UNIT – 5

E- Commerce: Meaning, Nature and Concept

ELECTRONIC COMMERCE

E-commerce is a transaction of buying or selling online. Electronic commerce draws on

technologies such as mobile commerce, electronic funds transfer, supply chain management,
Internet marketing, online transaction processing, electronic data interchange (EDI), inventory
management systems, and automated data collection systems.

Modern electronic commerce typically uses the World Wide Web for at least one part of the
transaction’s life cycle although it may also use other technologies such as e-mail. Typical e-
commerce transactions include the purchase of online books (such as Amazon) and music
purchases (music download in the form of digital distribution such as iTunes Store), and to a less
extent, customized/personalized online liquor store inventory services.

There are three areas of e-commerce:

(i) Online retailing,

(ii) Electric markets, and

(iii) Online auctions. E-commerce is supported by electronic business.

Nature of E- Commerce

It has also been described as a “fusion of telecommunications and computing technology to

conduct business. That is the creation and management of relationships between buyers and
sellers, facilitated by an interactive and pervasive electronic medium”. Some of the main reasons
for the increase in electronic trading are:-

(I) The drive to reduce the costs;

(II) Easy accessibility to the Internet;

(III) The lack of regulation on the Internet;

(IV) Access to global markets for vendors;

(V) Greater choice and potentially lower prices for purchasers;

(VI) Lower inventory costs for vendors;

 (VII) The ability to enter new markets more easily.

Examples of E-Commerce

Ecommerce can take on a variety of forms involving different transactional relationships

between businesses and consumers, as well as different objects being exchanged as part of these
transactions.

1. Retail: The sale of a product by a business directly to a customer without any intermediary.

2. Wholesale: The sale of products in bulk, often to a retailer that then sells them directly to consumers.
3. Dropshipping: The sale of a product, which is manufactured and shipped to the consumer by a third
party.
4. Crowdfunding: The collection of money from consumers in advance of a product being available in
order to raise the startup capital necessary to bring it to market.
5. Subscription: The automatic recurring purchase of a product or service on a regular basis until the
subscriber chooses to cancel.
6. Physical products: Any tangible good that requires inventory to be replenished and orders to be
physically shipped to customers as sales are made.
7. Digital products: Downloadable digital goods, templates, and courses, or media that must be
purchased for consumption or licensed for use.
8. Services: A skill or set of skills provided in exchange for compensation. The service provider’s time
can be purchased for a fee.
E-business Models Based on the Relationship of Transaction Parties
e-commerce has a great deal of advantages over “brick and mortar” stores and mail order
catalogs. Consumers can easily search through a large database of products and services. They
can see actual prices, build an order over several days and email it as a “wish list” hoping that
someone will pay for their selected goods. Customers can compare prices with a click of the
mouse and buy the selected product at best prices.

Online vendors, in their turn, also get distinct advantages. The web and its search engines
provide a way to be found by customers without expensive advertising campaign. Even small
online shops can reach global markets. Web technology also allows to track customer
preferences and to deliver individually-tailored marketing.

History of ecommerce is unthinkable without Amazon and Ebay which were among the first
Internet companies to allow electronic transactions. Thanks to their founders we now have a
handsome ecommerce sector and enjoy the buying and selling advantages of the Internet.
Currently there are 5 largest and most famous worldwide Internet retailers: Amazon, Dell,
Staples, Office Depot and Hewlett Packard. According to statistics, the most popular categories
of products sold in the World Wide Web are music, books, computers, office supplies and other
consumer electronics.

Amazon.com, Inc. is one of the most famous ecommerce companies and is located in Seattle,
Washington (USA). It was founded in 1994 by Jeff Bezos and was one of the first American
ecommerce companies to sell products over the Internet. After the dot-com collapse Amazon lost
its position as a successful business model, however, in 2003 the company made its first annual
profit which was the first step to the further development.

At the outset Amazon.com was considered as an online bookstore, but in time it extended a
variety of goods by adding electronics, software, DVDs, video games, music CDs, MP3s,
apparel, footwear, health products, etc. The original name of the company was Cadabra.com, but
shortly after it become popular in the Internet Bezos decided to rename his business “Amazon”
after the world’s most voluminous river. In 1999 Jeff Bezos was entitled as the Person of the
Year by Time Magazine in recognition of the company’s success. Although the company’s main
headquarters is located in the USA, WA, Amazon has set up separate websites in other
economically developed countries such as the United Kingdom, Canada, France, Germany,
Japan, and China. The company supports and operates retail web sites for many famous
businesses, including Marks & Spencer, Lacoste, the NBA, Bebe Stores, Target, etc.

Amazon is one of the first ecommerce businesses to establish an affiliate marketing program, and
nowadays the company gets about 40% of its sales from affiliates and third party sellers who list
and sell goods on the web site. In 2008 Amazon penetrated into the cinema and is currently
sponsoring the film “The Stolen Child” with 20th Century Fox.
 Evolution of E-Commerce

E-Commerce was introduced 40 years ago and, to this day, continues to grow with new
technologies, innovations, and thousands of businesses entering the on-line market each year.
The convenience, safety, and user experience of E-Commerce has improved exponentially since
its inception in the 1970’s.

1960-1982

Paving the way for electric commerce was the development of the Electronic Data
Interchange(EDI). EDI replaced traditional mailing and faxing of documents with a digital
transfer of data from one computer to another.

