COURSE Bachelor of Business Administration (BBA)

SEMESTER VI
SUBJECT CODE 601
SUBJECT NAME E-Commerce (Notes)

UNIT 1

PART I- E-COMMERCE

1. Evolution of E-Commerce

As the society evolved the commercial practices also evolved. The barriers to trade were
broken chiefly by the language and later by transport. The barter trade gave way to
acceptance of bullion as the trading currency. With the passage of time nation states
emerged as new political units and with new technological developments, like telegraph
and telephone further facilitated the trade. For over a century these telecommunication
devices became an integral part of the commercial enterprises all over the world.

(i) EDI- In the early 1960s, computers were increasingly used to disseminate
information across geographical space. Though telegraph, telephones, telex and
facsimile were still the relied upon options, nevertheless the big corporations
opted for Electronic Data Interchange (EDI). It refers to the process by which
goods are ordered, shipped, and tracked computer-to-computer using standardised
protocol. EDI1 permits the “electronic settlement and reconciliation of the flow
of goods and services between companies and consumers”. EDI saves money
because the computer, and not an office staff, submits and processes orders,
claims, and other routine tasks.

The early adopters of EDI were companies running complex operations in the
airlines, shipping, railways and retail sectors. These companies developed their
own proprietary format for interchanging data messages. It led to development of
proprietary systems.

(ii) Proprietary Systems- The proprietary systems whether of a retail or

automobile company were operation specific. It was felt that a universal standard
was impractical and unnecessary. Consequently, the lack of universal standards
made it difficult for companies to communicate with many of their trading
partners.

(iii) ANSI- In late 1970s, the American National Standards Institute (ANSI)
authorized a committee called the Accredited Standards Committee (ASC) X-12
(consisting of government, transportation, and computer manufacturers) to
develop a standard between trading partners. The standard was called ANSI X-12.
 Over a period of time sectors like paper, chemical, warehouse, retail,
telecommunications, electronics, auto, metals, textile, and aerospace developed
and started using sector specific EDI standards, which are subset of X12
standards.

(iv) UN- Under the aegis of United Nations, organizations from different sectors
collaborated and developed an internationally approved standard structure for
transmitting information between different trading partners, called the United
Nations Electronic Data Interchange for Administration, Commerce and
Transport (UN/EDIFACT) in 1986. It ensures transmission compatibility of
electronic business documents globally. In the US companies tend to use ANSI
X-12 protocol while their European counterparts prefer EDIFACT. Moreover,
various industry sectors use their industry specific protocols.

The EDI was like a business-to-business (B2B) model involving a company and its
various vendors performing commercial transactions using proprietary networks. By
late 1980s computers acquired the status of ‘personal computer’, i.e. became part of
the private domain of an individual. It was EDI at the individual level supported by
the public networks known as Internet.

Hence, e-commerce evolved out of EDI and should be considered as a next logical
step in the development of commercial processes involving commercial transactions.
Thus, e-commerce means doing business electronically across the extended
enterprise. It covers any form of business or administrative transaction or information
exchange that is executed using any information and communications technology.

The Timeline of The History of E-Commerce

New York Times issue on August 12, 1994, mentioned that the Internet Is Open and
chronicled the sale between two friends of a Sting CD. The Times said, “The team of
young cyberspace entrepreneurs celebrated the first retail transaction on the Internet
using a readily available version of powerful data encryption software designed to
guarantee privacy.” The development of the Electronic Data Interchange (EDI) in the
1960s paved the way for electronic commerce. EDI revolutionized traditional ways of
sending and receiving documents and allowed a digital data transfer from one
computer to another.

(A) 1800s-2000

(i) 1887: US statistician Herman Hollerith (1860–1929) sets up the forerunner of

IBM (International Business Machines), a company that will pioneer
electronic forms of doing business in the decades that follow.

(ii) 1950s–1960s: IBM pioneers online transaction processing (OLTP): a way

of handling money transactions instantly (in "real-time") using sophisticated
computerized systems. With American Airlines, IBM develops an OLTP
 system called SABRE (SemiAutomatic Business Research Environment) that
revolutionizes airline reservations. In 1969, IBM's transaction-processing
software evolves into CICS (Customer Information Control System), one of its
least-known but most successful products.

(iii) 1969: CompuServe, the first significant eCommerce company, is established

by Dr. John R. Goltz and Jeffrey Wilkins by utilizing a dial-up connection.
This is the first time eCommerce was introduced.

(iv) 1979: Michael Aldrich invented electronic shopping (he is also considered as
founder or inventor of eCommerce). This was done by connecting a
transaction-processing computer with a modified TV through a telephone
connection. This was done for the transmission of secure data.

(v) 1982: The continued growth of technology, particularly in electronics, led to

the launch of the first eCommerce platforms by Boston Computer Exchange.

(vi) 1992: The 90s took the online business to the next level by introducing Book
Stacks Unlimited as an online bookstore by Charles M. Stack. It was one of
the first online shopping sites created at that time.

(vii) 1994: Web browser tool introduced by Netscape Navigator by Marc

Andreessen and Jim Clark. It was used on the Windows platform.

(viii) 1995: The year marked the iconic development in the history of
eCommerce as Amazon and eBay were launched. Amazon was started by Jeff
Bezos, while Pierre Omidyar launched eBay.

(ix) 1998: PayPal launched the first eCommerce payment system as a tool to
make money transfers.

(x) 1999: Alibaba started its online shopping platform in 1999 with more than
$25 million as capital. Gradually it turned out to be an eCommerce giant.

(xi) 2000: Google launched the first online advertising tool, Google AdWords, to
help retailers utilize the pay-per-click (PPC) context.

(B) 2005-2009

(i) 2005: Amazon Prime membership was launched by Amazon to help customers
get free two-day shipping at an annual fee. Etsy was launched in 2005 to
enable small and medium-scale retailers to sell goods online. Square, Inc., as
an app-based service, is launched. Eddie Machaalani and Mitchell Harper
launched BigCommerce as an online storefront platform.
 (ii) 2011: Google launches its online wallet payment app. One of the earliest
moves by Facebook to launch sponsored stories for advertisements.

(iii) 2014: Apple launched Apple Pay, an online payment application. Jet.com
was launched in 2014 as an online shopping portal.

(iv) 2017: Instagram introduces shoppable tags- enabling people to sell directly
from the social media platform.

(C) 2017 to present- Significant reforms that have taken place in the eCommerce
industry between these years are-

(i) Large retailers are pushed to sell online.

(ii) Small businesses have seen a rise, with local sellers now operating from
social media platforms.

(iii) Operational costs have lowered in the B2B sector.

(iv) Parcel delivery costs have seen a significant increase with the growing
eCommerce industry.

(v) Several eCommerce marketplaces have emerged, enabling more sellers to sell
online.

(vi) Logistics has evolved with the introduction of automation tools and artificial
intelligence.

(vii) Social media has become a tool to increase sales and market brands. Sellers
also use social media to sell via channels like Facebook and Instagram.

(viii) The buying habits of customers have significantly changed.

