marketing will not cut much ice with customers, if the activities and processes of the
company cannot be customized to each customer.

Managers are tempted to dismiss one-to-one marketing as unattainable. Maintaining a

customer database, having one system communicate seamlessly with another, tracking each
customer’s contact with the company, making the operations responsive and flexible, and
assigning responsibility for maintaining customer relationships across divisions can be
daunting tasks.

But the benefits emanating from successful implementation of relationship marketing should
justify investment of time and money in the endeavour. One-to-one marketing increases
cross-selling as customer’s requirements are known more intimately; reduces customer
attrition as the company learns of increasingly more sophisticated and effective ways to serve
the customer’s evolving needs; reduces transaction costs as the customer’s requirements are
known and can be promptly served, and it leads to higher level of customer satisfaction as the
company’s total offering is tailored to his needs much better.

UNIT-2
Technology for Online Business: internet,
IT infrastructure
Importance of internet in business: You can understand the importance of the internet
in business by the inventions of Digital Marketing, Internet banking and ecommerce
business models. The Internet is providing great benefits for business communication.
The Internet is the easiest way for a business to connect with customer and clients. The
business organisation is using the high-speed internet to speed up the production.

Uses of the internet in business: Companies are getting customer data and buying
habits and creating marketing strategies based on the analysis. New and innovative
online business models are coming. Everyone is searching online business ideas.
People are working from home for companies around the world. Business information is
fastest than ever. So, you can see from all of this is that internet is now the backbone of
offline business to sell online. And the internet is a heart for online business.

Inventions of new internet technologies for businesses:  Internet technology

invented new methods of doing business. Internet is important for business
development. Internet technology provides powerful communication and marketing tools.
The Internet is a new Bazaar in which you can find online shops, online degree
programs and a lot more. You can browse various educational and business
development websites, management service platforms anytime & anywhere.

Internet is in role of business successor: important to make business successful.

Internet helps businesses to grow, achieve goals and become successful in this
competitive market. Marketing is important in business and in this case internet is the
first and most important marketing tool business owners are looking for. Internet
provides great benefits for entrepreneurs to create business infrastructure based on
customer’s data and information.  

Business success is impossible without internet in this modern era. Internet transformed
the education, communication and methods of receiving and giving data. Internet
technology provides great data management sources for businesses to launch unique
and creative solutions for customers.
Email marketing, social media customer support, Google hangouts, Skype chats and
VoIP applications etc. are providing great ROI (Return on Investment) for businesses.
Doing a business without realising the importance of Internet marketing, communication
and data management will make it tough to become successful businessmen in this
century.

A 21st Century entrepreneur understands the benefits of using internet for business
development and conducting daily business operations.  He knows the importance of the
internet in business, internet marketing and customer data management. Following are
the benefits business owners can get by executing internet application in business:-

Internet marketing and advertising is most accessed part of the internet by

Businesses
Internet plays an important role to advertise & market products and services around the
world to get more customers. The Internet is important to communicate with customers
about products and services. The internet is a global village and gives a chance for
business owners to take benefits of online advertising that is less costly. Internet
advertising and marketing is affordable for all kinds of small and big business as
compared to traditional marketing costs. Business can reach a wider audience and
geographical locations by the use of Google AdWords, Facebook ads, content
marketing, YouTube video ads etc.  

Online advertising is a big industry and the competition is high that’s why the cost of
internet advertising is more effective than TV advertising, newspaper and magazine ads.
Google, Facebook, and YouTube, such kind of business are surviving because of the
revenue they are generating by providing internet advertising services for business.
Business owners can get benefits by implementing paid and free internet marketing tools
in their business to reach customers globally. That’s why internet importance in the
business world is really important to utilise for creating better and valuable products and
services.

Internet is essential tool for business to do product survey and testing

Business research is really important to get data related to target customers, trends in
market, interest and information about the competition. Internet helps business to obtain
data and analyses the information to create better and effective products, marketing plan
before investing money in product development. Internet helps businesses to test and
collect the data behind the idea of product and services.

There are various paid and free tools to analyse and collect customer data by creating
data analysis applications by using Matlab, Scilab, python, R, and Microsoft excel etc.
For eCommerce or services business website, entrepreneurs can use best website
analytics tools such as Google Analytics, Crazy Egg, and Kissinsights.com etc.
Business analysis on the internet helps to take best product development and marketing
decision.

Internet platforms helping business to sell products and services online

Selling online is the biggest benefits of the Internet for big and small businesses. Selling
online is less costly with a high level of value marketing. The cost of setting up online
shop or eCommerce website is less expensive than a physical store. Internet helps
business and eCommerce website to automate selling and transactions process. Selling
products via online store is not only beneficial for one business but it helps third-party
business services such as couriers, content marketers, graphic designers, payment
gateway service providers etc. eCommerce industry is growing day by day and even
small business owners are generating high revenues for business in few months.

The cost of maintaining and starting eCommerce store and selling online not only helps
to sell but also business owners can track their best marketing and advertising efforts
and channels. This will not only help to sell more but it also helps to sell the right product
to target customers based on interest. Biggest examples of successful eCommerce
utilisation are Amazon.com, Alibaba.com, Flipkart, Paytm etc. which are generating high
revenues and profits at less cost.

Internet helping business to execute employee training and development

programs
Online employee training and web-based training programs are providing great benefits
to manage and execute tasks effectively.  The success of a business is dependent on
the creativity and analytical thinking of its employees. Internet plays an important role in
business to create multiple types of employee learning and training programs. Learning
and training explore the creativity in employees. Also, eCommerce websites, advertising
agencies, email marketing companies and all kinds of Internet connected business
always need to manage data and secure the customer information and privacy from
online attacks.

Online training and online classes for staff help them to learn from professionals related
to the business industry. Internet helps employees to access learning materials
anywhere on right time. Today’s business owners, companies and online entrepreneurs
are facing the productivity problems. The common question is How to be more
productive? How to make employees more productive? That’s how the internet helps the
business owners to create and use existing e-Learning programs and application to
provide continuous education and training. The benefits of online training programs such
as videos, apps, webinars help employees to learn at their own pace and comfort. The
cost of online programs is less than the cost of sending employees to seminars or hiring
productivity consultant. That’s how by the use of internet in small, medium and big
business everyone can get benefits by learning from e-learning resources.

Internet building business and customer relationships

Relationship with customers is really important for business success. Internet helps
business to connect with customer’s communication channels and build a strong
network. Communication by Internet platforms helps business to get new customers and
retain existing customers. The right product for right customers is not possible without
communicating with clients or customers about the product and their problems. The
website, Social Media Marketing, Administrative Support, Technical Support are few
examples which are used by almost all the businesses today. 24/7 customer support on
social media increasing the brand values is another example of effective business
communication and relationship building programs. A customer wants quick information
regarding their problems. So, it’s really important for businesses to improve how they
track customer problems and provide solutions that build the trust and an honest
relationship with clients. Social Media, blog, forums are the tools which businesses can
use to communicate effectively with customers. This kind of business development
practices on the internet really benefits business to build a strong network of customers.
Communication and network building also help to implement innovative, creative and
valuable marketing and advertising plans for the business. These types of everyday
business operations and marketing or free platforms are impossible to access without
the Internet. The cost of communication in today’s time, especially by the use of the
internet, is less than offline methods. Reviews, comments, link building, back-links, link
tracking etc. are daily practices that help business to grow business faster with a high
level of integrity.

Internet speedup and making business process accurate.

The World wide web gives you access to data and information with high speed and
accuracy. Emails, News, file transfers, cloud storage, IRC such kind of Internet features
are really important for business. Internet rich features and applications not only help
employees to become more productive but it also helps to work faster and accurately by
learning and using latest technologies in the day to day business dealings. Business and
companies get customer data and relationship status, feedback, comments, likes,
shares, reviews in real time and quickly. In the business development and marketing
speed really matters when you’re competing globally. Email marketing, collecting emails
address, tracking user behaviours, page views, landing pages are few examples in
which business owners get benefits by including internet to speed up the operations and
accuracy in the process of business development. Without the use of internet in
business it’s impossible today to grow business and earn profits.

By using the Internet and testing the importance of the Internet in business themselves
is the most important thing that business owners can learn and experiment with today.
Any small idea can be a big business for tomorrow. Google, Facebook, YouTube, Linked
In, Amazon, Alibaba etc. once were nothing more than an idea but these innovative
business owners added the power of internet technology in business. Now you can see
today their revenues and growth. This is how the Internet is powering up businesses.

In the future, we can’t imagine the world of business without the Internet. The Internet is
now automated the business operations. Every small and big task is done by the use of
internet such as financial transactions, invoicing, data sharing, hiring etc. The Internet is
a boon for new entrepreneurs, students, online freelancing workforces, and teachers or
for everyone. To get benefits people should understand the way they can add the power
of the internet to automate daily manual tasks. Almost all the living and even some non-
living things (think Artificial Intelligence) are on the internet. The uses of internet are
growing in everyday life. New apps, websites, applications, online education tools and
entertainment and time passways are launched daily on the internet. The Internet is now
making millionaires and billionaires in between the age of 30 and 40 and few are below
30. That’s how Internet has transformed the ways of conducting business.

Middleware Contexts: Text and integrating e-

business applications
The Need for Integration
Enterprises are typically comprised of hundreds if not thousands of applications that are
custom-built, acquired from a third-party, part of a legacy system, or a combination
thereof, operating in multiple tiers of different operating system platforms. It is not
uncommon to find an enterprise that has 30 different Websites, three instances of SAP
and countless departmental solutions.

We may be tempted to ask: How do businesses allow themselves to get into such a
mess? Shouldn’t any CIO of such an enterprise spaghetti architecture be fired? Well, like
in most cases things happen for a reason.

First of all, writing business applications is hard. Creating a single, big application to run
a complete business is next to impossible. The ERP vendors have had some success at
creating larger-than-ever business applications. The reality, though, is that even the
heavyweights like SAP, Oracle, Peoplesoft and the like only perform a fraction of the
business functions required in a typical enterprise. We can see this easily by the fact that
ERP systems are one of the most popular integration points in today’s enterprises.

Second, spreading business functions across multiple applications provides the

business with the flexibility to select the “best” accounting package, the “best” customer
relationship management or the order processing system that best suits the business’
needs. One-stop-shopping for enterprise applications is usually not what IT
organizations are interested in, nor is possible given the number individual business
requirements.