1982-1990

It was apparent from the beginning that B2B online shopping would be commercially lucrative
but B2C would not be successful until the later widespread use of PC’s and the World Wide
Web, also known as, the Internet. In 1982, France launched the precursor to the Internet
called, Minitel.

90’s to Present

In 1990 Tim Berners Lee, along with his friend Robert Cailliau, published a proposal to build a
“Hypertext project” called, “WorldWideWeb.

 1994

 Netscape arrived. Providing users a simple browser to surf the Internet and a safe online
transaction technology called Secure Sockets Layer.

Since 1995, many innovative applications, ranging from direct online sales to e-learning
experiences had been developed. Almost every organization in the world has a Web site. Two of
the biggest names in e-commerce are launched:Amazon.com and eBay.com.

 1998

DSL, or Digital Subscriber Line, provides fast, always-on Internet service to subscribers across
California. This prompts people to spend more time, and money, online.

 In 1999, the emphasis of e-commerce shifted from B2C to B2B.

 In 2001, from B2B to B2E, e-government, e-learning, and m-commerce.
 In 2005, social networks started to rise and so did E-Commerce and wireless applications.
 Advantages and Disadvantages of E- Commerce

ADVANTAGE OF E-COMMERCE

Today, e-Commerce has revolutionized the way companies are doing business. Now,
consumers can purchase almost anything online 24*7 a day and get an ultimate
shopping experience.

(i) Convenience & Easiness

For many people in the world, e-Commerce becomes one of the preferred ways of
shopping as they enjoy their online because of its easiness and convenience. They are
allowed to buy products or services from their home at any time of day or night.

The best thing about it is buying options that are quick, convenient and user-friendly
with the ability to transfer funds online. Because of its convenience, consumers can
save their lots of time as well as money by searching their products easily and making
purchasing online.

(ii) Offer Product Datasheets

Consumers can also get description and details from an online product catalog. For
your customers, it is very much important to get information about the product no matter
whether the time of day and day of the week. Through information, your customers and
prospects are making decision to purchase your products or not.

(iii) Attract New Customers with Search Engine Visibility

As we all know that physical retail is run by branding and relationships. But, online retail
is also driving by traffic that comes from search engines. For customers, it is not very so
common to follow a link in the search engine results and land up on an ecommerce
website that they never heard of.

(iv) Comprise Warranty Information

No matter whether you are looking to choose including warranty information with
product descriptions and datasheets or providing it from within an ecommerce shopping
cart, you need to make sure that customers must be aware of important terms and
conditions that are associated with their purchase.

(v) Decreasing cost of inventory Management

With e-commerce business, the suppliers can decrease the cost of managing their
inventory of goods that they can automate the inventory management using web-based
management system. Indirectly, they can save their operational costs.

(vi) Keep Eye on Consumers’ Buying Habit

The best thing is e-commerce retailers can easily keep a constant eye on consumers’
buying habits and interests to tailors their offer suit to consumers’ requirements. By
satisfying their needs constantly, you can improve your ongoing relationship with them
and build long-lasting relationships.

(vii) Competence

For effective business transactions, e-commerce is an efficient and competence

method. Setting-up cost is extremely low as compare to expanding your business with
more brick and mortar locations. Very few licenses and permits are required to start-up
an online business than physical store. You can save your lots of money by using fewer
employees to perform operations like billing customers, managing inventory and more.

(viii) Allow Happy Customers to Sell Your Products

With lots of customers’ reviews and product ratings, you can easily increase your sells
as new customers find that your products are good and effective. Make sure that you
mention your clients’ testimonials, reviews and product ratings as such things can help
your new customers to purchase your products.

(ix) Selling Products across the World

If you are running a physical store, it will be limited by the geographical area that you
can service, but with an e-Commerce website, you can sell your products and services
across the world. The entire world is your playground, where you can sell your complete
range of products without any geographical limits. Moreover, the remaining limitation of
geography has dissolved by mcommerce that is also known as mobile commerce.

(x) Stay open 24*7/365

One of the most important benefits that ecommerce merchants can enjoy is store
timings are now 24/7/365 as they can run e-commerce websites all the time. By this
way, they can increase their sales by boosting their number of orders. However, it is
also beneficial for customers as they can purchase products whenever they want no
matter whether it is early morning or mid-night.
DISADVANTAGES OF E-COMMERCE

Running an E-Commerce business is not all rainbows and unicorns. There are
challenges unique to this business model — knowing them will help you navigate the
choppy waters and avoid common pitfalls:

(i) Lack of Personal Touch

Some consumers value the personal touch they get from visiting a physical store and
interacting with sales associates. Such personal touch is particularly important for
businesses selling high-end products as customers not only want to buy the
merchandise but also have a great experience during the process.

(ii) Lack of Tactile Experience

No matter how well a video is made, consumers still can’t touch and feel a product. Not
to mention, it’s not an easy feat to deliver a brand experience, which could often include
the sense of touch, smell, taste, and sound, through the two-dimensionality of a screen.

(iii) Price and Product Comparison

With online shopping, consumers can compare many products and find the lowest price.
This forces many merchants to compete on price and reduce their profit margin.

(iv) Need for Internet Access

This is pretty obvious, but don’t forget that your customers do need Internet access
before they can purchase from you! Since many eCommerce platforms have features
and functionalities that require high-speed Internet access for an optimal customer
experience, there’s a chance you’re excluding visitors who have slow connections.

