Chapter-1

Introduction to E-Commerce
Que. What is E-Commerce? Or Explain Features of E-Commerce?

E-Commerce: E-commerce (electronic commerce or EC) is the buying and selling of goods and services, or the
transmitting of funds or data, over the Internet.

E-Commerce or Electronics Commerce is a methodology of modern business which addresses the need of business
organizations, vendors and customers to reduce cost and improve the quality of goods and services while increasing the
speed of delivery. E-commerce refers to paperless exchange of business information using following ways.

 Electronic Data Exchange (EDI)

 Electronic Mail (e-mail)
 Electronic Bulletin Boards
 Electronic Fund Transfer (EFT)
 Electronic publishing
 Digital Library

The process of E-commerce:

 A consumer uses Web browser to connect to the home page of a merchant's Web site on the Internet.
 The consumer browses the catalog of products featured on the site and selects items to purchase. The selected
items are placed in the electronic equivalent of a shopping cart.
 When the consumer is ready to complete the purchase of selected items, she provides a bill-to and ship-to address
for purchase and delivery
 When the credit card number is validated and the order is completed at the Commerce Server site, the merchant's
site displays a receipt confirming the customer's purchase.
 The Commerce Server site then forwards the order to a Processing Network for payment processing and fulfilment.

Features of E-Commerce:
E-Commerce provides following features

 Non-Cash Payment: E-Commerce enables use of credit cards, debit cards, smart cards, electronic fund transfer via bank's
website and other modes of electronics payment.
 24x7 Service availability: E-commerce automates business of enterprises and services provided by them to customers are
available anytime, anywhere. Here 24x7 refers to 24 hours of each seven days of a week.
 Advertising / Marketing: E-commerce increases the reach of advertising of products and services of businesses. It helps in
better marketing management of products / services.
 Improved Sales: Using E-Commerce, orders for the products can be generated any time, any where without any human
intervention. By this way, dependencies to buy a product reduce at large and sales increases.
 Support: E-Commerce provides various ways to provide pre sales and post sales assistance to provide better services to
customers.
 Inventory Management: Using E-Commerce, inventory management of products becomes automated. Reports get
generated instantly when required. Product inventory management becomes very efficient and easy to maintain.
 Communication improvement: E-Commerce provides ways for faster, efficient, reliable communication with customers and
partners.
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Que. Discuss the scope of E- Commerce:
Scope of E-commerce:
The scope of E-Commerce is not limited to business over internet. It include huge internet business area including -
Electronic Markets ,Electronic Data Interchange, Internet Commerce.

Electronic
Markets

EDI Internet
Comerce

Electronic markets:

Electronic markets are the foundation of electronic commerce. They potentially integrate advertising,
product ordering, delivery of digitizable products, and payment systems. An electronic marketplace (or
electronic market system) is an interorganizational information system that allows the participating
buyers and sellers to exchange information about prices and product offerings. The usual example of an
electronic market is Books Books are another product that consumers purchase on-line. One
bookseller on the Web is Amazon.com Books. Their site advertises a spotlight book, book of the day,
titles in the news, featured books, and books that are hot this week. Some of their books are discounted
as much as 30%. By clicking on book titles, and some authors, more detailed information can be
accessed (Amazon). It is no longer necessary to either go to a bookstore to buy a book or to find mail
order bookstores through a print advertisement. Also, Web advertising is likely to be more current than
print ads.

Seller 1

Seller 2 Electronic
Market
Customer
Seller 3

Product Distribution Network

Information
Product

Electronic Data Exchange [EDI]:

EDI stands for Electronic Data Exchange. EDI is an electronic way of transferring business documents in an organization
internally between its various departments or externally with suppliers, customers or any subsidiaries etc. In EDI, paper
documents are replaced with electronic documents like word documents, spreadsheets etc.
EDI Documents
Following are few important documents used in EDI:

 Invoices
 Purchase orders
 Shipping Requests
 Acknowledgement
 Business Correspondence letters
 Financial information letters

Internet Commerce:

Broad term covering all commercial activity on the internet, including auctioning, placing orders, making payments,
transferring funds, and collaborating with trading partners. Internet commerce is not a synonym for electronic commerce (e-
commerce) but one of its subsets.