(ix) The COVID-19 pandemic has impacted purchase decisions, and most users
are moving to eCommerce for their purchases.

(x) Sellers are adopting an omnichannel selling approach where they want to
provide users with a consistent shopping experience across different media
and channels.

2. Concept

E-Commerce or Electronic Commerce means buying and selling of goods, products,

or services over the internet. E-commerce is also known as electronic commerce or
internet commerce. These services provided online over the internet network.
Transaction of money, funds, and data are also considered as E-commerce. These
business transactions can be done in four ways: Business to Business (B2B), Business
to Customer (B2C), Customer to Customer (C2C), Customer to Business (C2B). The
standard definition of E-commerce is a commercial transaction which is happened
over the internet.

E-commerce, or electronic commerce, refers to the buying and selling of goods and
services over the internet. It involves the use of electronic platforms, such as websites,
mobile applications, and social media, to conduct transactions between businesses and
consumers or between businesses. E-commerce has revolutionized the way businesses
operate and has created new opportunities for entrepreneurs and consumers alike.

One of the primary benefits of e-commerce is that it offers a more convenient and
efficient way to conduct business. Consumers can browse and purchase products from
the comfort of their own homes, while businesses can reach a global audience without
the need for a physical storefront. E-commerce has also enabled businesses to
streamline their operations by automating many of the tasks involved in the sales
process, such as inventory management, order processing, and shipping. E-commerce
refers to paperless exchange of business information using following ways.

(i) Electronic Data Exchange (EDI)

(ii) Electronic Mail (e-mail)

(iii) Electronic Bulletin Boards

(iv) Electronic Fund Transfer (EFT)

(v) Other Network-based technologies

Definitions

As the Internet makes way for new business transactions via its complex
telecommunications network, it is difficult to provide a single all-encompassing
definition of e-commerce. It means different to different people. Thus, it would be
prudent to look into various definitions of e-commerce to comprehend e-commerce
and its different characteristics:

According to the editor-in-chief of International Journal of Electronic Commerce,

Vladimir Zwass, ‘Electronic commerce is sharing business information, maintaining
business relationships and conducting business transactions by means of
telecommunications networks.

Electronic Commerce is where business transactions take place via

telecommunications networks, especially the Internet – E. Turban, J. Lee, D. King and
H.M. Chung.
Electronic commerce is about doing business electronically – P. Timmers

Electronic commerce or e-commerce refers to a wide range of online business

activities for products and services – Anita Rosen

It pertains to “any form of business transaction in which the parties interact

electronically rather than by physical exchanges or direct physical contact.” – MK,
Euro Info Correspondence Centre (Belgrade, Serbia)

E-commerce is usually associated with buying and selling over the Internet, or
conducting any transaction involving the transfer of ownership or rights to use goods
or services through a computer-mediated network. – Thomas L. Mesenbourg

E-commerce is the use of electronic communications and digital information

processing technology in business transactions to create, transform, and redefine
relationships for value creation between or among organizations, and between
organizations and individuals. – Emmanuel Lallana, Rudy Quimbo, Zorayda Ruth
Andam

Features

Electronic commerce, or e-Commerce, refers to the purchasing and selling of goods or

services via electronic means, such as the Internet or mobile phone applications. It
may also refer to the process of creating, marketing, servicing and paying for services
and goods. Businesses, governments and the public can participate in e-Commerce
transactions. The following discussion will elicit the unique features of e-commerce.
The unique features of e-commerce technology include:

(i) Ubiquity- e-Commerce is ubiquitous, It is available just about everywhere

and at all times by using internet and Wi-Fi hotspot such as airport, coffee cafe
and hill station places.. Consumer can connect it to the Internet at any time,
including at their homes, their offices, on their video game systems with an
Internet connection and mobile phone devices. E-Commerce is ubiquitous
technology which is available everywhere Moreover, individuals who have
cell phones with data capabilities can access the Internet without a Wi-Fi
connection.

(ii) Global reach- The potential market size is roughly equal to the size of the
online population of the world. E-Commerce Technology seamlessly stretches
across traditional cultural and national boundaries and enables worldwide
access to the client. E-Commerce website has ability to translate the
multilingual websites as well as allow the access to visitors all over the world,
purchase products and make business interactions.

(iii) Universal standards- The technical standards of the Internet are shared
by all of the nations in the world. The whole online tradition are growing and
expanding their features in the world. To development any kind of business
 need Internet and communication application which make the business
relationship more lovingly and attractive for secure business and successful
business.

(iv) Richness- Users can access and utilize text messages and visual and audio
components to send and receive information. An individual may see
information richness on a company's blog if a post contains a video related to
a product and hyperlinks that allow him to look at or purchase the product and
send information about the post via text message or email.

(v) Interactivity- E-commerce technologies allow two-way communication

between the merchant and the consumer. As a result, e-Commerce
technologies can adjust to each individual’s experience. For example, while
shopping online, an individual is able to view different angles of some items,
add products into a virtual shopping cart, checkout by inputting his payment
information and then submit the order.

(vi) Personalization- Technologies within e-Commerce allow for the

personalization and customization of marketing messages that groups or
individuals receive. An example of personalization includes product
recommendations based on a user's search history on a Web site that allows
individuals to create an account.

(vii) Information density- The use of e-Commerce reduces the cost to store,
process and communicate information, At the same time, accuracy and
timeliness increase; thus, making information accurate, inexpensive and
plentiful. For example, the online shopping process allows a company to
receive personal, shipping, billing and payment information from a customer
all at once and sends the customer's information to the appropriate
departments in a matter of seconds.

(viii) Social technology- E-Commerce technology has tie up the social media
networking application to provide the best source of content sharing
technology and e-Marketing systems. You can share your content or data
easily in just one click.

(ix) User-Generated Content- Social networks use e-Commerce technologies to

allow members, the general public, to share content with the worldwide
community. Consumers with accounts can share personal and commercial
information to promote a product or service. When a company has a
professional social networking account, a member of the same social network
has the option of associating himself with the company or a product by saying
he likes or recommends it. When an individual updates his status on a social
networking account, he may also mention a product or company by name,
which creates word-of-mouth advertising.
3. Importance

Electronic commerce, or e-commerce, is the buying and selling of goods and services
over the internet. E-commerce can be conducted on computers, tablets, smartphones,
and other smart devices. Nearly every imaginable product and service is now
available through e-commerce, and it has upended how many companies and entire
industries do business.

(i) Around-the-clock availability- Aside from outages and scheduled

maintenance, e-commerce sites are available 24/7, enabling visitors to browse
and shop at any time. Brick-and-mortar businesses tend to open for a fixed
number of hours and even close entirely on certain days.

(ii) Speed of access- While shoppers in a physical store can be slowed by

crowds, e-commerce sites run quickly, depending on compute and bandwidth
considerations of both the consumer device and the e-commerce site. Product,
shopping cart and checkout pages load in a few seconds or less. A typical e-
commerce transaction requires a few clicks and takes less than five minutes.