Vendors have learned to cater to this preference and offer focused applications around a
specific core function. However, the ever-present urge to add new functionality to
existing software packages has caused some functionality spillover amongst packaged
business applications. For example, many billing systems started to incorporate
customer care and accounting functionality. Likewise, the customer care software maker
takes a stab at implementing simple billing functions such as disputes or adjustments.
Defining a clear functional separation between systems is hard: is a customer disputing
a bill considered a customer care or a billing function?

Users such as customers, business partners and internal users do generally not think
about system boundaries when they interact with a business. They execute business
functions, regardless of the how many internal systems the business function cuts
across. For example, a customer may call to change his or her address and see whether
the last payment was received. In many enterprises, this simple request can span across
the customer care and billing systems. Likewise, a customer placing a new order may
require the coordination of many systems. The business needs to validate the customer
ID, verify the customer’s good standing, check inventory, fulfill the order, get a shipping
quote, compute sales tax, send a bill, etc. This process can easily span across five or six
different systems. From the customer’s perspective, it is a single business transaction.

In order to support common business processes and data sharing across applications,
these applications need to be integrated. Application integration needs to provide
efficient, reliable and secure data exchange between multiple enterprise applications.

Integration Challenges
 Unfortunately, enterprise integration is no easy task. By definition, enterprise integration
has to deal with multiple applications running on multiple platforms in different locations,
making the term ‘simple integration’ pretty much an oxymoron. Software vendors offer
EAI suites that provide cross-platform, cross-language integration as well as the ability to
interface with many popular packaged business applications. However, this technical
infrastructure presents only a small portion of the integration complexities. The true
challenges of integration span far across business and technical issues.

 Enterprise integration requires a significant shift in corporate politics. Business

applications generally focus on a specific functional area, such as Customer
Relationship Management (CRM), Billing, Finance, etc. This seems to be an extension
of Conway’s famous law that postulates that “Organizations which design systems are
constrained to produce designs which are copies of the communication structures of
these organizations.” As a result, many IT groups are organized in alignment with these
functional areas. Successful enterprise integration does not only need to establish
communication between multiple computer systems but also between business units
and IT departments — in an integrated enterprise application groups no longer control a
specific application because each application is now part of an overall flow of integrated
applications and services.
 Because of their wide scope, integration efforts typically have far-reaching
implications on the business. Once the processing of the most critical business functions
is incorporated into an integration solution, the proper functioning of that solution
becomes vital to the business. A failing or misbehaving integration solution can cost a
business millions of Dollars in lost orders, misrouted payments and disgruntled
customers.
 One important constraint of developing integration solutions is the limited amount
of control the integration developers typically have over the participating applications. In
most cases, the applications are “legacy” systems or packaged applications that cannot
be changed just to be connected to an integration solution. This often leaves the
integration developers in a situation where they have to make up for deficiencies or
idiosyncrasies inside the applications or differences between the applications. Often it
would be easier to implement part of the solution inside the application “endpoints”, but
for political or technical reasons that option may not be available.
 Despite the wide-spread need for integration solutions, only few standards have
established themselves in this domain. The advent of XML, XSL and Web services
certainly mark the most significant advance of standards-based features in an integration
solution. However, the hype around Web services has also given grounds to new
fragmentation of the marketplace, resulting in a flurry of new “extensions” and
“interpretations” of the standards. This should remind us that the lack of interoperability
between “standards-compliant” products was one of the major stumbling blocks for
CORBA, which offered a sophisticated technical solution for system integration.
 Also, existing XML Web Services standards address only a fraction of the
integration challenges. For example, the frequent claim that XML is the ‘Lingua franca”
of system integration is somewhat misleading. Standardizing all data exchange to XML
can be likened to writing all documents using a common alphabet, such as the Roman
alphabet. Even though the alphabet is common, it is still being used to represent many
languages and dialects, which cannot be readily understood by all readers. The same is
true in enterprise integration. The existence of a common presentation (e.g. XML) does
not imply common semantics. The notion of “account” can have many different
semantics, connotations, constraints and assumptions in each participating system.
Resolving semantic differences between systems proves to be a particularly difficult and
time-consuming task because it involves significant business and technical decisions.
 While developing an EAI solution is challenging in itself, operating and
maintaining such a solution can be even more daunting. The mix of technologies and the
distributed nature of EAI solutions make deployment, monitoring, and trouble-shooting
complex tasks that require a combination of skill sets. In many cases, these skill sets do
not exist within IT operations or are spread across many different individuals.

How Integration Patterns Can Help

There are no simple answers for enterprise integration. In our opinion, anyone who
claims that integration is easy must be either incredibly smart (or at least a good bit
smarter than the rest of us), incredibly ignorant (OK, let’s say optimistic), or they have a
financial interest in making you believe that integration is easy.

Even though integration is a broad and difficult topic, we can always observer some
people who are much better at it than others. What do these people know that others
don’t? Since there is no such thing as “Teach Yourself Integration in 21 Days” (this book
sure ain’t!) it is unlikely that these people know all the answers to integration. However,
these people have usually solved enough integration problems that they can compare
new problems to prior problems they have solved. They know the “patterns” of problems
and associated solutions. They learned these patterns over time by trial-and-error or
from other experienced integration architects.

The “patterns” are not copy-paste code samples or shrink-wrap components, but rather
nuggets of advice that describe solutions to frequently recurring problems. Used
properly, the integration patterns can help fill the wide gap between the high-level vision
of integration and the actual system implementation.

The Wide World of Integration

We intentionally left the definition of “integration” very broad. To us it means connecting
computer systems, companies or people. While this broad definition gives us the
convenience of sticking whatever we find interesting into this book, it is helpful to have a
closer look at some of the most common integration scenarios. Helping clients design
and implement integration solutions, we repeatedly came across the following six types
of integration projects:

 Information Portals
 Data Replication
 Shared Business Functions
 Service-Oriented Architectures
 Distributed Business Processes
 Business-to-Business Integration

This list is by no means a complete taxonomy of all things integration but it does help to
illustrate the kind of solutions that integration architects build. Many integration projects
consist of a combination of multiple types of integration. For example, reference data
replication is often required in order to tie applications into a single distributed business
process.

Information Portal
Many business users have to access more than one system to answer a specific
question or to perform a single business function. For example, to verify the status of an
order, a customer service representative may have to access the order management
system on the mainframe plus log on to the system that manages orders placed over the
Web. Information portals aggregate information from multiple sources into a single
display to avoid having the user access multiple systems for information. Simple
information portals divide the screen into multiple zones, each of which displays
information from a different system. More sophisticated systems provide limited
interaction between zones, for example when a user selects an item from a list in zone
A, zone B refreshes with detailed information about the selected item. Other portals
provide even more sophisticated user interaction and blur the line between a portal and
an integrated application.

Data Replication
Many business systems require access to the same data. For example, a customer’s
address may be used in the customer care system (when the customer calls to change
it), the accounting system (to compute sales tax), the shipping system (to label the
shipment) and the billing system (to send an invoice). Many of these systems are going
to have their own data stores to store customer related information. When a customer
calls to change his or her address all these systems need to change their copy of the
customer’s address. This can be accomplished by implementing an integration strategy
based on data replication.

There are many different ways to implement data replication. For example, some
database vendors build replication functions into the database, we can export data into
files and re-import them into the other system, or we can use message-oriented
middleware to transport data records inside messages.

Shared Business Function

In the same way that many business applications store redundant data, they also tend to
implement redundant functionality. Multiple systems may need to check whether a
social-security number is valid, whether the address matches the specified postal code
or whether a particular item is in stock. It makes business sense to expose these
functions as a shared business function that is implemented once and available as a
service to other systems.

A shared business function can address some of the same needs as data replication.
For example, we could implement a business function called ‘Get Customer Address’
that could allow other systems to request the customer’s address when it is needed
rather than always storing a redundant copy. The decision between these two
approaches is driven by a number of criteria, such as the amount of control we have
over the systems (calling a shared function is usually more intrusive than loading data
into the database) or the rate of change (an address may be needed frequently but
change very infrequently).

Service-Oriented Architecture
Shared business functions are often referred to as services. A service is a well-defined
function that is universally available and responds to requests from “service consumers”.
Once an enterprise assembles a collection of useful services, managing the services
becomes an important function. First of all, applications need some form of service
directory, a centralized list of all available services. Second, each service needs to
describe its interface in such a way that an application can “negotiate” a communications
contract with the service. These two functions, service discovery and negotiation, are the
key elements that make up a service-oriented architecture.

Service-oriented architectures (SOAs) blur the line between integration and distributed
applications. A new application can be developed using existing, remote services that
may be provided by other applications. Therefore, calling a service may be considered
integration between the two applications. On the other hand a service-oriented
architecture usually provides tools that make calling an external service almost as simple
as calling a local method (performance considerations aside). Because all services are
available in a consistent manner, SOAs are sometimes referred to as “service bus
architectures”.

Distributed Business Process

One of the key drivers of integration is the fact that a single business transaction is often
spread across many different systems. A previous example showed us that a simple
business function such as “place order” can easily touch six or seven systems. In most
cases, all relevant functions are incorporated inside existing applications. What is
missing is the coordination between the applications. Therefore, we can add a business
process management component that manages the execution of a business function
across multiple existing systems.

The boundaries between a service-oriented architecture and a distributed business can

blur. For example, you could expose all relevant business functions as service and then
encode the business process inside an application that accesses all services via an
SOA.

Business-to-Business Integration
So far we have mainly considered the interaction between applications and business
functions inside an enterprise. In many cases, business functions may be available from
outside suppliers or business partners. For example, the shipping company may provide
a service for customers to compute shipping cost or track shipments. Or a business may
use an outside provider to compute sales tax rates. Likewise, integration frequently
occurs between business partners. A customer may contact a retailer to inquire on the
price and the availability of an item. In response, the retailer may ask the supplier for the
status of an expected shipment that contains the out-of-stock item.

Many of the above considerations apply equally to business-to-business integration.

However, communicating across the Internet or some other network usually raises new
issues related to transport protocols and security. Also, since many business partners
may collaborate in an electronic “conversation” standardized data formats are critically
important.
 Mechanism of making payment through internet:
online payment mechanism
Online Payment Mechanism
One of the most popular payment forms online are credit and debit cards. Besides them, there
are also alternative payment methods, such as bank transfers, electronic wallets, smart cards
or bitcoin wallet (bitcoin is the most popular cryptocurrency).

E-payment methods could be classified into two areas, credit payment systems and cash
payment systems.