Internet Commerce as also including:

 The full sales and marketing cycle - for example, by analysing online feedback to
discover customer's needs
 Identifying new markets - through exposure to a global audience through the World
Wide Web
 Developing ongoing customer relationships - achieving loyalty through ongoing email
interaction
 Assisting potential customers with their purchasing decision - for example by guiding
them through product choices in an intelligent way
 Providing round-the-clock points of sale - making it easy for buyers to order online,
irrespective of location
 Supply Chain Management - supporting those in the supply chain, such as dealers and
distributors, through online interaction
 Ongoing Customer Support - providing extensive after-sales support to customers by
online methods; thus increasing satisfaction, deepening the customer relationship and
closing the selling loop through repeat and onging purchases.

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Que. Explain e-Commerce Trade Cycle

The e-Commerce Trade Cycle:

A trade cycle is the series of exchanges, between a customer and supplier, that take place when a
commercial exchange is executed. A general trade cycle consists of:

Pre-Sales: Finding a supplier and agreeing the terms.

Execution: Selecting goods and taking delivery.
Settlement: Invoice (if any) and payment.
After-Sales: Following up complaints or providing maintenance.

The trade cycle varies depending on:

 The nature of the parties to the transaction

 The frequency of trade exchanges
 The nature of the goods or services being exchanged.

Three generic trade cycles can be identified:

 Regular, repeat transactions between commercial trading partners (Repeat)

 Irregular transactions between commercial trading partners (Credit)
 Irregular transactions in once-off trading relationships (commercial or retail) (Cash)

Generic trade cycles:

Trade Cycle: Repeat Credit Cash

Search
Pre-Sale
Negotiate

Order
Execution
Deliver

Invoice
Settlement
Payment

After Sales After Sale

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Que. Discuss the relationship between Trade Cycle and Electronic Market:

Trade Cycle and Electronic Market:

 Emphasis on the search phase of the trade cycle

 Typically an inter-organisational credit trade cycle

Search
Pre-Sale
Negotiate
EM
Order
Execution
Deliver

Invoice
Settlement
Payment
 Limited applications – airline seat bookings and financial sector – the operation of the electronic
market is not necessarily in the vendor’s interests

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Que. Discuss the term between Trade Cycle and EDI:

Trade Cycle and EDI:

 Used for standardised, repeat, inter-organisational transactions

Search
Pre-Sale
Negotiate

Order
Execution
Deliver EDI
Invoice
Settlement
Payment

After Sales After Sale

 Notable users of EDI are vehicle assemblers, component supplier’s, and supermarkets (and other
multiple retailers), ordering the goods to restock their shelves.

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Que. Discuss the relationship between Trade Cycle and Internet Commerce?

Trade Cycle and Internet Commerce:

 Used for once-off transactions – consumer or inter-organisational transactions.

Search
Pre-Sale
Negotiate

Order
Execution
Deliver Internet

Invoice
Settlement
Payment

After Sales After Sale

 Can apply to Search, Execution / Settlement and / or After Sales.

 Consumers pay at time of ordering – businesses may have credit arrangements with the
suppliers.

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Que. Explain Advantages / Benefits of E-Commerce?

Advantages / Benefits of E-Commerce:

E-Commerce advantages can be broadly classified in three major categories:

 Advantages to Organizations

 Advantages to Consumers

 Advantages to Society

A. Advantages to Organizations
1. To increase business scope:

Using E-Commerce, organization can expand their market to national and international markets with
minimum capital investment. An organization can easily locate more customers, best suppliers and suitable
business partners across the globe.

2. Cost Reduction:

E-Commerce helps organization to reduce the cost to create process, distribute, retrieve and manage the
paper based information by digitizing the information.

3. Easy to improve Brand Promotion:

Using E-Commerce it easy to launch new brand details, its features and services in minimum time and
highly target region and customers. E-commerce improves the brand image of the company.

4. Helps to improve Customer Service:

E-commerce helps organization to provide better customer services. It include less time to provide service,
response queries and guidelines to use products.

5. Simplify the Business Process:

E-Commerce helps to simplify the business processes and make them faster and efficient. Using E-
Commerce it is possible to save time to exchange information from various department of business. Ex.Produce
production report by stock and exchange department and forward to sales and marketing department.

6. Reduction in Paper work:

E-Commerce reduces paper work a lot. Because all document carried from one dept. to another, one branch
to another using E-Commerce services. Such as Email, Digital Library of documents etc.

7. Productivity:

E-Commerce increased the productivity of the organization. It supports "pull" type supply management. In
"pull" type supply management, a business process starts when a request comes from a customer and it uses just-in-
time manufacturing way.

B. Advantages to Customers
 24x7 support Customer can do transactions for the product or enquiry about any product/services provided by a company
any time, any where from any location. Here 24x7 refers to 24 hours of each seven days of a week.

 E-Commerce application provides user more options and quicker delivery of products.