(v) Credit Card Fraud

Credit card fraud is a real and growing problem for online businesses. It can lead to
chargebacks that result in the loss of revenue, penalties, and bad reputation.

(vi) IT Security Issues

More and more businesses and organizations have fallen prey to malicious hackers
who have stolen customer information from their database. Not only could this have
legal and financial implications but also lessen the trust customers have in the
company.

(vii) All the Eggs in One Basket

E-Commerce businesses rely heavily (or solely) on their websites. Even just a few
minutes of downtime or technology hiccups can cause a substantial loss of revenue and
customer dissatisfaction.

(viii) Complexity in Taxation, Regulations, and Compliance

If an online business sells to customers in different territories, they’ll have to adhere to

regulations not only in their own states/countries but also in their customers’ place of
residence. This could create a lot of complexities in accounting, compliance, and
taxation.
 E-Commerce in India, Transaction to E-Commerce in India

India has an internet users base of about 450 million as of July 2017, 40% of the population.
Despite being the second-largest user base in world, only behind China (650 million, 48% of
population), the penetration of e-commerce is low compared to markets like the United States
(266 million, 84%), or France (54 M, 81%), but is growing at an unprecedented rate, adding
around 6 million new entrants every month. The industry consensus is that growth is at an
inflection point.

In India, cash on delivery is the most preferred payment method, accumulating 75% of the e-
retail activities. Demand for international consumer products (including long-tail items) is
growing much faster than in-country supply from authorized distributors and e-commerce
offerings.

In 2015, the largest e-commerce companies in India were Flipkart,  Snapdeal, Amazon India, and
Paytm.

Government initiative

Since 2014, the Government of India has announced various initiatives namely, Digital India,
Make in India, Start-up India, Skill India and Innovation Fund. The timely and effective
implementation of such programs will likely support the e-commerce growth in the country.
Some of the major initiatives taken by the government to promote the e-commerce sector in
India are as follows:

Reserve Bank of India (RBI) has decided to allow “inter-operability” among Prepaid Payment
Instruments (PPIs) such as digital wallets, prepaid cash coupons and prepaid telephone top-up
cards.

Finance Minister Mr Arun Jaitley has proposed various measures to quicken India’s transition to
a cashless economy, including a ban on cash transactions over Rs 300,000 (US$ 4,655.1), tax
incentives for creation of a cashless infrastructure, promoting greater usage of non-cash modes of
payments, and making Aadhaar-based payments more widespread.

The e-commerce industry been directly impacting the micro, small & medium enterprises
(MSME) in India by providing means of financing, technology and training and has a favourable
cascading effect on other industries as well. The total size of e-Commerce industry (only B2C e-
tail) in India is expected to reach US$ 101.9 billion by 2020.

Technology enabled innovations like digital payments, hyper-local logistics, analytics driven
customer engagement and digital advertisements will likely support the growth in the sector.
With the increase in the number of electronic payment gateways and mobile wallets, it is
expected that by the year 2020, cashless transaction will constitute 55 per cent of the online
sales. The growth in e-commerce sector will also boost employment, increase revenues from
export, increase tax collection by ex-chequers, and provide better products and services to
customers in the long-term.

TRANSACTION TO E-COMMERCE IN INDIA

Much has been said about India’s accelerated digital transformation. Like the fact that we are the
world’s fastest-growing internet market, adding 40 million users per year on average. In fact,
despite the digital divide, India boasts the second highest active internet user base with 1 out of 3
people online.

The corollary to this story is the country’s red-hot ecommerce pie, which according to a new
study has the potential to become far bigger, driven by more than 500 million Indians who will
constitute the next wave of online consumers. The size of the opportunity up for grabs is a
whopping Rs 3.44 lakh crore.

The report, titled ‘Unlocking Digital for Bharat: $50 Billion Opportunity’, released by Bain &
Company, Google and Omidyar Network, claims that India has the potential to unlock over $50
billion in online commerce in India by driving awareness, usage and transactions among the
current and next set of internet users and shoppers.

But the road to get there is far from smooth. Based on a survey of 3,400 customers, the study
puts the spotlight on some major barriers holding India back, beginning with India’s small
transacting user base. Only 40 per cent of India’s 390 million internet users transact online. The
remaining 60 per cent do their research online but complete the transaction offline.

In addition, there is the worrying number of dropouts. According to the report, 54 million users –
across the affluent socioeconomic segments that comprise 80% of the user base alone – stop after
the first online purchase due to issues with user experience.

Significantly, it takes three to four months for a typical Indian internet user to make the first
online transaction and among users who have been on the internet for two or more years, 61
percent transact online. The number of “transactors” drops to 27% among new users, who have
been online for just 4-6 months. This underscores the need for ecommerce players to retain
customers through content, experience and fostering trust.

The study points out that India can “double the current product transactor base” by retaining the
number of people who give up after a trial purchase and by beefing up its current numbers. For
the latter, one can start by focussing on the 160M content consumers who draw the line at online
transactions, which has the potential to boost ecommerce by $14-18 billion.