(iii) Wide selection- Amazon's first slogan was "Earth's Biggest Bookstore." It
could make this claim because it was an e-commerce site and not a physical
store that had to stock each book on its shelves. E-commerce enables brands to
make an array of products available, which are then shipped from a warehouse
or various warehouses after a purchase is made. Customers are likely to have
more success finding what they want.

(iv) Easy accessibility- Customers shopping in a physical store might have

difficulty locating a particular product. Website visitors can browse product
category pages in real time and use the site's search feature to find the product
quickly.

(v) International reach- Brick-and-mortar businesses sell to customers who

physically visit their stores. With e-commerce, businesses can sell to anyone
who can access the web. E-commerce has the potential to extend a business's
customer base.

(vi) Lower cost- Pure play e-commerce businesses avoid the costs of running
physical stores, such as rent, inventory and cashiers. They might incur
shipping and warehouse costs, however.

(vii) Personalization and product recommendations- E-commerce sites

can track a visitor's browsing, search and purchase histories. They can use this
data to present personalized product recommendations and obtain insights
about target markets. Examples of how such insights are used include the
sections of Amazon product pages labeled "Frequently bought together" and
"Customers who viewed this item also viewed."
4. Objectives of E-Commerce

The objectives of e-commerce, or electronic commerce, revolve around leveraging

digital technologies to facilitate online transactions, enhance customer experiences,
and drive business growth. Here are the key objectives of e-commerce:

(i)Increase Sales- E-commerce enables businesses to reach a wider audience

and sell products or services online, thereby increasing sales and revenue
opportunities.
(ii)Expand Market Reach- E-commerce breaks down geographical barriers,
allowing businesses to expand their market reach beyond local or regional
boundaries and target a global audience.

(iii)Improve Customer Convenience- E-commerce platforms provide 24/7

accessibility, allowing customers to shop at their convenience, anytime and
anywhere, leading to enhanced customer satisfaction.

(iv)Reduce Operational Costs- E-commerce reduces the need for physical

storefronts and extensive manpower, leading to cost savings in terms of rent,
utilities, and staffing. Automated processes also reduce operational expenses.

(v)Enhance Customer Experience- E-commerce platforms can personalize

user experiences, offer product recommendations, and provide efficient
customer support, thereby enhancing overall customer satisfaction and loyalty.

(vi)Data Collection and Analysis- E-commerce businesses can collect and

analyze vast amounts of data related to customer behavior, preferences, and
purchasing patterns. Analyzing this data helps in making informed business
decisions, improving marketing strategies, and enhancing products or services.

(vii)Streamline Supply Chain Management- E-commerce platforms can

integrate with supply chain management systems, optimizing inventory,
reducing stockouts, and improving overall supply chain efficiency.

5. Types of E-Commerce

E-Commerce or Electronic Commerce means buying and selling of goods, products,

or services over the internet. E-commerce is also known as electronic commerce or
internet commerce. These services provided online over the internet network.
Transaction of money, funds, and data are also considered as E-commerce. These
business transactions can be done in following ways:

(i) B2B Commerce- Both parties involved in e-commerce transactions are

business firms, hence the name B2B, which stands for business-to-business.
The creation of utilities or the delivery of value requires the interaction of a
 business with a number of other business firms, which may be suppliers or
vendors of various inputs, or they may be a part of the channel through which
a firm distributes its products to consumers. For example, the production of an
automobile requires the assembly of a large number of components, which are
manufactured elsewhere, either locally or overseas.

(ii) B2C Commerce- B2C (business-to-customers) transactions involve

business firms on one end and their customers on the other. Although online
shopping is the first thing that comes to mind, it is important to remember that
selling is the outcome of the marketing process. Marketing begins before a
product is offered for sale and continues after the product is sold. As a result,
B2C commerce entails a wide range of marketing activities such as identifying
activities, promoting, and sometimes even delivering products that are carried
out online. e-business enables these activities to be carried out at a much lower
cost but at a much faster pace. For example, an ATM helps to withdraw money
24x7 in a convenient and fast manner.

(iii) C2C Commerce- C2C Commerce consists of the transactions taking place
between two or more customers. For example, you could sell used books or
clothes for cash or in exchange for goods. People can search for potential
buyers all over the world because of e-commerce. Quikr, OLX, are such
platforms where customers sell their goods and services to other customers.
Furthermore, e-commerce technology provides market system security to such
transactions, which would otherwise be missing if buyers and sellers interact
in the anonymity of one-to-one transactions. An excellent example of this can
be found on eBay, where consumers sell their goods and services to other
consumers. Several technologies have emerged to improve the security and
robustness of this activity. For beginners, eBay allows all sellers and buyers to
rate one another.

(iv) Intra B-Commerce- The interaction and dealing among various

departments and persons within the firm is known as Intra B-Commerce. An
intranet is used to interact and deal between various departments and firms
within a firm. Intra B-Commerce has facilitated flexible manufacturing. For
example, finance department may interact regularly with marketing
department within a firm. Intra-B-commerce transactions are conducted for
Inventory and cash management, reporting by subordinates to superiors,
human resource management, recruitment and selection, and for training,
development, and education. Nowadays, companies use VPN, which is,
Virtual Private Network technology, which helps employees access the
organisation's network and enable work from anywhere through network.

(v) B2G Commerce- Business-to-government e-commerce or B2G is

generally defined as commerce between companies and the public sector. It
refers to the use of the Internet for public procurement, licensing procedures,
and other government-related operations. This kind of e-commerce has two
features: first, the public sector assumes a pilot/leading role in establishing e-
 commerce; and second, it is assumed that the public sector has the greatest
need for making its procurement system more effective.15Web-based
purchasing policies increase the transparency of the procurement process(and
reduces the risk of irregularities). To date, however, the size of the B2G
ecommerce market as a component of total e-commerce is insignificant, as
government-procurement systems remain undeveloped.

(vi) Consumer-to-Government (C2G)- C2G refers to consumers selling

products or services to governments or government agencies. Examples
include individuals submitting bids for government contracts or selling items
to government entities through designated channels.

(vii) Government-to-Business (G2B)- G2B e-commerce occurs when

governments or government agencies sell products or services to businesses.
This can involve government departments providing specialized services or
selling business licenses and permits.

(viii) Government-to-Consumer (G2C)- G2C e-commerce involves

governments or government agencies selling products or services directly to
individual consumers. This can include government entities’ services, such as
online tax filing, payment of fines or fees, or issuing official documents.

6. Nature of E-Commerce

An e-commerce website serves as a virtual storefront online, providing a platform for

buyers and sellers to transact. It serves as an online representation of a business,
allowing customers to browse and select products or services. The e-commerce
website plays the role of a traditional physical store by showcasing products, assisting
customers in their purchasing decisions, and facilitating the transaction process.

(i) Internet-based Transactions- E-commerce facilitates the exchange of

goods and services through digital platforms, primarily the Internet. This
allows individuals and businesses to engage in transactions without the
limitations of physical proximity.