1. Credit Payment System

 Credit Card: A form of the e-payment system which requires the use of the card issued by a
financial institute to the cardholder for making payments online or through an electronic device,
without the use of cash.

 E-wallet: A form of prepaid account that stores user’s financial data, like debit and credit
card information to make an online transaction easier.
 Smart card: A plastic card with a microprocessor that can be loaded with funds to make
transactions; also known as a chip card.

2. Cash Payment System

 Direct debit: A financial transaction in which the account holder instructs the bank to collect
a specific amount of money from his account electronically to pay for goods or services.
 E-check: A digital version of an old paper check. It’s an electronic transfer of money from a
bank account, usually checking account, without the use of the paper check.
 E-cash: is a form of an electronic payment system, where a certain amount of money is
stored on a client’s device and made accessible for online transactions.
 Stored-value card: A card with a certain amount of money that can be used to perform the
transaction in the issuer store. A typical example of stored-value cards are gift cards.

Advantages
E-payment systems are made to facilitate the acceptance of electronic payments for online
transactions. With the growing popularity of online shopping, e-payment systems became a
must for online consumers — to make shopping and banking more convenient. It comes with
many benefits, such as:

 Reaching more clients from all over the world, which results in more sales.
 More effective and efficient transactions— It’s because transactions are made in seconds
(with one-click), without wasting customer’s time. It comes with speed and simplicity.
 Convenience. Customers can pay for items on an e-commerce website at anytime and
anywhere. They just need an internet connected device. As simple as that!
 Lower transaction cost and decreased technology costs.
 Expenses control for customers, as they can always check their virtual account where they
can find the transaction history.
 Today it’s easy to add payments to a website, so even a non-technical person may
implement it in minutes and start processing online payments.
 Payment gateways and payment providers offer highly effective security and anti-fraud
tools to make transactions reliable.

Disadvantages

 E-commerce fraud is growing at 30% per year. If you follow the security rules, there
shouldn’t be such problems, but when a merchant chooses a payment system which is not highly
secure, there is a risk of sensitive data breach which may cause identity theft.
 The lack of anonymity: For most, it’s not a problem at all, but you need to remember that
some of your personal data is stored in the database of the payment system.
 The need for internet access: As you may guess, if the internet connection fails, it’s
impossible to complete a transaction, get to your online account, etc.

Mechanism of making payment through internet:

Electronic Payment System
E-commerce sites use electronic payment, where electronic payment refers to
paperless monetary transactions. Electronic payment has revolutionized the business
processing by reducing the paperwork, transaction costs, and labor cost. Being user
friendly and less time-consuming than manual processing, it helps business organization
to expand its market reach/expansion. Listed below are some of the modes of electronic
payments −

 Credit Card
 Debit Card
 Smart Card
 E-Money
 Electronic Fund Transfer (EFT)

Credit Card
Payment using credit card is one of most common mode of electronic payment. Credit
card is small plastic card with a unique number attached with an account. It has also a
magnetic strip embedded in it which is used to read credit card via card readers. When a
customer purchases a product via credit card, credit card issuer bank pays on behalf of
the customer and customer has a certain time period after which he/she can pay the
credit card bill. It is usually credit card monthly payment cycle. Following are the actors
in the credit card system.

 The card holder: Customer

 The merchant: seller of product who can accept credit card payments.
 The card issuer bank: card holder’s bank
 The acquirer bank: the merchant’s bank
 The card brand: for example , visa or Mastercard.

Credit Card Payment Process

 Step Description

Bank issues and activates a credit card to the customer on his/her

Step 1
request.

The customer presents the credit card information to the merchant site
Step 2 or to the merchant from whom he/she wants to purchase a
product/service.

Merchant validates the customer’s identity by asking for approval from

Step 3
the card brand company.

Card brand company authenticates the credit card and pays the
Step 4
transaction by credit. Merchant keeps the sales slip.

Merchant submits the sales slip to acquirer banks and gets the service
Step 5
charges paid to him/her.

Acquirer bank requests the card brand company to clear the credit
Step 6
amount and gets the payment.

Now the card brand company asks to clear the amount from the issuer
Step 6
bank and the amount gets transferred to the card brand company.

Debit Card
Debit card, like credit card, is a small plastic card with a unique number mapped with the
bank account number. It is required to have a bank account before getting a debit card
from the bank. The major difference between a debit card and a credit card is that in
case of payment through debit card, the amount gets deducted from the card’s bank
account immediately and there should be sufficient balance in the bank account for the
transaction to get completed; whereas in case of a credit card transaction, there is no
such compulsion.

Debit cards free the customer to carry cash and cheques. Even merchants accept a
debit card readily. Having a restriction on the amount that can be withdrawn in a day
using a debit card helps the customer to keep a check on his/her spending.

Smart Card
Smart card is again similar to a credit card or a debit card in appearance, but it has a
small microprocessor chip embedded in it. It has the capacity to store a customer’s
work-related and/or personal information. Smart cards are also used to store money and
the amount gets deducted after every transaction.

Smart cards can only be accessed using a PIN that every customer is assigned with.
Smart cards are secure, as they store information in encrypted format and are less
expensive/provides faster processing. Mondex and Visa Cash cards are examples of
smart cards.

E-Money
E-Money transactions refer to situation where payment is done over the network and the
amount gets transferred from one financial body to another financial body without any
involvement of a middleman. E-money transactions are faster, convenient, and saves a
lot of time.

Online payments done via credit cards, debit cards, or smart cards are examples of
emoney transactions. Another popular example is e-cash. In case of e-cash, both
customer and merchant have to sign up with the bank or company issuing e-cash.

Electronic Fund Transfer

It is a very popular electronic payment method to transfer money from one bank account
to another bank account. Accounts can be in the same bank or different banks. Fund
transfer can be done using ATM (Automated Teller Machine) or using a computer.

Nowadays, internet-based EFT is getting popular. In this case, a customer uses the
website provided by the bank, logs in to the bank’s website and registers another bank
account. He/she then places a request to transfer certain amount to that account.
Customer’s bank transfers the amount to other account if it is in the same bank,
otherwise the transfer request is forwarded to an ACH (Automated Clearing House) to
transfer the amount to other account and the amount is deducted from the customer’s
account. Once the amount is transferred to other account, the customer is notified of the
fund transfer by the bank.

Mechanism of making payment through internet:

Payment Gateways
Payment gateways are software and servers that transmit transaction information to
acquiring banks and responses from issuing banks (such as whether a transaction is
approved or declined). Essentially, payment gateways facilitate communication within
banks.

Security is an integral component of all payment gateways, as sensitive data such as

credit card numbers need to be protected from any fraudulent parties. The card
associations have created a set of rules and security standards which must be followed
by anyone with access to card information including gateways. This set of rules and
 security standards is called the Payment Card Industry Data Security Standard (PCI-
DSS or PCI).

Submitting an order is usually completed using HTTPS protocol, which securely

communicates personal information through the parties involved in the transaction. Many
payment providers, such as 2Checkout, enable merchants with added options when a
cardholder purchases a service or product. Aside from providing the ability for real-time
transactions, these providers can help to translate currencies between two parties in
different countries, as well as bridge language and payment methods. Payment
gateways usually charge those who use them a per transaction fee.

How payment gateways work

When a customer places an order from an online store, the payment gateway performs
several tasks to finalize the transaction:

 Encryption: The web browser encrypts the data to be sent between it and the
vendor’s web server. The gateway then sends the transaction data to the payment
processor utilized by the vendor’s acquiring bank.
 Authorization Request: The payment processor sends the transaction data to a
card association. The credit card’s issuing bank views the authorization request and
“approves” or “denies.”
 Filling the Order: The processor then forwards an authorization pertaining to the
merchant and consumer to the payment gateway. Once the gateway obtains this
response, it transmits it to the website/interface to process the payment. Here, it is
interpreted and an appropriate response is generated. This seemingly complicated and
lengthy process typically takes only a few seconds at most. At this point, the merchant
fills the order.

Clearing Transactions
The steps outlined above are repeated in an effort to “clear” the authorization via a
consummation of the transaction. However, the clearing is only triggered once the
merchant has actually completed the transaction (shipping the order). The issuing bank
changes the “auth-hold” to a debit, allowing a “settlement” with the vendor’s acquiring
bank. The processor is then relied upon to settle all of the vendor’s approved
authorizations with the acquiring bank at the end of the day.

Other Payment Gateway Functions

Payment gateways also screen orders with a myriad of helpful tools. This screening
process filters out as much fraud as possible. Examples of gateway fraud detection tools
include:

 Delivery address verification

 AVS checks
 Computer finger printing technology,
 Velocity pattern analysis
 Identity morphing detection
 Geolocation
Mechanism of making payment through internet:
Visitors to Website
A lot of times, failing to drive e-commerce traffic from your potential customers’ computer to
your online shop is what leads to failed ventures.

There is no point in having the best looking website or best product if nobody even knows
you exist.  Period.

What can you do?

So what can you do?  Driving online traffic to your e-business is not a simple or straight
forward subject matter.  But simplistically speaking, you could either buy traffic, or you can
drive traffic organically.

1) By buying traffic, you could quickly usher potentially customers into your online store.

However, if you are not careful in managing your marketing spend, you could quickly spend
you way out of business if the traffic does not convert into paying customers.

The simplest and one of the most common way is to advertise your business using Google
AdWords.

When your potential customers search for specific terms related to your product on Google,
you can pay Google to show your ad either at the top or the right hand side of the search
results page.

This is one of the easiest way of buying traffic to your online business.  However as
mentioned, you better ensure that your that your website is optimized in a way that
maximizes your chances of converting these traffic into paying customers.

2) The other method of driving traffic, which is usually the preferred method by many since it
is free, is to increase your search engine ranking.

Basically, if you are on the first page of Google search, you are significantly increasing your
e-commerce’s chances of doing well.

How do you improve your search engine ranking?  The purest way to do so is to provide
valuable online content or information to the online community.  The more relevant and
useful your content is, the more search engines such as Google would like you.

Writing original and useful articles about your products is an excellent way to provide value
to people looking for information related to your product.  Becoming an authority in the
online world and hence having others recognize you as an authority by linking their website
to yours is also another effective method of rising in search rankings.
The more you contribute, the more you will receive.  The price in this case is not your
marketing budget, but more so, your time.

Tools for Promoting Website

No matter what kind of online business you have, it is essential that customers are able
to find your company. Once they locate you, it is necessary to engage them in the
browsing or buying process, depending on your site objectives, using various
promotional tools and techniques to enhance the online experience.