Then there is the massive non-user base, just waiting to be tapped. The report estimates 370
million non-internet users across India’s affluent socioeconomic strata and 620 million across the
mostly-untapped lower income segments. While the latter are out of the scope of the survey,
their sheer numbers spell a massive future opportunity.
“Digital India is at a very interesting point – a large internet user base with significant variations
across demographics, and only a small portion actually transacting online. While online spends
are still low given lower per capita incomes, there is huge potential to unlock value by
addressing user concerns at various stages of the digital curve,” said Arpan Sheth, partner, Bain
& Company, and one of the authors of the report. “However, the path won’t be easy for
businesses and they will have to innovate and be patient to monetize this user base and generate
value.”
 B2C and B2B Internet Marketing

B2B stands for Business to Business marketing, which is based on same B2C (Business to
Customer) marketing practices, but it has slight modifications due to the nature and
characteristics of B2B commerce industry. Although, there certainly is some overlap between
these two marketing strategies but a few key differences are also there which can either make or
break your overall online marketing campaign. The B2B audiences are tech savvy, accustomed
to being bombarded with information and they are short on time. The exploitation of social
media marketing in case of businesses is also different from the one used for the customers. On
the other hand, digital marketing, in the case of B2C, is all about entertainment and fun for
selling products and services.

1. Past vs. Present

In the past, there were much more differences between these two types of marketing strategies
because the primary method of research and point of contact differed greatly. The ground level
basis was used by marketers to reach the customers. On the other hand, businesses used to be
more formal and restricted in their methods of reaching out.

But today, the situation is completely different; both the businesses and the consumers are
capable of working and researching their problems on the internet. A whole new expanse has
opened up the opportunity for reaching out and making contact with potential new customers. In
the realm of digital marketing, the method of reaching out and contact is nearly identical. A few
significant changes suggest that the marketers have to make use of industry jargons for excellent
effects on B2B platforms. The B2B marketing process is designed for efficiency and expertise
seeking audiences. The B2B purchase process is more rational and logical as compared to the
emotionally triggered consumer choices in case of B2C marketing.

2. B2B vs. B2C Audience 

The B2B buyers are top managers or owners of their respective companies. They are more
sophisticated and gain an in-depth understanding of the service being offered by the marketers
from an organizational perspective. They have an interest in a particular offer with an objective
to grow their own company. Therefore, the marketers, when conveying a message through digital
media, have to define how the managers or business owners can boost profits, save money and
stay competitive in the long run using their product. In such case, the content must have to be
thoroughly researched, and the marketers are required to give the audience a reason to utilize
their product and service being marketed before it’s too late.

However, typical B2C buyers look for the best price available. They tend to purchase from the
most trusted retailer. So, in this case, the marketing content and the website have to convey a
feeling of confidence and security to the buyer. That is why the design of the site and the
substance matters the most. The consumers are likely to opt for trusted sources for purchase.
Therefore, in the case of B2C marketing, the digital marketers have to give priority to trust,
security and brand loyalty.
3. Size of the Market
The size of the market is another important consideration in the field of digital marketing. When
we talk about B2C marketing, the target market is larger and takes a major sector of the public,
i.e., millions of customers are included in this case. On the other hand, in B2B marketing, you
are targeting a particular niche, i.e., the number of clients is in thousands only. Hence, the
differences in the size of the markets for both cases suggest that the content has to be appealing
to the particular market that the company is aiming to target.

4. Marketing Material – Thought Leader or Entertainer? 

B2B marketing means you must have to understand the operational activities of the organisations
which you are targeting. It is also essential to know who will be looking at your content and
website. In B2B sector, there is a tremendous thrust for knowledge because the business owners
are focused on growth and expansion of their companies. Your product will get an active
appreciation if it is capable enough to contribute to their development. You have to provide the
marketing material to lay out the foundation about how your product and services can save time,
money and resources of your client. To captivate B2B customers, you must have to provide the
relevant content which the businesses are actively searching for, and relate it with your offerings.

Whereas, B2C marketing is all about entertainment. Your customers are not going to follow the
posts having too much of sales pitch. Only the genuinely exciting, emotional and funny content
can keep the masses happy and content. In the case of B2C marketing, the marketers must have
to utilise the social media channels with a personalized and lively touch. By just being a mere
faceless corporate entity will only make you lose a significant number of customers in the long
run.

From a client’s perspective, B2B and B2C both are just types of marketing to people like you
and me. However, being a professional doesn’t mean that you cannot have fun. Marketing to the
public does not say you cannot take advantage of B2B methods. Though both are different, you
can utilise both at the same time.

5. Social Media Matters

B2B digital marketing strategy has a slightly different perspective involving long term
relationship when compared to the social media strategy in B2C digital marketing. B2C
companies flock to Facebook to reach wider audiences, on the other hand, B2B companies
gravitate towards LinkedIn as a way to establish networks with active connections. In B2B
digital marketing, the utilization of newer and trendier social media networks like Snapchat is
not suitable in any way because teenage consumers are the possible demographics of this type of
social platform. I am not saying that B2B marketers do not or should not use Facebook for
promotional activities. My point is that they have to opt for the best social media marketing
approach that targets the exact relevant audience for them.

6. B2B Marketing Builds Relationships 

The ultimate target of B2C marketing is to ‘sell’ the products and services to target consumers.
On the other hand, B2B marketers tend to look for ways to establish long term ongoing
relationships with their customers. The main aim of B2B marketing is to focus on generating
lead and keeping up the long term relationship through emails, blogging and other strategies.
B2B is all about building trust and sharing information with each other. It means that the
marketers should communicate with their contacts for building a mutually beneficial
relationship.