(ii) Multi-Device Accessibility- E-commerce transactions can be conducted

through a variety of devices, including computers, tablets, smartphones, and
other smart devices. This flexibility ensures that consumers can conveniently
access online marketplaces wherever they are.

(iii) Extensive Product Range- One of the defining characteristics of e-

commerce is its vast product range. Almost any product or service can be
purchased online, making it a highly competitive environment for businesses
operating within this realm.
 (iv) Substitute for Physical Stores- E-commerce has become a potential
substitute for traditional brick-and-mortar stores. While some businesses
maintain a physical presence alongside their online operations, others operate
solely in the digital space, benefiting from the lower costs and broader
customer reach that e-commerce offers.

(v) Market Segments- E-commerce operates in several market segments, each

catering to different types of transactions. These segments include business-to-
business (B2B), business-to-consumer (B2C), consumer-to-consumer (C2C),
and consumer-to-business (C2B). This diverse range of market segments
accommodates various commercial interactions and enables individuals and
organizations to engage in e-commerce based on their specific needs and
preferences.

(vi) Attract New Customers- By leveraging the vast user base and targeting
capabilities of social media platforms, businesses can reach and attract new
customers interested in their products or services.

(vii) Build Brand Awareness- Social-media allows businesses to create a

strong brand presence, enabling them to showcase their offerings, share
content, and interact with customers. This helps in building brand awareness
and loyalty.

(viii) Generate Online Sales- Social media platforms also provide

opportunities for businesses to drive online sales directly through features like
shoppable posts, social commerce integrations, and targeted advertising
campaigns.

7. Need of E-commerce

Electronic commerce, commonly known as e-commerce, is the buying and selling of

product or service over electronic systems such as the Internet and other computer
networks. Electronic commerce draws on such technologies as electronic funds
transfer, supply chain management, Internet marketing, online transaction processing,
Electronic Data Interchange (EDI), inventory management systems, and automated
data collection systems. Modern electronic commerce typically uses the World Wide
Web at least at one point in the transaction’s life-cycle, although it may encompass a
wider range of technologies such as e-mail, mobile devices and telephones as well.
Electronic commerce is generally considered to be the sales aspect of e-business. It
also consists of the exchanging of data to facilitate the financing and payment aspects
of business transactions.

(i) Marketing- Issues of online advertising, marketing strategies, consumer’s

behaviour and cultures. One of the areas in which it impacts particularly is
direct marketing. In the past this was mainly door-to-door, home parties and
mail order using catalogues or leaflets. This moved to telemarketing and TV
 selling with the advances in telephone and television technology and finally
developed into e-marketing spawning „e-CRM‟ data mining and the like by
creating new channels for direct sales and promotion.

(ii) Computer Sciences- Development of different network and computing

technologies and languages to support e-commerce and e-business, for
example linking front and back-office legacy systems with the „web based‟
technology.

(iii) Finance and Accounting- On-line banking; issues of transaction costs;

accounting and auditing implications where intangible assets and human
capital must be tangibly valued in an increasingly knowledge-based economy.

(iv) Economics- The impact of e-commerce on local and global economies,

understanding the concept of a digital and knowledge-based economy and how
these fits into economic theory.

(v) Production and Operations Management- The impact of on-line

processing has led to reduced cycle times. It takes seconds to deliver digitized
products and services electronically; similarly, the time for processing orders
can be reduced by more than 90 per cent from days to minutes. Production
systems are integrated with finance marketing and other functional systems as
well as with business partners and customers.

(vi) Production and Operations Management- Moving from mass

production to demand driven, mass customization customer pull rather than
the manufacturer push of the past. Web based Enterprise Resource Planning
systems (ERP) can also be used to forward orders directly to designers and/or
production floor within seconds, thus cutting production cycle times by up to
50 per cent, especially when manufacturing plants, engineers and designers are
located in different countries. In sub-assembler companies, where a product is
assembled from a number of different components sourced from a number of
manufacturers, communication, collaboration and coordination are critical so
electronic bidding can yield cheaper components and having flexible and
adaptable procurement systems allows fast changes at a minimum cost so
inventories can be minimized and money saved.

(vii) Management Information Systems- Analysis, design and

implementation of E-business systems within an organization; issues of
integration of front-end and back-end systems.

(viii) Human Resource Management- Issues of on-line recruiting, home

working and intrapreneurs working on a project by project basis replacing
permanent employees.
 (ix) Business Law and Ethics-The different legal and ethical issues that have
arisen as a result of a global virtual market. Issues are copyright laws, privacy
of customer information, and legality of electronic contracts.

8. Essential Requirements of E-Commerce

People often confuse ecommerce system requirements with goals and objectives. The
difference between these terms is rather simple: goals and objectives describe what
you want to achieve, whereas requirements are all about how you intend to reach
those goals. In other words, a requirement describes must-have features and tasks to
ensure that your goal or objective is achieved and your project is successful.
(i) Hardware- A Web server hardware platform is one of the major components
of the Ecommerce infrastructure on which the performance of the whole
Ecommerce application depends. While selecting Web server hardware, the
software that will run on the server of the E-commerce transactions to be
processed must be considered. The amount of the storage capacity and the
computing power required depend on the volume of the E-commerce
transaction to be processed. If the exact requirements are not known in
advance, then the hardware configuration should be highly scalable so that
they can be upgraded to meet the requirements.

(ii) Software- Software is the main component that implements the E-commerce
services and functionality. Software for E-commerce can be categorized in the
following two types:

i. Web server software- Web server software is required in addition

to the Web server operating system software. It is used to implement
some extra functionality such as security and identification and
retrieval and sending of Web pages. Web server software creates a Web
log file that identifies things such as the URL of the visitor, the length
of the visit and the search engine and the key words used to find the
site. Web server software includes website development tools such as
HTML editor and Web page upload support.

ii. E-commerce software- With the growth of E-commerce, many

applications have emerged— for example, the electronic shopping cart
that tracks the items selected for purchase and their costs. A typical E-
commerce software must support the following processes:

(a) Catalog management- It is required to deliver the

customized content to the screen or the GUI used by the
customer. The software used for catalog management combines
the different product data formats into a standard format for
viewing, aggregating and interacting catalog data into a central
store.
 (b) Product configuration- The Web-based product
configuration software allows the user to build the product to
their specifications without the intervention of the salespeople.
For example, Dell Computers and CISCO Systems use
configuration software to sell build-to-order and network
processes to their customers over the Internet.

(c) Shopping cart- A model known as shopping cart is used by

Ecommerce sites to track the items that are selected for
purchase; the shopping cart allows customers to view all the
items selected by them. The customers can add new items and
remove the previously selected items from the shopping cart.

(d) Transaction processing- E-commerce transaction

processing is used to process the data received from the
Shopping cart and to calculate the total cost of the purchase.

(e) Web traffic data analysis- It is required to analyse all the

data captured in the Web log file. The analysis is essential to
improve the Website performance.