 The challenge in getting customers to visit your site and return in the future is a
reflection of the competitive nature of the online environment. Not only do online
businesses have to compete against thousands of new companies that go online every
day, but they must also consider the increased buying and decision-making power of
consumers, who have a variety of options at their fingertips. If you want to stand out from
the endless stream of online businesses and gain the attention of customers, you need
to promote your site, and you need to do it well.

There are a number of ways you can promote your online site. You can use your own
site as a vehicle to drive your objectives forward using various online tools, or you can
implement a number of online and offline promotional techniques.

Online Promotional Tools

Feedback Forms

Bookmarking

Content

Daily Give-Away, Coupons, Contests

Surveys

Awards/Testimonials

Online Chat

Tours
Online Promotional Tools:
Feedback Forms – What better way to find out what people think of your company than
to solicit their opinion. Using customer feedback you can improve your site and provide
better service to your customers. Using feedback forms also shows your customers that
you are interested in what they have to say, and provides an opportunity to build
relationships with them. For instance, you may send out an email thanking a particular
customer for bringing an issue to your attention and follow-up with a coupon to show
your appreciation. The disadvantage with a feedback form is the type of information
people provide or the questions they may ask. If customers cannot find answers on your
site, they may resort to using the feedback form. To receive targeted feedback, it is
useful to develop an online form for customers to complete that leads them through the
feedback process.

Bookmarking – A good way to encourage customers to visit your site is to ask them to
bookmark it. Through bookmarking, they have easy access to your site and do not have
to remember your site’s exact URL to visit. Bookmarking a site is particularly beneficial
for web surfers who like to follow links. It enables them to go back and take a more in-
depth look at what you have to offer when they need to.

Content – Content is a strong driver for encouraging repeat visits by customers,

particularly when it is fresh, timely, and gives customers a reason to visit regularly. For
example, perhaps you have a ‘Tip of the Day’ or a regular visit by an ‘expert’ well-known
in your field of business who provides online advice. Content that is useful for your
visitors and will enable them to leave with new knowledge will attract them to your site,
and encourage them to check back regularly.

Daily Give-Away/Coupons/Contests – Sites that offer regular promotions such as a

‘give-away’, coupons and contests are in a solid position to capture a regular audience.
While the promotion acts as the driver that attracts customers to visit initially, it provides
an opportunity to showcase new products and services, and deliver important news
about your company. For instance, you may initiate a ‘give-away’ that is a printer, but
also take the opportunity to tell your customers about a printer sale next week. Your
promotional tool has not only lured customers to your site, but it has also increased the
likelihood of getting a sale. Offering various promotions also enables you to obtain
customer information that you can use in future marketing campaigns.

Surveys – Surveys provide an effective avenue through which to gather important

customer data that will help you to improve your business and plan for the future. To
encourage visitors to complete the survey, you can provide an incentive such as an
opportunity to win a prize.

Awards/Testimonials – Including awards and testimonials on your site will provide

credibility to your business. They will also provide a foundation for you to build rapport
and trust with your customers, who will be more willing to visit a site they can trust.
Online Chat – Online chat mechanisms provide a forum where customers can come
together and share their experiences with each other and you. This interactive tool
allows you direct access to customer opinions where you can gauge trends and
determine their views on the industry.

Tours – Online tours provide you with an opportunity to showcase particular products
and services, and highlight their key benefits. For instance, you may have a CRM
product that you would like to promote. What better way to show how it works than to
provide a tour of the product – making what could be a potentially complex product look
simple and easy to use.

Online and Offline

Promotional Techniques

Article Submissions

Newsletters

Press Releases

Banner Advertising

Sponsorships

Link Strategies

News Groups

Email Marketing

Search Engine Optimization

Affiliate Marketing

Web Site Promotion Services

 Collateral Material

Trade Shows

Launch Events

Online And Offline Promotional Techniques

Article Submissions – Submitting articles you write to targeted resource portals will
broaden your reach and position you as an expert in your field of business. If people
identify with you and find your articles useful, they are likely to visit your site and take an
interest in your products and services.

Newsletters – As a low cost promotional tool, a newsletter enables you to build rapport
and strengthen your relationship with customers. The key to success is to focus less on
self-promotion and focus more on providing information that is newsworthy and valuable.
To effectively communicate with prospective and current customers release the
newsletter regularly and provide customers with an opportunity to unsubscribe.

Press Releases – When you have important news to share about your business,
sending a press release, by email, mail or fax, to editors and public relations newswires,
will give you direct access to customers most interested in your message and increase
your exposure. For instance, if you have a technology related site you may focus on
journalists who cover the Internet. You can also target your release to specific industries.

Banner Advertising – If you want to increase your company’s brand awareness,

implementing a banner ad campaign is an effective advertising method. Banner ads are
an effective direct marketing tool that can increase site traffic if they are creative and
include a call-to-action. Advertise on sites that your customers would visit, and ensure
you provide the best possible offer you can.

Sponsorships – Sponsorships are an effective way to develop greater brand impact

because you can capitalize from an existing community and associate your brand with
fresh content. By customizing your sponsorships to specific areas or for specific
messages, you can create an excellent platform to communicate your products and
services.

Link Strategies – Linking strategies provide an effective way for customers to learn
about your company through other sites related to your subject. The key to developing
an effective link program is to identify sites that are not direct competitors but have a
similar target market as you. It is also necessary to find a balance between the amount
of traffic that exits your site through a link and the number of people who visit your site
through a link on another site. Building links from other sites to your site also increases
your site’s relevancy to search engines.

Newsgroups – Joining a newsgroup will enable you to build your reputation, identify
trends in your industry, and evaluate the needs of potential customers. To get in close
contact with potential customers, it is necessary to research groups that target your
prospective customer base and spend time identifying what kind of behavior is
acceptable in the group. Netiquette is very important when you are a member of a
newsgroup. The best way to give your business exposure without appearing like you are
only there to market yourself is to use a signature file, which references your contact
information

Email Marketing – With people spending so much time on email, there is an enormous
opportunity to market to them and build solid customer relationships. Email marketing
has emerged to become one of the most profitable and economical ways to manage
customer relationships, presenting marketers with many opportunities and benefits. Its
benefits include the following: low cost vehicle; access to a targeted and qualified
audience; fast, efficient and effective; offers personalized communication; easy to track
and evaluate; increases sales, awareness, and traffic.

Search Engine Optimization – Effectively submitting your site in search engines will
enable you to acquire top placement in search engine results and increase the likelihood
that people will link into your site during search queries. The trick is to identify effective
methods to optimize your placement. The criteria search engines and directories use to
determine which sites rank highly varies. Some, like Google, use link popularity in their
ranking mechanisms. Others measure click popularity, gauge the number of times key
words are used throughout a site, or favor sites that are updated regularly. Therefore, it
is important to learn about the various search engines and identify the ones that are best
suited for your site.

Affiliate Marketing – With an affiliate program you offer affiliates an incentive to perform
a particular outcome. This outcome may be to generate customer leads for your
business, increase ‘clicks’ to your site or improve sales – from a banner ad, text link,
graphic or other means such as a newsletter. The incentive is usually a fee, provided as
a flat rate or percentage depending on your affiliate program objectives.

Web Site Promotion Services – There are web site promotion services that will assist
you in marketing your site. While these types of services can be helpful, they do not
guarantee results and can be quite expensive. It is necessary to do your research before
working with a company – check their reviews and contact references if necessary.

Collateral Material – Ensure your Web and email address are on all collateral materials
including any promotional items you give away, such as mouse pads. This will give
customers an easy way to contact you and increase your brand awareness.

Trade Shows – Attending trade shows is an effective way to increase awareness of

your business to a targeted audience and provide you with direct access to potential
customers, who can get hands-on knowledge about your business and its products or
services. Attending a trade show will also enable you to identify trends in the industry
and provide you with information about your competitors. Furthermore, you can give
away products with your web site address and encourage customers to complete forms
for prizes, providing you with valuable customer data.

Launch Events – An event that introduces new products and services is an effective
way to generate excitement and develop relationships with potential customers. For
instance, you can obtain customers’ contact information so you can follow-up after the
event with promotions or introduce new products and services. As well, inviting
prominent guests to the event as speakers or supporters will generate interest in the
media, which can result in free publicity and bring greater exposure to your business.

The kind of promotional tools and techniques you implement depends on a variety of
factors including your online objectives, customers, products and services, marketing
budget, and competition.

Objectives – Whether your online objective is to increase awareness, improve sales or

drive site traffic, it will influence the type of promotional tools and techniques you use.
For instance, if you want to increase sales, you may offer online coupons, which give
customers an incentive to buy. You may also conduct daily ‘give-aways’, which will
enable customers to test your products and encourage future purchases. If you want to
increase awareness of your site or drive site traffic, purchasing banner space on sites
that target your customers may do the trick. You can also conduct an email marketing
campaign to keep customers up-to-date on your company and inform them of new
products and services.

Customers – The demographics of your customer group will influence what kind of
promotional tools and techniques you use. For instance, women may be more likely to
use coupons than men. A young audience may appreciate more interactive tools on the
site that are fun and engaging, such as an online tour of a site or particular product.

Products/Services – The type of products or services you sell can impact the
promotional tools or techniques you implement. For instance, if you sell highly complex
products, it will be necessary to find avenues where you can communicate product
features concisely and enable customers to walk away with the most useful information.
You may provide an online tour of a particular product that shows customers its benefits.
If you sell packaged goods, you may focus on making sales and providing online
coupons to encourage purchases.

Budget – When choosing the right promotional tools or techniques, your budget is
obviously a big consideration. Some promotional techniques are very expensive
including attending trade shows and organizing a launch event. Low cost options may
include submitting articles to resource portals, sending out a newsletter or developing a
link strategy.

Competition – If you want to stay in line with your competition, it is beneficial to identify
what type of online or offline promotions they are using. How are they getting top
placement in search engines? What kind of promotional tools do they use on their site?

Driving traffic to a new web site involves a large amount of strategic planning,
development and organization. Your web site should never be static – it must be
regularly updated to meet the needs of your customers, be checked to ensure there are
no dead links or old promotions, consider trends in the market that support specific
online marketing techniques, and reflect changes in your business over time. As a result,
it is important to ensure you have the right resources committed to your online site and
allocate the appropriate budget to maintaining and promoting it. When you start to
measure how well your site is doing compared to other traditional sales and marketing
channels, you will be able to quantify the impact of your Internet presence and develop
strategies that will build on your successes.