7. Businesses Want Facts 

B2C marketing requires making use of various exciting videos and tweets to entertain the target
audiences. However, in the case of B2B marketing, the sole purpose of marketers is to spread
information. The target market of corporate buyers includes industry savvy customers, and they
seek information that can help them to grow their businesses. Facts and figures drive business
customers. They want logic instead of a typical advertising strategy. If you are building an online
media campaign, then it is important to keep in mind the interests and needs of your customers.
Try to use info graphics, factual links and statistical reports to back up your claims.

8. Sales Cycle
Capturing the attention of your audience in both cases is entirely different from each other. In the
case of B2B marketing, the marketers try to capture the attention of smaller markets over the
longer period as compared to the marketing done in the case of B2C approach. The sales cycle in
case of B2C marketing is relatively lower than the sales cycle in case of B2B. Similarly, business
transactions need more consideration as compared to B2C operations and require a high level of
trust and bond between the customer and the supplier. The sales cycle for B2B typically starts
with driving traffic to the website for finding potential clients. Whereas, the B2C sales cycle is
based on a single step purchase. In this case, the customer wants a brand to be perfect. So, for
B2C marketing, you should give your clients a reason to buy your product.

9. Brand Value
By providing a branded content, the organizations want to create a favourable impression on
their consumers. A little piece of an interesting content sufficiently evokes an emotional and
political responsiveness among the customers. For instance, Procter & Gamble is successfully
creating a forward thinking impression on its consumers. It markets products for entertainment
and opts for emotional response option from them. This behavior reflects their B2C digital
marketing strategy. On the other hand, in the case of B2B digital marketing, the marketers tend
to provide a general overview. For this purpose, e-Books, whitepapers and other forms of
downloads, such as template and documents, can be used to add more worth to your brand.
These valuable sources incredibly contribute in enhancing your brand promotions. 

Moreover, to increase brand value, developing online public relations is considered as an integral
part of B2C marketing, but it is not sufficient in the case of B2B marketing. In the case of B2C
marketing, the marketers strive to get mentioned in various industry publications and blogs for to
be read by their target audiences. In this instance, applying some fruitful strategy for media
coverage can be a better option. Other than that, you can communicate via interviews, arrange
meetings and write advertorials to increase your PR. Whereas, in the case of B2B marketing, a
routine surveillance of industry related media outlets is required to enhance public relations.
10. B2B Content is More Accurate and Industry-Driven
The content is an integral part of digital marketing. Whether it is B2B marketing or B2C
marketing, content plays a significant role in marketing and advertising your brand over the
internet. While sharing or writing the content for B2C audiences, the marketers should have to
keep it short. They need to make it as much humorous and catchy as possible to appeal a large
number of readers. On the contrary, in the case of B2B marketing, a more detailed, informative
and lengthy content is required because the marketers are expected to show off their digital
expertise, they have to inform and inspire their prospective buyers.
 E-commerce Sales Life Cycle (ESLC) Model
E-Commerce sales life cycle includes the following stages:

Pre-sale:

Online promotions are done to create excitement about the products that are being sold through
online advertisements.

Transaction:

The customers place their order for the products. The process should be user-friendly and secure.

Delivery:

This stage involves delivering the product to the consumer. Care should be taken in delivery with
proper packaging and speedy delivery to make the customer happy.

After sales:

This stage involves following up with the customer to let him know that the product has been
delivered or if he is satisfied. The feedbacks from the customer can be furthers used in improving
services by the company.
Stages

Stage 1: Start-up & fast growth

Most ecommerce businesses go through an initial period of fast and in some cases unexpected
growth. This is usually to do with the popularity of the product they sell or market demand rather
than the implementation of their ecommerce platforms. Many businesses will choose platforms
such as BigCommerce, Shopify or Magento. It’s important that your business stays agile and
responds quickly to change.

You don’t want to get caught up in complicated systems or handcuffed by too much process.
Brands often enjoy quick impact in this honeymoon period, before growth slows down and
progression is halted by a kind of invisible ceiling. This sees businesses moving into the second
stage of the ecommerce lifecycle, which is a growth plateau.

Stage 2: Plateauing growth or consolidation

Businesses reaching this second stage of the ecommerce lifecycle tend to panic and look for
quick-fix solutions to perceived issues. You need to understand that it’s natural for there to be a
levelling off of growth after the early spike. Once your business has gained traction, brand
awareness and initial momentum, it’s time to reflect on your progress, analyse your data and gain
key insights to make measured and strategic changes to your ecommerce website and your
marketing.

It’s important for business owners to assign ample time and resources to research, to systemise
and strategise to work out the best ways to move to the next level and start achieving renewed
growth.

Stage 3: Renewed growth

Many business owners think that the solution to the issue of plateauing growth is a quick fix or a
swift change of direction, which can be an ecommerce platform move or, perhaps, the
recruitment of a new ecommerce manager.

This is not necessarily thinking strategically. A replatforming project might indeed be the answer
perhaps to a more advanced or modern ecommerce platform, like BigCommerce but you need to
make a clear business case (including extensive research and risk assessments) before deciding
to migrate platforms. Check out Space 48’s golden rules of replatforming blog to learn more.