PART II- E-BUSINESS

1. Concept

E-business, is the application of Information and Communication Technologies (ICT)

in support of all the activities of business. Commerce constitutes the exchange of
products and services between businesses, groups and individuals and can be seen as
one of the essential activities of any business. Electronic commerce focuses on the use
of ICT (Information and Communication Technologies) to enable the external
activities and relationships of the business with individuals, groups and other
businesses or e business refers to business with help of internet (i.e.) doing business
with the help of internet network.

The term "E-Business" was coined by IBM's marketing and Internet teams in 1996. In
1997, IBM marketing, with its agency Ogilvy & Mather began to use its foundation in
IT solutions and expertise to market itself as a leader of conducting business on the
Internet through the term "e-business." Then CEO Louis V. Gerstner, Jr. was prepared
to invest $1 billion to market this new brand. After conducting worldwide market
research, in October 1997, IBM began with an eight-page piece in the Wall Street
Journal that would introduce the concept of "e-business" and advertise IBM's
expertise in this new field. IBM decided not to trademark the term "e-business" in the
hopes that other companies would use the term and create an entire new industry.
 However, this proved to be too successful and by 2000, to differentiate itself, IBM
launched a $300 million campaign about its "e-business infrastructure" capabilities.
Since that time, however, the terms, "e-business" and "E-Commerce " have been
loosely interchangeable and have become a part of the common vernacular E-business
includes E-Commerce, but also covers internal processes such as production,
inventory management, product development, risk management, finance, knowledge
management and human resources. E-business strategy is more complex, more
focused on internal processes, and aimed at cost savings and improvements in
efficiency, productivity and cost savings.

2. Principles

E-Business covers the online transactions, but also extends to all the internet-based
transactions with the business partners, suppliers and customers like: selling directly
to the consumers, manufacturers and suppliers; monitoring and exchanging
information; auctioning surplus inventory; collaborative product design. These online
interactions are aimed at improving or transforming the business processes and
efficiency. An EBusiness status is received when we handle the business using phone
calls, E-Mail orders, postal orders, and also the online activities.

Bureau of Indian Standards released Working Draft on E-Commerce - Principles and

Guidelines for Self-Governance This draft proposes a complete set of principles and
guidelines for e-commerce self-governance, with the goal of supporting an ethical and
responsible e-commerce ecosystem.

Key Principles

Draft divides e-commerce transaction principles into three phases – Pre-Transaction

Principles, Contract Formation Principles, and Post-Transaction Principles.

(i) Pre-Transaction Principles

a) E-commerce entity must ensure authenticity of sellers with details of

their place of business, key managerial personnel, financial
information etc.

b) Disclosure of relevant information including product/service

description, final consumer price, cancellation/exchange/return
policies, safety warnings, seller details, country of origin etc.

(ii) Contract Formation Principles

a) Entity shall record express informed consent of consumer and not in

the form of pre-ticked checkboxes.

b) Enable transaction review before final payment.

 c) Transparent process and policies for cancellations, returns, and
refunds, clearly specifying charges and time limits.

d) Maintain complete transaction records and secure payment

systems with encryption and two-factor authentication etc.

(iii) Post-Transaction Principles

Easy return, exchange, refund or dispute resolution process with

single point of contact toll-free number, estimated resolution time,
grievance officer etc.

(iv) General Principles

a) Prohibition on selling of banned products with monitoring

mechanisms and seller background checks.

b) Fair Business Practice with no preferential treatment, following

packaging norms etc.

c) Provisions for addressing counterfeit products and mechanism

for reporting instances of intellectual property rights.

3. Models of E-Business

Electronic Business (E-Business) is the administration of conducting any business

using the internet, extranet, web, and intranet. This would include buying and selling
of goods or services using commercial transactions conducted electronically along
with providing customer or technical support with the help of the internet. E-business
is similar to E-commerce but it is more than just a simple act of buying and selling
services or goods online. In fact, it is the method of utilizing digital information and
advanced communication technologies to streamline different business processes –
from the initial to the implementation phase. E-business includes a lot of business
processes including online order processing, CRM (Customer Relationship
Management), supply chain management, and many more. E-commerce is a part of e-
business.

Electronic business model is a way that describes how a company functions to

provide the services or products and how it generates profits. Moreover, it also defines
how a company will create and adapt to new technologies or markets. All components
of a business model work together for successful business operations.
(i) Business - to – Business- A website following the B2B business model
sells its products to an intermediate buyer who then sells the product to the
final customer. As an example, a wholesaler places an order from a company's
website and after receiving the consignment, sells the end product to the final
customer who comes to buy the product at one of its retail outlets.

(ii) Business - to – Consumer- A website following the B2C business model

sells its products directly to a customer. A customer can view the products
shown on the website. The customer can choose a product and order the same.
The website will then send a notification to the business organization via email
and the organization will dispatch the product/goods to the customer.
(iii) Consumer - to – Consumer- A website following the C2C business
model helps consumers to sell their assets like residential property, cars,
motorcycles, etc., or rent a room by publishing their information on the
website. Website may or may not charge the consumer for its services. Another
consumer may opt to buy the product of the first customer by viewing the
post/advertisement on the website.

(iv) Consumer - to – Business- In this model, a consumer approaches a

website showing multiple business organizations for a particular service. The
consumer places an estimate of amount he/she wants to spend for a particular
service. For example, the comparison of interest rates of personal loan/car loan
provided by various banks via websites. A business organization who fulfills
the consumer's requirement within the specified budget, approaches the
customer and provides its services.

(v) Business - to – Government- B2G model is a variant of B2B model.

Such websites are used by governments to trade and exchange information
with various business organizations. Such websites are accredited by the
government and provide a medium to businesses to submit application forms
to the government.
 (vi) Government - to – Business- Governments use B2G model websites to
approach business organizations. Such websites support auctions, tenders, and
application submission functionalities.

(vii) Government - to – Citizen- Governments use G2C model websites to

approach citizen in general. Such websites support auctions of vehicles,
machinery, or any other material. Such website also provides services like
registration for birth, marriage or death certificates. The main objective of
G2C websites is to reduce the average time for fulfilling citizen’s requests for
various government services.

(viii) Business - to - Administration- B2A is a form of electronic transactions

of the products or services in which the business and government are involved.
For example, social security, legal documents, etc.

(ix) Consumer - to - Administration- Consumer to Administration includes

all transactions between the consumer/customer and the government. For
example, taxes, education, etc.

4. E-Business Infrastructure
E-Business infrastructure refers to the combination of hardware such as servers and
client’s PCs in an organization, the network used to link this hardware and the
software applications used to deliver services to workers within the e-business and
also to its partners and customers.

E-business infrastructure refers to the combination of hardware such as servers and

client PCs in an organization, the network used to link this hardware and the software
applications used to deliver services to workers within the e-business and also to its
partners and customers. Infrastructure also includes the architecture of the networks,
hardware and software and where it is located. Finally, infrastructure can also be
considered to include the methods for publishing data and documents accessed
through e-business applications.

A key decision with managing this infrastructure is which elements are located within
the company and which are managed externally as third-party managed applications,
data servers and networks. It is also important that the e-business infrastructure and
the process of reviewing new technology investments be flexible enough to support
changes required by the business to compete effectively.