Plastic Money: Debit Card, Credit Card

Debit cards and credit cards each have advantages and disadvantages. The biggest
advantage of debit cards over credit cards is that you don’t need to worry about interest rates,
monthly bills and finance charges. Since a debit card uses only the money you actually have,
you won’t build up an unmanageable debt by using it, as you might with unchecked use of a
credit card. Credit cards, after all, accrue interest on unpaid balances. Unless you pay off your
balance every month, you will always end up paying more for a TV, for example, than what
the TV actually cost.

Credit card limits are often quite high, sometimes significantly higher than the average
monthly balance in your checking account. If you aren’t careful, your credit card balance can
grow out of control. The limit on your debit card, on the other hand, is whatever you have in
your checking account.

Another advantage of the debit card is how easy it is to acquire one. You can get a debit
card with pretty much any checking account, whereas you can obtain a credit card only by
applying for one. A debit card does not require an investigation into your credit history; most
credit cards do require a credit check.

Just as the advantage of a debit card is that it draws on your actual funds, the disadvantage
of a debit card is that you are limited by those funds. You can overdraw your checking
account, which can result in your bank charging an overdraft fee. These fees can reach up to
Rs. 2500. But you can also go over your credit card limit, which results in a similar fee, and
this fee can accrue interest. Debit cards don’t license you to be irresponsible in your
spending; you should always keep tabs on your transactions and account balance.

One advantage of credit cards over debit cards is that they can help you to make very
large purchases that would be otherwise impossible, such as that plasma TV you’ve been
eyeing. But it is easy with credit cards to feel like you can buy whatever you want, whenever
you want. Live and spend within your means.

A disadvantage of debit cards is the amount of buying protection provided to you by law.
Debit card transactions very much resemble cash transactions. The money changes hands
quickly, and it’s difficult to get it back. If you want to return a broken or unsatisfactory item
you purchased with a debit card, many businesses will only give you an exchange or store
credit.

Laws Relating to Online Transaction

As commerce on the Internet has grown, the inevitable fallout from failed transactions
and business relationships has resulted in a developing body of case law. In some
cases, the legal issues that govern the analysis of the electronic commercial transaction
are no different from those applied in a more traditional commercial setting.
For example, a fraudulent scheme perpetrated through print media is still the same
fraudulent scheme when perpetrated on a web-site. Indeed, in the area of consumer
fraud, the emerging issues in e-commerce are less related to substantive legal
principles, than they are to procedural issues, such as the courts’ jurisdiction over out-of-
state defendants and discovering and stopping fraud from taking place online.

Overview of “UNCITRAL MODEL LAW”

United Nations Commission on International Trade Law (UNCITRAL) Model Law on E-
Commerce, the Government of India enacted the Information Technology Act in June
2000. The Act facilitates E-commerce in the country.

The United Nations General Assembly adopted the United Nations Commission on
International Trade Law (UNCITRAL) Model Law on E-Commerce through a
Resolution passed on 30 January 1997.  The UNCITRAL Model Law on E-commerce
was drafted in order to serve as a document that the various countries of the world could
use and evaluate and amend their own laws and practices and by providing a common
legal platform on which all countries could model their domestic legislations allow the
countries of the world to move towards a uniform international law on E-commerce.

The main objective of UNCITRAL Model Law of E-commerce is to offer national

legislators with a set of internationally acceptable rules as to how the legal obstacles in
the communication of legal significant information through paperless messages, may be
removed and how a more secure legal environment may be created for E-commerce.

Any legislation pertaining to E-commerce will be a futile exercise unless it fills up the
lacunae in the existing law regarding the validity of online contracts. Recognizing this
factor, the Model law has incorporated a provision in Article 11 relating to the formation
and validity of contracts:

In the context of contract formation, unless otherwise agreed by the parties, an offer and
the acceptance of an offer may be expressed by means of data messages. Where a
data message is used in the formation of a contract that contract shall not be denied
validity or enforceability on the sole ground that a data message was used for that
purpose.

Overview of the Indian law

The Information Technology Act, 2000 (“IT Act”) deals with contractual aspects of use of
electronic records.

The validity of electronic transactions is established under the IT Act. The act
establishes that an ecommerce transaction is legal if the offer and acceptance are made
through a ‘reasonable’ mode. The objectives of the Information Technology Act, as
outlined in the preamble, are to provide legal recognition for E-commerce transactions.
The Act lays down procedures for networking operations and for civil wrongs and
offences. The Indian Information Technology Act does not have any express provision
regarding the validity or formation of online contracts.
For instance, a communication sent by an offeror to an offeree through indirect means,
such as an email that passes multiple servers and spam mails, is not regarded as a
reasonable mode under the IT act. Reasonable modes of acceptance in an ecommerce
transaction are:

Direct mail from the offeree to the offeror.

Acceptance by conduct, which is pressing an ‘Accept’ button to an offer.

The IT act governs the revocation of an ecommerce offer and acceptance. An

ecommerce transaction is said to be complete when the offeror receives
acknowledgment of the receipt of the offer. Besides, an offeror has the liberty to
terminate an offer, provided its acceptance has not been communicated by the offeree.

The Information Technology (Amended) Act, ITAA, was amended in 2008 to increase
security of e-commerce transactions, with special provisions for legal recognition of
digital signatures and electronic documents. Section 43A of ITAA holds ecommerce
companies accountable for protection of personal data.

When an ecommerce company fails to protect personal data of its customers or is

negligent in maintaining and implementing reasonable security practices, and if this
results in wrongful loss of an online buyer, the laws are clear that its body corporate is
wholly liable to pay the damages by means of monetary compensation.

UNIT-2
APPLICATIONS OF E-COMMERCE
e-commerce applications in Manufacturing
The transformation in the manufacturing industry is driven by the way your clients are getting
used to purchasing products through web stores. It is very important to realize that your
business customers are also consumers, who are more demanding when it comes to finding
the information they need and making purchases. Convenience is everything and businesses
that truly adopt omnichannel commerce are the winners of tomorrow.

The manufacturing industry is following suit and evolving at a rapid pace. I believe that
manufacturers that primarily serve clients through phone, fax, or email will risk losing the
loyalty of customers who are digital natives.

These clients want to be in control of the information, whether it is inventory levels, product
details, their order history, or their own negotiated discounts. They want to be able to
purchase goods whenever and wherever they want. These customers information to be
accessible at anytime and anywhere. Their world is online.

How Do Manufacturers Benefit From E-Commerce?

I know that the fact that customers expect companies to take their business online scares
many in the manufacturing industry. Their business is complex and translating this business
to an online environment sounds like a big challenge.

However, it doesn’t have to be.

Adopting B2B e-commerce has many benefits and doesn’t have to be difficult. For instance
most processes can stay the same, such as your sales process. It’s just another channel, and
adding this channel will benefit a manufacturing company in several ways.

Provide a Personalized Catalog

As a company in the manufacturing industry you have a great catalog of products that you are
proud of and want to showcase for your clients. However, prices for your products depend on
the specific situation and differ from customer to customer. That is why you have to be
careful with sharing your pricing.

In addition, it would be nice to have a tailor-made catalog for every client. Such a catalog
would only feature the products which are relevant to a certain customer. This is possible
with a B2B web store. By connecting your assortment to a personalized account, your
customers will only see the products that fit their needs and requirements.

Ensure Visibility for Spare Parts

Many manufacturing industries have high traffic for spare parts. An ERP-integrated e-
commerce platform lets you match these spare parts with the more complex products clients
have purchased. This makes cross-selling and upselling easy and efficient. Customers don’t
have to spend any effort on searching for connecting parts. A quick win for both service and
efficiency.

Configure Products Online

The ability to match products also grants you the opportunity to configure products in your e-
commerce platform. Products that differ in shape, size and color. This means your customers
are able to customize products to their own requirements, without the help of your sales or
support department. This saves both your clients and your company a lot of time and effort.

Promote Your Private Label

Manufacturing companies that own a private label benefit even more from e-commerce. A
web store allows you to highlight these products by providing suggestions for additional
sales, or offer them as (high quality) spare parts. This not only increases the sales of your
private label, but also improves cross-sell and upsell results.

Sell Your Complete Assortment Online

As a manufacturer, your assortment can contain thousands of products. Of these products,
only a small percentage is known and purchased by the average client. However, you often
have much more to offer than the products your customers know about.

Adding a B2B web store to your sales channels helps you to inform your customers about
your complete assortment. Tools like quick search, search filters and search suggestions will
guide clients through the goldmine of products. Customers can now learn about new and
additional products, as well as alternatives.
 e-commerce applications in Wholesale
Wholesale eCommerce has given businesses the platform to accelerate sales opportunities.
Alongside an eCommerce solution, wholesalers can rely heavily on an accounting/ERP
system and/or an inventory management solution to run day-to-day wholesale operations.
Yet, despite proficiently implementing systems and applications to perform their specific role
within the organisation, they often operate in isolation.

Running multiple business systems that are not integrated results in disparate information,
miscommunication and repetitive bi-directional data entry.

Wholesale and eCommerce Integration

One of the biggest challenges wholesale businesses face is having the disconnection between
eCommerce and back-end systems. Integrating wholesale eCommerce with an
accounting/ERP system and an inventory management solution provides the ability to
synchronise information between systems and enables them to talk to each other.

Data integration and synchronization will enable wholesale businesses to streamline day-to-
day operations by eradicating repetitive bi-directional data entry. Streamlining manual
administration tasks that surround back office activities not only improves speed and data
accuracy, it also improves ROI and helps to drive the business forward. Why have an
employee wasting valuable time processing orders and keeping an eye on inventory levels
when it can be automated?

Here’s a selection of common wholesale eCommerce integration processes that businesses

look to automate:

 Synchronisation of orders taken online and offline between systems

 Synchronisation of customer details including payment details and transaction IDs into an
accounting/ERP system
 Automatic update of product details, stock levels and pricing to an online web store
 Automated data distribution including price changes, remove from sale notices, end of line
information and delivery schedules
 Automatic update of wholesale eCommerce solution with a ‘complete’ or ‘shipped’ status
when an invoice or delivery has been created in an accounting/ERP system
 Automatic update of stock levels (including returned stock) to warehouse(s), eCommerce
and retail stores
 The creation and distribution of PO requisitions when an eCommerce order depletes stock
levels below agreed levels
 Automated order placement with couriers and shipping services

Improving the way that data is processed and documented can play a significant role in
improving company performance. Wholesale eCommerce integration can be achieved by
deploying business process automation (BPA) functionality. BPA software, such as Codeless
Platforms’ BPA Platform, provides a positive influence on the performance of an
organisations’ systems and applications. Codeless Platforms’ BPA Platform facilitates
automated business processes between systems and applications that can be set to
 specific business rules on a scheduled or event-driven basis. This means that data can be
passed between systems and applications in real-time without any employee intervention.