 E-Commerce application provides user more options to compare and select the cheaper and better option.

 A customer can put review comments about a product and can see what others are buying or see the review comments of
other customers before making a final buy.

 Readily available information. A customer can see the relevant detailed information within seconds rather than waiting for
days or weeks.

 E-Commerce increases competition among the organizations and as result organizations provides substantial discounts
to customers.
C. Advantages to Society
 Customers need not to travel to shop a product thus less traffic on road and low air pollution.

 E-Commerce helps reducing cost of products so average rich people can also manage to pay for the products.

 E-Commerce has enabled access to services and products to rural areas as well which are otherwise not available to
them.

 E-Commerce helps government to deliver public services like health care, education, social services at reduced cost and
in improved way.

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Que. Explain disadvantages obstacles of E-Commerce?

E-Commerce disadvantages
E-Commerce disadvantages can be broadly classified in two major categories:

 Technical disadvantages

 Non-Technical disadvantages

Technical Disadvantages
 There can be lack of system security, reliability or standards remaining to poor implementation of e-Commerce.

 Software development industry is still evolving and keeps changing rapidly.

 In many countries, network bandwidth might cause an issue as there is insufficient telecommunication bandwidth
available.

 Special types of web server or other software might be required by the vendor setting the e-commerce environment apart
from network servers.

 Sometimes, it becomes difficult to integrate E-Commerce software or website with the existing application or databases.

 There could be software/hardware compatibility issue as some E-Commerce software may be incompatible with some
operating system or any other component.

Non-Technical Disadvantages
 Initial cost: The cost of creating / building E-Commerce application in-house may be very high. There could be delay in
launching the E-Commerce application due to mistakes, lack of experience.

 User resistance: User may not trust the site being unknown faceless seller. Such mistrust makes it difficult to make user
switch from physical stores to online/virtual stores.

 Security/ Privacy: Difficult to ensure security or privacy on online transactions.

 Lack of touch or feel of products during online shopping.

 E-Commerce applications are still evolving and changing rapidly.

 Internet access is still not cheaper and is inconvenient to use for many potential customers like one living in remote
villages.

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Que. Explain the term M-Commerce or Mobile Commerce or scope of M- Commerce?

Que. Disscuss M- Commerce or scope of m-Commerce?

M-Commerce or Mobile Commerce:

M-commerce (mobile commerce) is the buying and selling of goods and services through
wireless handheld devices such as cellular telephone and personal digital assistants (PDAs). Known
as next-generation e-commerce, m-commerce enables users to access the Internet without needing to
find a place to plug in.

Scope of M-Commerce :

M-Commerce is an emerging discipline involving applications, mobile device, middleware, and

wireless networks. While most of existing eCommerce application can be modified to run a wireless
environment, M-Commerce also involves many more new applications that become possible only
due to the wireless infrastructure. These applications include mobile financial services, user and
location specific mobile advertising, mobile inventory management, wireless business re-
engineering, and mobile interactive games.

In addition to device and wireless constraints, M-Commerce would also be impacted by the
dependability of wireless infrastructure.

ƒ M-Commerce existing and futures possible application include: ƒ

 Mobile banking service (check account information, money transfer).

 Mobile trade service (stock quotes, selling/buying).

 Credit card information (account balance) ƒ

 Life insurance account information (account information, money transfer) ƒ Airline (online
reservation, mileage account check) ƒ

 Travel (online reservation, timetables) ƒ

 Concert ticket reservation (online or telephone booking) ƒ

 Sales (online books, CDs)

 Entertainment (games) ƒ

 News/information (headline, sports, weather, horse racing information, business, ƒ technology,

regional) ƒ

 Database, application (yellow pages, dictionary, restaurant guide) ƒ Location based application
(area information and guides)

Que. Difference between M Commerce and E- Commerce:

M-commerce and E-commerce are business transactions done online.
1. M-commerce stands for Mobile Commerce while E-commerce stands for Electronic Commerce.
2. M-commerce uses mobile devices for commercial transactions while E-commerce uses computers.
3. M-commerce is available anyplace you go, even if there is no Internet. For E-commerce, you still need to go to a place where
there is Internet to access your online transactions.
4. M-commerce is very handy and easy to carry while E-commerce you cannot always bring with you your computer or laptop
anywhere.
5. M-commerce is charged through the caller’s rate, deduction of user’s credit, and mobile banking. E-commerce is charge
dthrough the use of credit cards that are swiped in credit card machines.
6. In conclusion, M-commerce uses mobile devices for business transactions while E-commerce uses computers or laptops for
business transactions.