E-Business Infrastructure Components

The different components of e-business architecture which need to be managed relate

to each other. The different components can be conceived of as different layers with
defined interfaces between each layer. The different layers can best be understood in
relation to a typical task performed by a user of an e-business system.

(i) E-business Services Application Layer- This layer encompasses

various applications crucial for electronic business services.

a) Customer Relationship Management (CRM)- Focuses on

managing and improving interactions with customers.

b) Supply Chain Management- Involves the coordination and

optimization of the entire supply chain process.

c) Data Mining- Utilizes techniques to discover patterns and trends

within large datasets.

d) Content Management System- A platform for creating,

managing, and organizing digital content.

e) Enterprise Resource Planning (ERP) systems- Integrates

core business processes, such as finance, HR, and supply chain, into a
unified system.
(ii) Systems Software Layer- This layer consists of fundamental software
components supporting the overall system.

a) Web Browser and Server Software Standards- Facilitates

communication between clients and servers over the web.

b) Networking Software- Manages network resources and

communication between different devices.

c) Database Management System (DBMS)- Organizes and

retrieves data from databases efficiently.

d) Operating systems- Manages computer hardware and provides

services for computer programs.

(iii) Transport or Network Layer- Involves the physical network and

transport standards governing data transmission.

a) TCP/IP (Transmission Control Protocol/Internet

Protocol)- A fundamental set of protocols ensuring reliable
communication over the Internet.

b) Routing protocols- Determine the best path for data to travel in a

network.

(iv) Storage/Physical Layer- Encompasses the physical components where

data is stored.

a) Permanent Magnetic Storage- Refers to the long-term storage

of data on web servers using magnetic technology.

b) Optical Backup- Backup storage using optical discs.

c) Temporary Storage in Memory- Involves the short-term

storage of data in volatile memory.

(v) Content and Data Layer- This layer deals with the actual content and
data processed within the e-business framework.

a) Web Content for Intranet, Extranet, and Internet Sites-

The information presented on different types of web platforms.

b) Customer Data- Information related to customers, their

preferences, and interactions.
 c) Transaction Data- Records of business transactions.

d) Clickstream Data- Information about users' interactions with

websites, particularly the sequence of pages viewed.

e) Content management systems (CMS)- Facilitate the creation

and modification of digital content.

CRM, supply chain management,

I
data mining, content management
E-business services –
systems
applications layer
Web browser and server software
II
and standards, networking software
Systems software layer
and database management systems
III
Physical network and transport
Transport or network
standards (transmission TCP/IP)
layer
Permanent magnetic storage on
IV web servers or optical backup or
Storage/physical layer temporary storage in memory
(RAM)
Web content for intranet, extranet
V
and Internet sites, customers‘ data,
Content and data layer
transaction data, clickstream data

5. Advantages of E-Business

E-business stands for electronic business. Electronic business is also known as online
business. Online business is a business where the transaction takes place online. Here,
the buyer and the seller don’t meet personally. E-business is a part of e-commerce. E-
commerce means electronic commerce. There are actually innumerable advantages of
e-Business, the most obvious one being the ease of doing business. Some of the major
advantages of e-business are as follows:

(i)Ease of Formation and Lower Investment Requirements- The

formation of an e-business is very easy. The procedural requirements are not
needed, as needed for setting up traditional industry. It does not require any
investment in the shop, stock, or display like in the case of traditional
business. The success of e-business depends on the network (contacts) and not
on investments (net worth).

(ii)Convenience- E-business is very flexible. The Internet offers the

convenience of ‘24 hours × 7 days a week × 365 days’ a year business.
Organisational personnel can do work from wherever they are, and whenever
they may want to do. Businessmen can remain in touch with their customers,
suppliers, etc.
(iii)Speed- The exchange of information involved in buying and selling is done
with the help of the internet at the click of a mouse. This speed is more
beneficial in the case of information-intensive products, such as software,
movies, music, e-books, and journals that can even be delivered online. Due to
the transformation of the business processes, the cycle time, i.e., the time
taken to complete a cycle from the origin of demand to its fulfilment, is
substantially reduced due to being sequential to becoming parallel or
simultaneous. Money can be easily transferred through electronic fund transfer
of e-business.

(iv)Global Reach- With the help of e-business, the sellers can operate at the
national and global level, as there is a well-developed computerised
networking system. The buyers and sellers can also interact with each other
from any part of the world. Buyers also have the facility of choosing products
from any part of the world.

(v)Movement toward a Paperless Society- Dependence on paperwork

and the attendant ‘red tape’ is considerably reduced due to the use of the
Internet, as most of the work is done electronically through computers.
Government departments and regulatory authorities are also now increasingly
using computers to reduce the use of paper, whereby they allow electronic
filing of returns and reports. This also leads to an increase in the speed of the
process of granting permissions, approvals, licenses, etc.

(vi)Cost Efficiency- Traditional brick-and-mortar businesses often involve

high operational costs. E-business significantly reduces these expenses by
eliminating the need for physical storefronts, utility bills, and additional staff.
This cost-saving advantage can be a game-changer, especially for startups and
small businesses.

(vii)Personalized Customer Experience- E-business platforms allow for

personalized interactions with customers. Through data analysis and customer
tracking, businesses can tailor their offerings, marketing strategies, and user
experience to individual preferences, fostering customer loyalty and
engagement.

(viii)Improved Customer Service- E-business facilitates real-time

communication with customers through various channels, such as live chat,
email, and social media. This instant interaction helps address customer
queries promptly, enhancing overall customer satisfaction and trust in your
brand.

(ix)Streamlined Operations- Automation and digital tools in e-business

streamline various business processes, from inventory management to order
processing. This not only reduces the risk of errors but also enhances
 efficiency, enabling businesses to focus on core activities and strategic
planning.

6. Disadvantages of E-Business

Conducting business activities over the internet or any other computer network is
known as e-business or Electronic Business. e-business conducts all business
activities, like trade, commerce, and industry; electronically. It is about using the
internet and other computer networks and technologies to provide superior customer
service, increase sales and reduce costs. The limitations of e-business are as follows:

(i)Low Personal Touch- There is no personal touch in e-business even

though it is very high-tech, as it lacks interpersonal touch. And because of this,
it is not suitable for businesses, which require a personal touch, such as
garments, toiletries, etc.

(ii)Incongruence between Order taking/giving and Order

fulfilment Speed- Physical delivery of products may take time, even after
the flow of information at a single click of a mouse. So, there is an
incongruence between order taking/giving and order fulfilment speed. Users
are also frustrated because of technical reasons, such as websites taking an
unusually long time to open, servers being unreachable, etc.

(iii)Need for Technology Capability and Competence of Parties to

e-business- The parties involved in e-business should be well versed with
the technologies and world of computers apart from the traditional 3 R’s
(Reading, Writing, and Arithmetic). And, this requirement leads to the digital
divide, which divides society on the basis of familiarity and non-familiarity
with digital technology. Many businessmen and customers who are
technologically challenged are unable to grab the benefits of e-business.