The benefits of integrated wholesale eCommerce

Wholesale businesses that have integrated an eCommerce platform with other business
systems and automated a number of wholesale processes can achieve the following
commercial benefits:

 Removal of repetitive bi-directional data entry and administration errors

 Reduction in processing costs
 Remove the need to recruit seasonal or temporary employees
 Reduction in stock waste
 Optimised inventory levels
 Enhancement to communications between departments
 Increase in the visibility of critical information
 Improved procurement process flow

e-commerce applications in Retail

1. Establish an Online Presence

More than 80% of the online population has used the Internet to purchase something.
Your customers expect you to be available, and this presence allows you to keep up with
the competition. Otherwise, your audience will be flocking toward your competitors to
make an online purchase.

2. Attract New Customers

As a business owner, you want to grow your business and attract new audiences.
Physical retail relies on branding and customer relationships, but online retail has the
added benefit of driving traffic from the search engines. If a customer is doing a search
for photo editing software, for instance, they may land on your company even though
they’ve never heard of you before.

3. Save on Operational Costs

Running an ecommerce store can actually save you money. How? With a web-based
management system, you can automate inventory management and decrease the costs
associated with it. Also, running an ecommerce store doesn’t come with the same
overhead costs as a physical store. The additional profit that is made from reaching
more customers will offset any initial setup costs.

4. Better Understand Your Customers

It’s difficult to build a customer persona when you’re running a mom-and-pop shop. You
can get a rough idea of who your customers are, but it’s based on your perception rather
than actual data. With an ecommerce store, you have the ability to track your customers’
buying habits. What products are they most interested in? When are they likely to buy?
 What motivates them? All of this information can be used to sell more efficiently to your
customers.

5. Boost Brand Awareness

Ecommerce will help your brand get more awareness in the online landscape. As you
develop more web pages, the search engines can index them and boost your
placement. It’s important to use good keywords in your content that are optimized for
your audience, as this is what will drive traffic to your site. As your site gets more
visibility, people will become familiar with your brand and reputation.

6. Equip Customers with Information

When you have an ecommerce site, you can provide as much information as you want,
which customers appreciate. From the product description to customer reviews to
shipping charges, you can arm shoppers with the information they need to make
informed buying choices, and you don’t need to provide the staff to answer these
questions. This leaves you with more time for other tasks around the workplace.

7. Drive Conversions and Sales

When you open up your business globally without any geographical or time constraints,
you capture new audiences that you wouldn’t be able to reach otherwise. With a well-
designed ecommerce site and a quality product, you can drive conversions and sales
and experience a new level of growth. Analytics also helps you fine tune your marketing
strategies so that you’re reaching the right audience.

e-commerce applications in Service Sector

E-Services
The delivery of services via the internet to consumers or other businesses can be
referred to by the generic term of e-services. There is a wide range of e-services
currently offered through the internet and these include banking, loans, stock trading,
jobs and career sites, travel, education, consultancy advice, insurance, real estate,
broker services, on-line publishing, and on-line delivery of media content such as videos,
computer games, etc. This list is by no means exhaustive and it is growing all the time.
In this lecture, we will give an overview of eservices.

In order to bring some order to the discuss of these wide variety of e-services, we
organize them into the following categories, namely

1. Web-enabling services, which were previously provided by humans in office

agencies and/or their branches. The primary purpose here is that these services help to
save time and effort for the user; bring convenience, and improve the quality of life. In
many cases, it can result in a reduced cost for the consumer.

E-services that fall into this category include

 Banking
 Stock trading
 Education

In some cases, this may bring a new dimension to the original service, enhancing and
altering it. E-education is an example of this. It may also bring into the catchments new
groups of consumers of the service to whom it might not have been previously
accessible.

2. Matchmaking services. These take a need from an individual or business

customer and provide mechanisms (from providers) for matching that need.

E-services that fall into this category include

 Jobs and employment sites

 Travel
 Insurance
 Loans including mortgage loans
 Real estate sales
 Brokers

The advantage of this kind of matchmaking through the internet is that the ability to
search electronically over a wider area to satisfy the customer need and to more
precisely meet the customer need is greatly facilitated by both computerization and
communication over the internet.

3. Information-selling on the web. This group essentially sells information content

of one sort or another and includes ecommerce sites that provide on-line publishing such
as web-based newspapers
o consultancy advice
o specialized financial or other information
4. Entertainment services. These provide internet-based access to videos,
movies, electronic games, or theme sites. This E-entertainment sector is expected to
grow rapidly in the next few years, with a convergence of TV and internet-based
technologies.
5. Specialized services such as auctions. Many different auction sites have
appeared and these are discussed further in this lecture. It is not possible to discuss all
the different eservices in this lecture and so we will briefly sample only a few examples
for each category.

Web-Enabled Services
Web-enabled services include personal banking, stock trading, and education.

E-banking

Security First Network Bank (SFNB;)was the first internet bank. It provides most of the
banking services on the web. Therefore, you can do your banking with your fingers
instead of your feet. Looking at e-banking, we can distinguish between twp distinct
models:
1. Pure cyber banks
2. Traditional banks that provide e-banking to complement their retail banking
SFNB. is a pure cyber bank, while the homepage of Bank of America illustrates the
second model.

While not all banks offer the full range of services on the internet, banks in both the
mentioned groups offer a varied range of services including

1. personal banking
2. commercial banking for both small businesses and large corporations
3. financial services
4. loan application services
5. International trade including settlement instruments, foreign exchange
transactions, etc.

There are significant advantages for either the individual or corporation as well as the
bank in using e-banking. An individual doing personal banking on the internet can,
amongst other things, pay bills, do account transfers, make queries on account
balances, obtain statements, in some cases view images of checks, etc., and import
transactions directly into home account management software. Furthermore, one can
make such transactions 24 hours a day from any place with internet access around the
world. In addition to these, a number of banks offer personal financial services including
making personal loan applications on the internet. All these represent a large increase in
convenience and time saving for the bank customer, saving him trips to the bank branch,
queuing, etc.

The advantages to the banking institutions themselves include

1. Reduction in the number of retail banking branches, saving rentals or ownership

of the related properties.
2. Reduction in staffing because of the reduction in paper processing as well as
face-to face bank teller contact.
3. Bringing about increase in the time the bank hangs on to the money before
making the required transfers, leading to increase in interest received by the banks.
These advantages are so significant that some banks offer customers a number of
incentives to -switch to internet banking, such as free checks, reduced fees, increased
deposit rates, etc.

E-stock trading and e-investing

Several companies such as E-Trade .Datek.on-line, American Express Financial
Services, etc. allow you to trade stocks, bonds, mutual funds, etc. on the internet. These
companies offer you to trade at a very small cost compared to discount brokers or full-
service brokers. This has resulted in these on-line trading companies grabbing an
increasing market share. In response to this, discount brokers including Charles Schwab
and full-service brokers have also moved to introduce internet trading of stocks.

The steps involved essentially are the following:

1. Place a request to trade, say buy a stock

2. The system responds with current “on the web site” prices
3. The internet trader has to confirm this trade or cancel it several companies allow
one to create a simulated portfolio, which one watches over time without actually buying
or selling the stocks in reality. An example of this can be found on the Smart Money site.

The major advantages to the person doing the trading are

1. tThe reduced cost;

2. The convenience of being able to trade anywhere in the world with internet
access, e.g. while travelling; and
3. Access to a wide variety of information on a number of sites.

In addition to actually allowing you to trade, these sites provide a considerable amount of
information. The reduction in margins available to stockbrokers as a result of internet
trading is beginning to have an effect on other more traditional forms of brokers. This
has led to some traditional brokers also providing internet trading of stocks.

E-education
A number of e-universities are being spawned around the world. Again, three models
can be seen:

1. Pure cyber universities, such as Jones International University

2. Traditional universities setting up new cyber vehicles for providing university
education perhaps with other business partners. An example of this the Hong Kong
CyberU .which was set by the Hong Kong Polytechnic University and Pacific Century
CyberWorks.
3. Traditional universities offering courses themselves on the internet. There are a
number of web-based technology tools for this purpose. An example is Web CT. A
number of so called “open universities” that previously provided distance learning have
moved into providing an internet-based version of their courses. These traditional
universities have a number of advantages. They can now reach a client base that is
outside their catchment. They also expect to be able to deliver these courses at a
reduced cost; however, the jury is still out on this. Another advantage a traditional
university has on the internet over a new pure cyber university is that it has an
established brand name. There are a variety of issues that need to be explored carefully
when preparing to deliver educational material on the internet and these include the
following:
1. Does one use a distance learning model where the student uses a PULL
model to acquire the material?
2. Does one use a traditional lecture model using video streaming? This is a
PUSH model whereby a teacher “pushes” the materials to the students.

The use of the ‘internet for education opens up many possibilities, namely use of
quizzes, tests to provide the student with instant feedback on his/her mastery of the
materials, use of graphics and animation to explain concepts, particularly those that
have a dynamic character to them. It is anticipated that the internet will not only lead to
cyber universities of one kind or another but will also have a marked effect on teaching
and learning in traditional universities. One among some of the innovations that are
being explored is the joint teaching by two universities on different continents in order to
enhance the learning experience.
 Matchmaking Services
This has perhaps been the area in which there has been the greatest growth in
eservices. Essentially, in most of these applications, the customer who could be an
individual or business specifies his requirements in relation to the service.

The e-commerce site then does a search over its own databases or over the internet
using mobile agents, or over other databases or web sites to look for one or more
matches to these requirements. The information is then returned to the e-service
provider site to give the customer the required service.

Travel Services
Before the internet, one might have gone along to a travel agent in order to book one’s
travel requirements such as air tickets, train tickets, car hire, hotel, tours, etc. The travel
agent would try his best to meet these requirements by providing information regarding
schedules, pricing, promotions, as well as suggestions on changes to de itinerary. These
bookings could be for individuals or corporations involving corporate rates, etc.

A large number of e-commerce sites have appeared, which address this precise market
segment. These include trip.com travelweb.com, and priceline.com. These web sites
work in exactly the same way. When a customer provides requirements, these sites do a
search of their own databases or send agents our _ explore other web sites and respond
to the consumer. Amongst the requirement that the customer could specify is an
acceptable price.