In this third stage of the ecommerce lifecycle, the attempts to reinvigorate your company’s
momentum and growth should always be strategic. In my experience, the solution to plateauing
growth may only require realigning your business goals with changing customer trends, keeping
up-to-date with new technology and channel strategies.
Research and analysis is required to optimise processes and improve customer experience. This
will steer your strategy. Research may reveal issues and you might find you need to replatform,
but there needs to be sound reasoning behind decisions to implement technology and tools.
 Concept of e-Money, Electronic Payment System and It’s Type

Broadly, electronic money is an electronic store of monetary value on a technical device. The
definition of electronic money is becoming more scientific and specific with developments
associated with it. The European Central Bank defines e-money in the following words. “E-
money can be defined as amount of money value represented by a claim issued on a prepaid
basis, stored in an electronic medium (card or computer) and accepted as a means of payment by
undertakings other than the issuer” (ECB).

E money is a monetary value that is stored and transferred electronically through a variety of
means a mobile phone, tablet, contactless card (or smart cards), computer hard drive or servers.
Electronic money need not necessarily involve bank accounts in transaction but acts as a prepaid
bearer instrument.  They are often used to execute small value transactions.

Different Systems of Electronic Money:

Electronic Money includes three different systems namely:

 Centralized Systems,
 Decentralized Systems, and
 Offline Anonymous Systems.

Centralized Systems:

There are many centralized systems that directly sell their e–currency to end users is Web
Money, Pay Pal, Hub Culture Ven, and CashU but Liberty Reserve sells only via 3rd party
digital currency exchangers.

Decentralized Systems:

Electronic Money includes some decentralized systems. They are:

(i) Bitcoin: Bitcoin is a Peer to Peer Electronic Money system with maximized inflation limit.

(ii) Ripple Monetary System: Ripple Monetary system is a system that is developed to

distribute electronic money system independent to local currency.

Offline Anonymous System:

Offline Anonymous System can be done ‘offline’. In this electronic money system, the
merchants do not need to have interaction with banks before receiving currency from the users.
Instead of that, the merchants can collect spent money by users and deposits the money later to
 the bank. The merchant can deliver his storage media in bank for exchanging the electronic
money to cash.

Electronic Money

Scrip or money that is exchanged only through electronically is referred to as electronic money.
Electronic Money is also referred as e–money, Electronic Cash, Digital Money, Electronic
Currency, Digital Currency, e–currency, Digital Cash, and Cyber Currency. Electronic Money
uses Internet, Digital Stored Value systems, and Computer Networks.

Some of the examples of electronic money are Direct Deposit, EFT (Electronic Funds Transfer),
Virtual Currency, and Digital Gold Currency.

Types of Electronic Currencies:

There are two types of electronic currencies namely: Hard Electronic Currency and Soft
Electronic Currency:

 Hard Electronic Currency does not allow reversing charges i.e. it supports only Non–Reversible
transaction. The advantage of this type is that it reduces the operating cost of e–currency system.
 Soft Electronic Currency allows payment reversals. The payment is reversed only in case of dispute
or fraud. The payment reversible time will be 72 hrs or even more. Some examples of this type are
Credit Card and Pay Pal.

Electronic Money systems are developing day by day. Some of the developments are: it can be
used with Secured Credit Cards for wide range facilities and the bank accounts that are linked
can be used with an internet to exchange currency with Secure Micropayment system like Pay
Pal.

Electronic Payment System

An e-payment system is a way of making transactions or paying for goods and services through
an electronic medium, without the use of checks or cash. It’s also called an electronic payment
system or online payment system.

The electronic payment system has grown increasingly over the last decades due to the growing
spread of internet-based banking and shopping. As the world advances more with technology
development, we can see the rise of electronic payment systems and payment processing devices.
As these increase, improve, and provide ever more secure online payment transactions the
percentage of check and cash transactions will decrease.

Electronic payment methods

 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 crypto currency).

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 of electronic payment systems:

 Time savings: Money transfer between virtual accounts usually takes a few minutes, while a wire
transfer or a postal one may take several days. Also, you will not waste your time waiting in lines at a
bank or post office.

 Expenses control: Even if someone is eager to bring his disbursements under control, it is necessary
to be patient enough to write down all the petty expenses, which often takes a large part of the total
amount of disbursements. The virtual account contains the history of all transactions indicating the
store and the amount you spent. And you can check it anytime you want. This advantage of
electronic payment system is pretty important in this case.
 Reduced risk of loss and theft- You can not forget your virtual wallet somewhere and it can not be
taken away by robbers. Although in cyberspace there are many scammers, in one of the previous
articles we described in detail how to make your e-currency account secure.
 Low commissions: If you pay for internet service provider or a mobile account replenishment
through the UPT (unattended payment terminal), you will encounter high fees. As for the electronic
payment system: a fee of this kind of operations consists of 1% of the total amount, and this is a
considerable advantage.
 User-friendly: Usually every service is designed to reach the widest possible audience, so it has the
intuitively understandable user interface. In addition, there is always the opportunity to submit a
question to a support team, which often works 24/7. Anyway you can always get an answer using the
forums on the subject.
 Convenience: All the transfers can be performed at any time, anywhere. It’s enough to have an
access to the Internet.

Disadvantages of electronic payment systems:

1. Restrictions: Each payment system has its limits regarding the maximum amount in the account, the
number of transactions per day and the amount of output.

2. The risk of being hacked: If you follow the security rules the threat is minimal, it can be compared to
the risk of something like a robbery. The worse situation when the system of processing company has
been broken, because it leads to the leak of personal data on cards and its owners. Even if the
electronic payment system does not launch plastic cards, it can be involved in scandals regarding the
Identity theft.