(iv)Increased Risk due to Anonymity and non-traceability of

Parties- It becomes difficult to establish the identity of the parties, as
internet transactions occur between cyber personalities. Moreover, it is very
difficult to know the location from where the parties may be operating.
Therefore, it is riskier to transact through the internet. There are also
additional hazards of impersonation (someone else may transact in your name)
and leakages of confidential information, such as misuse of OTP and credit
card details. Problems of viruses and hacking are also there in e-business.

(v)People Resistance- There is a lot of resistance by people in the case of e-

business. Stress and a sense of insecurity are caused amongst people because
of the process of adjustment to new technologies and a new way of doing
things. As a result, there is resistance amongst people to an organisation’s
plans of entry into e-business.
 (vi)Ethical Fallouts- There are ethical fallouts in businesses because of e-
businesses. Companies use an ‘electronic eye’ to keep track of the computer
files, e-mail accounts, etc., of employees. Companies use such information
against employees, which is unethical.

(vii)Not accessible to all- Since there are few obstacles to entry, operating
your business in this manner has many benefits. In addition, we live in the Age
of Information, when we may quickly and easily obtain any information. The
drawback of e-businesses is that only some can access them. Some people
might require assistance to take advantage of e-businesses because of the high
cost of resources like Internet connections, computer hardware and software,
broadband internet service providers, and even cell phones.

7. Reasons for Popularity of E-Commerce over Traditional System

E-commerce has experienced exponential growth over the years. Factors, such as the
increasing prevalence of smartphones, improved internet connectivity, and changing
consumer preferences have contributed to its rise. Online marketplaces and dedicated
e-commerce websites have emerged as major players in the global retail industry.
Companies, like Amazon, Alibaba, and eBay have transformed the way people shop,
creating a highly competitive environment for traditional retailers.

(i)Increasing Competition- Traditional retail businesses face intense

competition from various sources, including online retailers, e-commerce
platforms, and big-box stores. These competitors often offer a wide range of
products, competitive pricing, and convenient shopping experiences, attracting
customers away from traditional brick-and-mortar stores.

For example, A local bookstore faces competition from online retailers like
Amazon, which offers a vast selection of books at competitive prices. Many
customers choose the convenience of online shopping and opt for digital
books or e-books instead of visiting the physical store.

(ii)Changing Consumer Behaviour- The shift in consumer behaviour

towards online shopping and digital experiences has posed a significant
challenge for traditional retail businesses. Today, consumers increasingly
prefer the convenience of shopping from their homes, comparing prices
online, and having products delivered to their doorstep.

For example, A traditional clothing retailer faces challenges as more customers

prefer to browse and purchase clothes through online platforms. Consumers
can easily compare prices, read customer reviews, and order clothes without
leaving their homes, reducing foot traffic to physical stores.

(iii)Comparing Product Options- As compared to traditional business, e-

commerce provides customers with a wide range of alternatives while
 shopping. It gives the customers an opportunity to check out the merchandise
and simultaneously compare similar products on different websites. By doing
so, e-commerce also helps customers in comparing prices which is not an easy
process in traditional business. Therefore, customers shift from traditional
business towards e-commerce.

For example, it is easy to compare clothes and their prices (including

discounts) on different websites like Flipkart, Amazon, Myntra, etc., then to go
to a physical marketplace and search for clothes at different shops.

(iv)Changes in Supply Chain- With the rise in e-commerce, there have

been numerous changes in the supply chain. It is because retailers have had to
adapt to the increased demand for efficient and fast shipping. This change in
the supply chain has resulted in new logistics and fulfilment challenges for
traditional retailers.

(v)Opportunities for Integration- Besides the negative impacts, e-

commerce has also given traditional businesses some opportunities. It includes
integration between the online and offline channels. With e-commerce,
traditional retailers have successfully developed omnichannel strategies
allowing their customers to shop online and pick up products in-store or to
order the product online, and then return them (if required) at the physical
store. Examples of businesses using omnichannel strategy include Decathlon,
H&M, etc.

(vi)Gain a number of customers with effective SEO strategy-

Traditional retail shops depend mostly on branding and relations to drive more
customers to their shop but on the other hand, e-commerce websites are not
restricted to a physical site. They have the opportunity to drive traffic from the
internet. Over 30% of e-commerce traffic comes from organic searches on
search engines. This is just the traffic from organic searches and then we have
advertisements, social media traffic, and more.

(vii)Opportunities to Optimize investments- When you are about to

open a physical store, the location will play a key role. The location of your
shop will impact the fortunes of the business. Things are different in
eCommerce. There are multiple ways you can build an eCommerce
marketplace platform without impacting the platform quality So there are
further ways to optimize investment costs in starting with an eCommerce
business.

S.No. Basis Traditional Commerce E-Commerce

1. Location Physical presence required Operates online
2. Accessibility Limited operating hours 24/7 availability
3. Customer reach Local or regional Global
Higher due to rent, utilities, and Lower due to reduced
4. Overhead costs
staff infrastructure needs
5. Transaction Face-to-face interactions Online transactions and
 process automation
Inventory Digital inventory management
6. Manual tracking and storage
management systems
Higher prices due to operating Potential for cost savings and
7. Cost comparison
expenses discounts
Customer Personalized service and human Convenience and ease of
8.
experience interaction online shopping
Slower growth due to Rapid scalability and market
9. Market expansion
geographical limitations reach
Relies on physical expansion and Online presence and digital
10. Business growth
new outlets marketing

8. E-Business and Its Solutions

Prior to the development of the WWW and Netscape, businesses had mostly used the
internet for publishing information online relating to products, prices and other
marketing material. E-business varies in scope and type of activities undertaken. The
entire supply chain of many industries has been radically transformed by the
development of the internet and related technologies.

E-Business solutions are the products and services that can help ecommerce
businesses bloom and successfully conduct business across the web are often referred
to as ecommerce solutions. It includes website builder tools, web development
software, online website development platforms, mobile app builders, as well as
ecommerce platforms. It also includes e-commerce-based services like domain and
hosting service, professional product photography, cataloguing, accountancy and
taxation, payment gateway integration, partnering with the shipping service providers,
technical assistance, customer support, and so on.

Any business that wants to sell their products and services across the internet have to
opt for ecommerce solutions to support their business at different stages. With the
availability of resources and an increase in the competition, there are several
ecommerce solutions in the market. Being a merchant, it’s your responsibility to
research, analyse, and compare the ecommerce solutions and opt for the one that’s of
greater utility. There are different types of digital commerce solutions available in the
market. Some of the common types are:

(i)Hosted vs Self-hosted Solutions- Hosted solutions are provided by a

third-party provider that hosts and manages the ecommerce platform for the
business. The business pays a monthly or annual fee to use the platform and its
features. The provider takes care of the website maintenance, security updates,
backups etc.