A number of sites, such as priceline.com, require that provided the price specified is met,
the customer cannot refuse the offer found. These ecommerce sites are beginning to
grab an increasing part of the travel market. They are attractive to consumers because
of the convenience, the ability to meet requirements such as specified prices, and in
some cases like lastminute.com, a special customer need (i.e” booking at the last
minute). These travel sites often also have a lot of information on promotions,
suggestions,etc., which are useful for customers. These ecommerce sites are having a
strong “disintermediation” effect. Disintermediation refers to the removal of
intermediaries such as travel agents from the process involved in the purchase of the
service.

A recent increasing trend has also seen the primary provider of a service such as an
airline introducing internet based booking at reduced prices, further emphasizing the
disintermediation effect.

E-employment and e-jobs

There are several different kinds of services provided here, namely

1. sites where you can get advice on developing your resumes and can post your
resumes on the web
2. recruiters who use the web site to post available jobs, such as Hot jobsor
Jobdirect
3. employers who list available jobs on the web sites
4. matchmaking facilities that search the internet for jobs for jobseekers based on a
specification, such as
5. matchmaking facilities to search the internet for resumes that best fit a job
description given by a prospective employer use of agents to do the search These
approaches of using the internet for e-employment or ejobs avoid many of the costs and
difficulties associated with traditional approaches to advertising, such as high cost,
limited duration, and minimal information.

Others
In some areas, such as real estates e.g., the visualization ‘(3D’ facilities provided on the
web allow one to either

 show visualizations of buildings at the drawing board stage, or

 allow people distant from the physical site of building to actually visualize it

This area of matchmaking and brokering services is expected to grow greatly in the near
future with e-commerce sites exploiting new market niches. This is also an area with the
greatest likelihood of disinter mediation, and traditional agents or brokers will have to
build new dimensions to their services in order to survive.

E-Entertainment
This is expected to be a growing area of e-commerce in the future. A number of
companies are gaining access to or have purchased large inventories of movies or other
entertainment material with the view of allowing people to download this on the web.
Sites here vary from theme sites that use a small amount of interactive entertainment to
promote their products, such as Disney, to others that provide games either for a fee or
are free coupled together with advertising that pays for the site. An important issue here
is that the payments involved are relatively small for each transaction, and hence the
use of micro payment techniques is likely to be of considerable importance here.

Electronic Commerce and Banking

“Banking is vital to a healthy economy. Banking as a business can be subdivided into
five broad types: retail, domestic wholesale, international wholesale, investment, and
trust. Of all these types, retail and investment banking are most affected by online
technological innovations and are the ones that stand to profit most from electronic
commerce. The role of electronic commerce in banking is multifaceted impacted by
changes in technology, rapid deregulation of many parts of finance, the emergence of
new banking institutions, and basic economic restructuring.

Given these environmental changes, banks are reassessing their cost and profit
structures. Many banks feel that in order to be profitable they need to reduce operating
expenses and maintain strict cost control. This philosophy is evident in the many
mergers and acquisitions occurring in the banking industry. The challenge behind bank
restructuring lies in adequately operational zing the notion of cost control.
UNIT-4
Virtual existence: Concepts, Working, Advantages
and pitfalls of Virtual Organizations
This new form of organisation, i.e., ‘virtual organisation’ emerged in 1990 and is also
known as digital organisation, network organisation or modular organisation. Simply
speaking, a virtual organisation is a network of cooperation made possible by, what is
called ICT, i.e. Information and Communication Technology, which is flexible and comes
to meet the dynamics of the market.

Alternatively speaking, the virtual organisation is a social network in which all the
horizontal and vertical boundaries are removed. In this sense, it is a boundary less
organisation. It consists of individual’s working out of physically dispersed work places,
or even individuals working from mobile devices and not tied to any particular
workspace. The ICT is the backbone of virtual organisation.

It is the ICT that coordinates the activities, combines the workers’ skills and resources
with an objective to achieve the common goal set by a virtual organisation. Managers in
these organisations coordinate and control external relations with the help of computer
network links. The virtual form of organisation is increasing in India also. Nike, Reebok,
Puma, Dell Computers, HLL, etc., are the prominent companies working virtually.

While considering the issue of flexibility, organisations may have several options like
flexi-time, part-time work, job-sharing, and home-based working. Here, one of the most
 important issues involved is attaining flexibility to respond to changes – both internal and
external – is determining the extent of control or the amount of autonomy the virtual
organisations will impose on their members.

This is because of the paradox of flexibility itself. That is: while an organisation must
possess some procedures that enhance its flexibility to avoid the state of rigidity, on the
one hand, and simultaneously also have some stability to avoid chaos, on the other.

Characteristics:

1. Flat organisation
2. Dynamic
3. Informal communication
4. Power flexibility
5. Multi-disciplinary (virtual) teams
6. Vague organisational boundaries
7. Goal orientation
8. Customer orientation
9. Home-work
10. Absence of apparent structure
11. Sharing of information
12. Staffed by knowledge workers.

In fact, this list of the characteristics of virtual organisation is not an exhaustive one but
illustrative only. One can add more characteristics to this list.

Types of virtual organisations:

Depending on the degree or spectrum of virtuality, virtual organisations can be
classified into three broad types as follows:

1. Telecommuters
2. Outsourcing employees/competencies
3. Completely virtual

A brief description of these follows in turn.

Telecommuters:
These companies have employees who work from their homes. They interact with the
workplace via personal computers connected with a modem to the phone lines.
Examples of companies using some form of telecommuting are Dow Chemicals, Xerox,
Coherent Technologies Inc., etc.

Outsourcing Employees/Competencies:
These companies are characterised by the outsourcing of all/most core competencies.
Areas for outsourcing include marketing and sales, human resources, finance, research
and development, engineering, manufacturing, information system, etc. In such case,
virtual organisation does its own on one or two core areas of competence but with
excellence. For example, Nike performs in product design and marketing very well and
 relies on outsources for information technology as a means for maintaining inter-
organisational coordination.

Completely Virtual:
These companies metaphorically described as companies without walls that are tightly
linked to a large network of suppliers, distributors, retailers and customers as well as to
strategic and joint venture partners. Atlanta Committee for the Olympic Games (ACOG)
in 1996 and the development efforts of the PC by the IBM are the examples of
completely virtual organisations. Now, these above types of virtual organisations are
summarized in the following Table 34.1.

Advantage:

1. It saves time, travel expenses and eliminates lack of access to experts.

2. Virtual teams can be organised whether or not members are in reasonable
proximity to each other.
3. Use of outside experts without incurring expenses for travel, logging and
downtime.
4. Dynamic team membership allows people to move from one project to another.
5. Employee can be assigned to multiple, concurrent teams.
6. Teams’ communication and work reports are available online to facilitate swift
responses to the demands of the (global) market.
7. Employees can accommodate both personal and professional lives.
8. Virtual teams allow firms to expand their potential labour markets enabling them
to hire and retain the best people regardless of their physical locations.

Disadvantages:

1. The lack of physical interactions with its associated verbal and non-verbal cues
and also the synergies that often accompany face-to-face interaction
2. Non-availability of paraverbal and non-verbal cues such as voice, eye movement,
facial expression, and body language which help in better communication.
3. Ability to work even if the virtual teams are miles apart and the members have
never or rarely met each other face-to-face.

But the fact remains that despite these drawbacks; virtual organisations have become a
reality and are growing in popularity. By now, several successful cases of virtual
organisations abound in our country. It is the explicitly designed ‘Group Ware’, computer
based system to support virtual groups, enables the virtual organisations to work in order
to achieve a common goal.
Features of virtual organisation:
Information is power. The absence of information and knowledge renders virtual teams
to emasculate and ineffective. Information technology, i.e., seamless web electronic
communication media does not allow happening this and keeps the organisation going.
Following are the salient features of virtual organisations:

Technology:
New technology has transformed the traditional ways of working. In particular, the worlds
of computing and telephony are coming together to open up a whole new range of
responsibilities. Computer Telephony Integrations (CTI) will usher in a new revolution to
the desktop. The CTI has traditionally been used in all call center applications.

E-mail Integration:
Integrating Short Message Service (SMS) into the existing e-mail infrastructure allows
the whole organisation to take advantages of SMS products such as ‘Express Way’.

Office System Integration:

SMS technology can greatly enhance the existing or new office systems, e. g., phone
messages can be sent via SMS rather than returning it in a message book.

Voice Mail Alert:

SMS technology added to the existing voice mail system builds an effective method of
receiving voice mail alerts.

Mobile Data:
This enables a laptop to retrieve information anywhere through the mobile phone
network. Mobile data communications revolutionize where and how work is done. In the
past, corporate information has been inaccessible from many places where it is needed.
One’s ability to link laptop to mobile phone keeps one connected to his/her virtual
organisation from anywhere.

Workface, Work zone, Workspace and Staff

Less Organization
Workface
Workface created customer-initiated engagement technology that helps companies market,
sell and support their products and services on the internet. Combining profile technology
with real-time, two-way communications like text/audio/video chat, Workface enables
companies to engage with customers and prospects live.

Work zone
An optimal work zone is the area in which an employee can perform a specific task, or set of
tasks, while maintaining a comfortable and neutral posture. Work performed in the optimal
work zone is less likely to cause musculoskeletal problems, or injuries, than work that
requires the employee to reach, or apply force, outside of this zone. The optimal work zone is
sometimes referred to as the best work zone or preferred work zone.

An optimal work zone permits an employee to perform most of his or her job tasks while
maintaining neutral posture. Each body part and muscle group should be considered when
determining the optimal work zone for a task.

When standing or sitting, an optimal work zone is one which allows the employ to maintain
the spine’s natural S-curve. Positions that require an employee to lean too far forward to
reach a tool or twist to push a button are not optimal. Additionally, employees should not
need to bend their neck or wrist awkwardly to perform job tasks. Items that are commonly
used for a job, or task, should be placed in a neutral reach zone, the optimal work zone for the
arms.

Ergonomically designed jobs that provide for performance of tasks within the optimal work
zone increase productivity and comfort for employees while reducing musculoskeletal risk
factors and injury.

Workspace
Workspace enables real-time project intelligence to replace the time consuming, costly and
inaccurate project reports that are typically outdated by the time they are produced.

To achieve more predictable outcomes and reliable forecasts, organizations are consolidating
project data into smart, AI-ready platforms like Workspace capable of producing project
intelligence that is automatically updating every minute of every day.