3. The problem of transferring money between different payment systems: Usually the majority of
electronic payment systems do not cooperate with each other. In this case, you have to use the
services of e-currency exchange, and it can be time-consuming if you still do not have a trusted
service for this purpose. Our article on how to choose the best e-currency exchanger greatly
facilitates the search process.

5. The lack of anonymity: The information about all the transactions, including the amount, time and
recipient are stored in the database of the payment system. And it means the intelligence agency has
an access to this information. You should decide whether it’s bad or good.
6. The necessity of Internet access: If Internet connection fails, you cannot get to your online account.
 Electronic Payment System, Types of Electronic Payment System

An e-payment system is a way of making transactions or paying for goods and services through
an electronic medium, without the use of checks or cash. It’s also called an electronic payment
system or online payment system. Read on to learn more.

The electronic payment system has grown increasingly over the last decades due to the growing
spread of internet-based banking and shopping. As the world advances more with technology
development, we can see the rise of electronic payment systems and payment processing devices.
As this increase, improve, and provide ever more secure online payment transactions the
percentage of check and cash transactions will decrease.

Methods of Electronic Payment System

One of the most popular payment forms online is 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 crypto currency). 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 of electronic payment systems

(i) Time savings: Money transfer between virtual accounts usually takes a few minutes, while a
wire transfer or a postal one may take several days. Also, you will not waste your time waiting in
lines at a bank or post office.

(ii) Expenses control: Even if someone is eager to bring his disbursements under control, it is

necessary to be patient enough to write down all the petty expenses, which often takes a large
part of the total amount of disbursements. The virtual account contains the history of all
transactions indicating the store and the amount you spent. And you can check it anytime you
want. This advantage of electronic payment system is pretty important in this case.

(iii) Reduced risk of loss and theft: You can not forget your virtual wallet somewhere and it
can not be taken away by robbers. Although in cyberspace there are many scammers, in one of
the previous articles we described in detail how to make your e-currency account secure.

(iv) Low commissions: If you pay for internet service provider or a mobile account
replenishment through the UPT (unattended payment terminal), you will encounter high fees. As
for the electronic payment system: a fee of this kind of operations consists of 1% of the total
amount, and this is a considerable advantage.

(v) User-friendly: Usually every service is designed to reach the widest possible audience, so it

has the intuitively understandable user interface. In addition, there is always the opportunity to
submit a question to a support team, which often works 24/7. Anyway you can always get an
answer using the forums on the subject.

(vi) Convenience: All the transfers can be performed at anytime, anywhere. It’s enough to have
an access to the Internet.

Disadvantages of electronic payment systems

(i) Restrictions: Each payment system has its limits regarding the maximum amount in the
account, the number of transactions per day and the amount of output.

(ii) The risk of being hacked: If you follow the security rules the threat is minimal, it can be
compared to the risk of something like a robbery. The worse situation when the system of
processing company has been broken, because it leads to the leak of personal data on cards and
its owners. Even if the electronic payment system does not launch plastic cards, it can be
involved in scandals regarding the Identity theft.

The problem of transferring money between different payment systems- Usually the majority of
electronic payment systems do not cooperate with each other. In this case, you have to use the
services of e-currency exchange, and it can be time-consuming if you still do not have a trusted
service for this purpose. Our article on how to choose the best e-currency exchanger greatly
facilitates the search process.
(iii) The lack of anonymity: The information about all the transactions, including the amount,
time and recipient are stored in the database of the payment system. And it means the
intelligence agency has an access to this information. You should decide whether it’s bad or
good.

(vi) The necessity of Internet access: If Internet connection fails, you can not get to your online
account.
 Security Issues in E-Commerce: Need and Concept

In spite of its advantages and limitations E-commerce has got some security issues in practical.
E-commerce security is nothing but preventing loss and protecting the areas financially and
informational from unauthorized access, use or destruction.  Due the rapid developments in
science and technology, risks involved in use of technology and the security measures to avoid
the organizational and individual losses are changing day to day.  There are two types of
important cryptography we follow for secured E-commerce transactions.

Symmetric (private-key) cryptography: This is an encryption system in which sender and

receiver possess the same key. The key used to encrypt a message is also used to decrypt the
encrypted message from the sender.

Asymmetric (public-key) cryptography:  In this method the actual message is encoded and
decoded using two different mathematically related keys, one of them is called public key and
the other is called private key.

Security is an essential part of any transaction that takes place over the internet. Customers will
lose his/her faith in e-business if its security is compromised. Following are the essential
requirements for safe e-payments/transactions:

 Confidentiality: Information should not be accessible to an unauthorized person. It should not be

intercepted during the transmission.
 Integrity: Information should not be altered during its transmission over the network.
 Availability: Information should be available wherever and whenever required within a time limit
specified.
 Authenticity: There should be a mechanism to authenticate a user before giving him/her an access to
the required information.
 Non-Repudiability: It is the protection against the denial of order or denial of payment. Once a
sender sends a message, the sender should not be able to deny sending the message. Similarly, the
recipient of message should not be able to deny the receipt.
 Encryption: Information should be encrypted and decrypted only by an authorized user.
 Auditability: Data should be recorded in such a way that it can be audited for integrity requirements.

e-Commerce Security can be divided into two Broad Types:

(1) Client-Server Security

Client-server securities are popular because they increase application processing efficiency while
reducing costs and gaining the maximum benefit from all resources working together. These
benefits are gained by splitting processing between the client machine/software and server
machine/software. Each process works independently but in cooperation and compatibility with
other machines and applications (or pieces of applications).