Self-hosted solutions are installed on the business’s own server or a rented

server from a hosting provider. The business has full control over the
ecommerce platform and its features. The business is responsible for the
website maintenance, security updates, backups etc.
 (ii)Open-source vs Proprietary Solutions- Open-source solutions are
software that have their source code available for anyone to use modify or
distribute. They are usually free or low-cost but may require technical skills or
external support to set up customize or maintain them.

Proprietary solutions are software that have their source code protected by the
software owner or developer. They are usually paid but may offer more
features security or support than open-source solutions.

(iii)SaaS vs PaaS Solutions- SaaS stands for Software as a Service which is

a type of hosted solution that offers a ready-to-use ecommerce platform with
predefined features and functionalities. The business pays a subscription fee to
access the platform via the internet without having to install or manage
anything on their own server.

PaaS stands for Platform as a Service which is a type of hosted solution that
offers a customizable ecommerce platform with basic features and
functionalities. The business pays a subscription fee to access the platform via
the internet but has more flexibility to add modify or remove features
according to their needs.

(iv)B2B vs B2C vs C2C Solutions- B2B stands for Business to Business

which is a type of ecommerce solution that caters to businesses that sell
products or services to other businesses. B2B solutions may have features such
as bulk pricing quotes invoices contracts etc.

B2C stands for Business to Consumer which is a type of ecommerce solution

that caters to businesses that sell products or services to individual consumers.
B2C solutions may have features such as product reviews ratings
recommendations etc.

2C stands for Consumer to Consumer which is a type of ecommerce solution

that caters to individuals who sell products or services to other individuals.
C2C solutions may have features such as auctions ratings feedback etc.

How do E-Commerce Solutions Work?

Ecommerce and ecommerce solutions stand apart individually. Ecommerce is the

newly developed method of business conduction, and ecommerce solutions are the
services that aid this idea of business conduction. When talking on the macroscopic
level, ecommerce solutions can be considered as components that streamline the
business process and ease business conduction. Ecommerce solutions are the subset of
ecommerce, as they also deploy ecommerce to successfully conduct their business. If
you connect with the company offering ecommerce products, you will be comparing
them based on:
 (i)Features- The features offered by that product and how it will help you
resolve your troubles.

(ii)Pricing- The price of the product and how it varies with respect to other
products of the same type.

(iii)Scalability- You will check with the additional or advanced options that
can help your business flourish.

(iv)Support- Though most of the product sellers create user guides or videos to
help you easily use the product, assistance is required at certain circumstances.
Check with the type of support offered.

(v)Tier based plans- Tier based plans are set for different classes of business
or different sets of audiences. They are categorized and created aftermarket
analysis. So, you can compare them to choose the plan that seems befitting for
your business.

(vi)Scalability- Here, you explore the features offered in the next-tier and if all
those features will be enough for your business.

(vii)Compatibility- Even if the product is not that scalable, you need to check
if it is compatible to adapt third-party plugins, apps, or software. This will
surely aid in the growth of your business; else, you will feel stuck.

(viii)Additional services- Some of the ecommerce companies also offer

ecommerce services to let your business flourish. You can check those
ecommerce companies, as it will be easier for you to get your work done
under one roof.

(ix)Customer assistance- Subscription-based services, as well as products,

offer discounts for a long-term commitment. That is why the type of assistance
they will be offering is really important for you and your business in the long
run.

9. Business Benefits from E-Commerce

Ecommerce is much broader than having an online business and simply selling goods
over the internet. Ecommerce site lets organizations manage customer relationships
globally by reaching more potential customers and demographics than they would
with a physical storefront. It offers several benefits, including:

(i)It helps to reach Global- E-Commerce enabled business now have access
to people all around the world. In effect all E-Commerce businesses have
 become virtual multinational corporations. E-Commerce expands the market
place to national and international markets. Internal and web based E-
Commerce helps to reach a more geographically dispersed customer base and
more business partners as compared to the traditional business methods.

(ii)Cost effective- E-Commerce is proved to be highly cost effective for

business concerns as it cuts down the cost of marketing, processing, inventory
management, customer care etc. It also reduces the burden of infrastructure
required for conducting business. It can also collect and manage the
information related to the customers efficiently which in turn will assist the
consumer in developing efficient promotional strategy.

(iii)New Customers With Search Engine Visibility- Physical retail is

driven by branding and relationships. In addition to these two drivers, online
retail is also driven by traffic from search engines. It is not unusual for
customers to follow a link in search engine results and land up on an
ecommerce website that they have never heard of. This additional source of
traffic can be the tipping point for some ecommerce businesses.

(iv)It Reduces the Paper Costs- E-Commerce decreases the cost of

creating, processing, distributing, storing and retrieving information through
the use of FDI systems. This greatly cuts on the cost of paper work in terms of
the time taken and the man power required. Also, the date is more secure from
theft and destruction.

(v)Reduction in Inventories- A reduction in inventory is desirable to enable

reduction in storage, handling, insurance and administrative costs. Internet E-
Commerce can helps firms to reduce inventories by electronically linking the
suppliers and buyers. The process starts from the customer orders and uses
just-in-time manufacturing. Information on inventory levels and production
rate is shared between manufacturers and their suppliers. Using such
information, the delivery schedules are “fine turned” for Just in time
manufacturing, rather than maintaining large inventories.

(vi)Mass Customization and Competitive advantage- The web based

interactive ECommerce enables the customization of products/services as per
the customer needs. This provides a great competitive advantage to businesses.
For example, an online travel agency may customize the literary for a
customer who wishes to travel abroad or a computer manufacturer may be able
to supply to customized PC to a user.

(vii)No Middlemen- There is a direct contract with customers in E-Commerce

through internet without any intermediation. Companies can now focus more
on specific customers by adapting different one-to-one marketing strategy.

10. Comparison of E-Business and E-Commerce

 The differences between e-commerce and e-business are as follows:

S.No. Particulars E-commerce E-business

It refers to performing online commercial It refers to performing every type of business

1. Meaning
transactions and activities over the internet. activity through the internet.
It is a narrow concept and is a subset of e- It is a broad concept and is a superset of e-
2. Scope
business. commerce.
Commercial transactions are carried out in e- Business transactions are carried out in e-
3. Transactions
commerce. business.
4. Limitation E-commerce transactions are limited. E-business transactions are not limited.
It includes selling and buying products, It includes customer education, procurement
5. Activities making monetary transactions, etc., over the of raw materials, supply activities, making
internet. monetary transactions, etc., over the internet.
It requires using multiple websites, ERPs and
6. Operation It mainly requires the use of only a website. CRMs, that connect different business
processes.
It consists of the use of the internet, extranet
7. Resources It involves mandatory use of the internet.
or intranet.
Business E-commerce is appropriate in a Business to E-business is appropriate in a Business to
8.
models Customer (B2C) context. Business (B2B) context.
E-commerce covers external/outward E-business covers internal and external
9. Coverage
business processes. business processes/activities.

E-commerce and e-business are different. However, they are interrelated and support
businesses. E-commerce and e-business are emerging modes of business. They are
continuously reshaping and evolving the business world.