Staff less Organization

Digital Signatures
Digital signatures are the public-key primitives of message authentication. In the
physical world, it is common to use handwritten signatures on handwritten or typed
messages. They are used to bind signatory to the message.

Similarly, a digital signature is a technique that binds a person/entity to the digital data.
This binding can be independently verified by receiver as well as any third party.

Digital signature is a cryptographic value that is calculated from the data and a secret
key known only by the signer.

In real world, the receiver of message needs assurance that the message belongs to the
sender and he should not be able to repudiate the origination of that message. This
requirement is very crucial in business applications, since likelihood of a dispute over
exchanged data is very high.

Model of Digital Signature

 As mentioned earlier, the digital signature scheme is based on public key cryptography.
The model of digital signature scheme is depicted in the following illustration:

The following points explain the entire process in detail:

 Each person adopting this scheme has a public-private key pair.

 Generally, the key pairs used for encryption/decryption and signing/verifying are
different. The private key used for signing is referred to as the signature key and the
public key as the verification key.
 Signer feeds data to the hash function and generates hash of data.
 Hash value and signature key are then fed to the signature algorithm which
produces the digital signature on given hash. Signature is appended to the data and
then both are sent to the verifier.
 Verifier feeds the digital signature and the verification key into the verification
algorithm. The verification algorithm gives some value as output.
 Verifier also runs same hash function on received data to generate hash value.
 For verification, this hash value and output of verification algorithm are compared.
Based on the comparison result, verifier decides whether the digital signature is valid.
 Since digital signature is created by ‘private’ key of signer and no one else can
have this key; the signer cannot repudiate signing the data in future.

It should be noticed that instead of signing data directly by signing algorithm, usually a
hash of data is created. Since the hash of data is a unique representation of data, it is
sufficient to sign the hash in place of data. The most important reason of using hash
instead of data directly for signing is efficiency of the scheme.

Let us assume RSA is used as the signing algorithm. As discussed in public key
encryption chapter, the encryption/signing process using RSA involves modular
exponentiation.

Signing large data through modular exponentiation is computationally expensive and

time consuming. The hash of the data is a relatively small digest of the data,
hence signing a hash is more efficient than signing the entire data.
 Importance of Digital Signature
Out of all cryptographic primitives, the digital signature using public key cryptography is
considered as very important and useful tool to achieve information security.

Apart from ability to provide non-repudiation of message, the digital signature also
provides message authentication and data integrity. Let us briefly see how this is
achieved by the digital signature −

 Message authentication: When the verifier validates the digital signature using

public key of a sender, he is assured that signature has been created only by sender
who possess the corresponding secret private key and no one else.
 Data Integrity: In case an attacker has access to the data and modifies it, the
digital signature verification at receiver end fails. The hash of modified data and the
output provided by the verification algorithm will not match. Hence, receiver can safely
deny the message assuming that data integrity has been breached.
 Non-repudiation: Since it is assumed that only the signer has the knowledge of
the signature key, he can only create unique signature on a given data. Thus the
receiver can present data and the digital signature to a third party as evidence if any
dispute arises in the future.

By adding public-key encryption to digital signature scheme, we can create a

cryptosystem that can provide the four essential elements of security namely − Privacy,
Authentication, Integrity, and Non-repudiation.

Encryption with Digital Signature

In many digital communications, it is desirable to exchange an encrypted messages than
plaintext to achieve confidentiality. In public key encryption scheme, a public (encryption)
key of sender is available in open domain, and hence anyone can spoof his identity and
send any encrypted message to the receiver.

This makes it essential for users employing PKC for encryption to seek digital signatures
along with encrypted data to be assured of message authentication and non-repudiation.

This can archived by combining digital signatures with encryption scheme. Let us briefly
discuss how to achieve this requirement. There are two possibilities, sign-then-
encrypt and encrypt-then-sign.

However, the crypto system based on sign-then-encrypt can be exploited by receiver to

spoof identity of sender and sent that data to third party. Hence, this method is not
preferred. The process of encrypt-then-sign is more reliable and widely adopted. This is
depicted in the following illustration −
The receiver after receiving the encrypted data and signature on it, first verifies the
signature using sender’s public key. After ensuring the validity of the signature, he then
retrieves the data through decryption using his private key.

Network Security
Network security is the security provided to a network from unauthorized access and risks. It
is the duty of network administrators to adopt preventive measures to protect their networks
from potential security threats.

Computer networks that are involved in regular transactions and communication within the
government, individuals, or business require security. The most common and simple way of
protecting a network resource is by assigning it a unique name and a corresponding
password.

Types of Network Security Devices

Active Devices
These security devices block the surplus traffic. Firewalls, antivirus scanning devices, and
content filtering devices are the examples of such devices.

Passive Devices
These devices identify and report on unwanted traffic, for example, intrusion detection
appliances.
Preventative Devices
These devices scan the networks and identify potential security problems. For example,
penetration testing devices and vulnerability assessment appliances.

Unified Threat Management (UTM)

These devices serve as all-in-one security devices. Examples include firewalls, content
filtering, web caching, etc.

Firewalls
A firewall is a network security system that manages and regulates the network traffic based
on some protocols. A firewall establishes a barrier between a trusted internal network and the
internet.

Firewalls exist both as software that run on a hardware and as hardware appliances. Firewalls
that are hardware-based also provide other functions like acting as a DHCP server for that
network.

Most personal computers use software-based firewalls to secure data from threats from the
internet. Many routers that pass data between networks contain firewall components and
conversely, many firewalls can perform basic routing functions.

Firewalls are commonly used in private networks or intranets to prevent unauthorized access
from the internet. Every message entering or leaving the intranet goes through the firewall to
be examined for security measures.

An ideal firewall configuration consists of both hardware and software based devices. A
firewall also helps in providing remote access to a private network through secure
authentication certificates and logins.

Hardware and Software Firewalls

Hardware firewalls are standalone products. These are also found in broadband routers. Most
hardware firewalls provide a minimum of four network ports to connect other computers. For
larger networks − e.g., for business purpose − business networking firewall solutions are
available.

Software firewalls are installed on your computers. A software firewall protects your
computer from internet threats.

Antivirus
An antivirus is a tool that is used to detect and remove malicious software. It was originally
designed to detect and remove viruses from computers.
 Modern antivirus software provide protection not only from virus, but also from worms,
Trojan-horses, adwares, spywares, keyloggers, etc. Some products also provide protection
from malicious URLs, spam, phishing attacks, botnets, DDoS attacks, etc.

Content Filtering
Content filtering devices screen unpleasant and offensive emails or webpages. These are used
as a part of firewalls in corporations as well as in personal computers. These devices generate
the message “Access Denied” when someone tries to access any unauthorized web page or
email.

Content is usually screened for pornographic content and also for violence- or hate-oriented
content. Organizations also exclude shopping and job related contents.

Content filtering can be divided into the following categories −

 Web filtering
 Screening of Web sites or pages
 E-mail filtering
 Screening of e-mail for spam
 Other objectionable content

Intrusion Detection Systems

Intrusion Detection Systems, also known as Intrusion Detection and Prevention Systems, are
the appliances that monitor malicious activities in a network, log information about such
activities, take steps to stop them, and finally report them.

Intrusion detection systems help in sending an alarm against any malicious activity in the
network, drop the packets, and reset the connection to save the IP address from any blockage.
Intrusion detection systems can also perform the following actions:

 Correct Cyclic Redundancy Check (CRC) errors

 Prevent TCP sequencing issues
 Clean up unwanted transport and network layer options

Data encryption Secret Keys

A secret key is the piece of information or parameter that is used to encrypt and decrypt
messages in a symmetric, or secret-key, encryption.

In assymetric encryption, two separate keys are used. One is a public key and the other
is a secret key.

A secret key may also be known as a private key.

When using symmetric encryption, only one key is used for encryption and decryption.
However, in asymmetric cryptography there is both a private key and a public key
 involved in the encryption and decryption processes. The secret key can be kept by one
person or exchanged with someone else when sending encrypted messages. If only one
key is available for both encryption and decryption, both the sender and receiver of a
message have to have a copy of the secret key to be able to read the message.

The most difficult aspect of this type of encryption is how to distribute the key to a
second party without affecting security.

Secret key cryptography systems are often classified to be either stream ciphers or block
ciphers. Stream ciphers work on a single bit at a time and also use some kind of
feedback mechanism so that the key changes regularly. A block cipher, on the other
hand, encrypts one data block at a time by using precisely the same key on every block.

The most accepted secret key cryptography scheme is Data Encryption Standard (DES)
cryptography. Other cryptography systems used for secret-key encryption include the
Advanced Encryption Standard (AES) and CAST-128/256.

Data encryption
Encryption is a security method in which information is encoded in such a way that only
authorized user can read it. It uses encryption algorithm to generate ciphertext that can
only be read if decrypted.

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Types of Encryption
There are two types of encryptions schemes as listed below:

 Symmetric Key encryption

 Public Key encryption

SYMMETRIC KEY ENCRYPTION

Symmetric key encryption algorithm uses same cryptographic keys for both encryption
and decryption of cipher text.

PUBLIC KEY ENCRYPTION

Public key encryption algorithm uses pair of keys, one of which is a secret key and one
of which is public. These two keys are mathematically linked with each other.
 Hashing
In terms of security, hashing is a technique used to encrypt data and generate
unpredictable hash values. It is the hash function that generates the hash code, which
helps to protect the security of transmission from unauthorized users.

Hash function algorithms

Hashing algorithm provides a way to verify that the message received is the same as
the message sent. It can take a plain text message as input and then computes a value
based on that message.

Key Points

 The length of computed value is much shorter than the original message.
 It is possible that different plain text messages could generate the same value.

Here we will discuss a sample hashing algorithm in which we will multiply the number of
a’s, e’s and h’s in the message and will then add the number of o’s to this value.

For example, the message is “ the combination to the safe is two, seven, thirty-five”. The
hash of this message, using our simple hashing algorithm is as follows:

2 x 6 x 3 ) + 4 = 40

The hash of this message is sent to John with cipher text. After he decrypts the
message, he computes its hash value using the agreed upon hashing algorithm. If the
hash value sent by Bob doesn’t match the hash value of decrypted message, John will
know that the message has been altered.

For example, John received a hash value of 17 and decrypted a message Bob has sent
as “You are being followed, use backroads, hurry”

He could conclude the message had been altered, this is because the hash value of the
message he received is:

(3x4x1)+4 = 16

This is different from then value 17 that Bob sent.