All independent processing must be performed to complete the requested service. Cooperation of
application processing produces another client-server advantage, it reduces network traffic. Since
each node (client and/or server) performs part of the processing within itself, network
communication can be kept to a minimum. For example, static processes, like menus or edits,
usually take place on the client-side. The server, on the other hand, is responsible for processes
like updating and reporting.

(2) Data and Transaction Security

Secure Electronic Transaction (SET) is a system for ensuring the security of financial transactions on the
Internet. It was supported initially by Mastercard, Visa, Microsoft, Netscape, and others. With SET, a
user is given an electronic wallet (digital certificate) and a transaction is conducted and verified using a
combination of digital certificates and digital signatures among the purchaser, a merchant, and the
purchaser’s bank in a way that ensures privacy and confidentiality. SET makes use of Netscape’s Secure
Sockets Layer (SSL), Microsoft’s Secure Transaction Technology (STT), and Terisa System’s Secure
Hypertext Transfer Protocol (S-HTTP). SET uses some but not all aspects of a public key infrastructure
(PKI).
 Electronic Data Interchange And It’s components and
Communication Process

ELECTRONIC DATA INTERCHANGE

Electronic data interchange (EDI) is the concept of businesses communicating electronically

certain information that was traditionally communicated on paper. The two classic examples of
such information are purchase orders and invoices. Standards for EDI exist to facilitate parties
transacting such instruments without having to make special arrangements.

EDI has existed for more than 30 years, and there are many EDI standards (including X12,
EDIFACT, ODETTE, etc.), some of which address the needs of specific industries or regions. It
also refers specifically to a family of standards.

In 1996, the National Institute of Standards and Technology defined electronic data interchange
as “the computer-to-computer interchange of strictly formatted messages that represent
documents other than monetary instruments.

EDI implies a sequence of messages between two parties, either of whom may serve as
originator or recipient. The formatted data representing the documents may be transmitted from
originator to recipient via telecommunications or physically transported on electronic storage
media.” It distinguishes mere electronic communication or data exchange, specifying that “in
EDI, the usual processing of received messages is by computer only.

 Human intervention in the processing of a received message is typically intended only for error
conditions, for quality review, and for special situations. For example, the transmission of binary
or textual data is not EDI as defined here unless the data are treated as one or more data elements
of an EDI message and are not normally intended for human interpretation as part of online data
processing.EDI can be formally defined as the transfer of structured data, by agreed message
standards, from one computer system to another without human intervention.

COMPONENTS OF EDI

The following components and tools are necessary for performing EDI ARE-

 Trade Agreement

A legally binding trade agreement between you and your trading partner.

 Standard Document Format

The standard agreed upon format for the documentto be electronically transmitted.
 EDI Translation Management Software

Software used to convert the documentyour application’s format into the agreed upon standard
format. For optimum performance the translation software should be on the same platform as
your  business application.

 Communications Software

A programming tool that enables you to writecommunications protocols, or a separate

application. It can be a module to thetranslator or a separate software application.

 Modem

A hardware device used to transmit electronic information betweencomputer systems. The higher
the baud rate, the faster the communications will be.

 VAN

Stands for Value Added Network. A network to which you can connect totransmit data from one
computer systems to another. One network can act as agateway to another.

 Point-to-Point

A direct communication link from one computer to another. Sometrading partners offer a direct
connection to their EDI computer. Trading partnersmay opt for this method of communication
instead of using a VAN.

ADVANTAGES OF EDI

 Save Money

The cost of paper and paper processing is incredibly high compared to a properlyimplemented
EDI program. RJR Nabisco estimates that processing a paper purchaseorder costs the company
$70. Processing an EDI purchase order reduces the cost to amere 93 cents.

 End Repetition

If your trading partner wants a copy of a document, instead of calling you they simplycheck their
mailbox. This results in a great time savings from not having to copy andfax/mail copies of
business documents.

 Save Time
EDI also saves time over paper processing since the transfer of information fromcomputer to
computer is automatic. There is no need to rekey information with EDI. Andthe chance for error
drops to near zero, with no data entry.

EDI COMMUNICATION PROCESS

By moving from a paper-based exchange of business document to one that is electronic,

businesses enjoy major benefits such as reduced cost, increased processing speed, reduced errors
and improved relationships with business partners. Learn more about the benefits of EDI here. »

Each term in the definition is significant

Computer-to-computer– EDI replaces postal mail, fax and email. While email is also an
electronic approach, the documents exchanged via email must still be handled by people rather
than computers. Having people involved slows down the processing of the documents and also
introduces errors. Instead, EDI documents can flow straight through to the appropriate
application on the receiver’s computer (e.g., the Order Management System) and processing can
begin immediately. A typical manual process looks like this, with lots of paper and people
involvement:

Manual EDI (Electronic Data Interchange) Document Exchange

The EDI process looks like this — no paper, no people involved:

EDI (Electronic Data Interchange) Document Exchange

Business documents – These are any of the documents that are typically exchanged between
businesses. The most common documents exchanged via EDI are purchase orders, invoices and
advance ship notices. But there are many, many others such as bill of lading, customs
documents, inventory documents, shipping status documents and payment documents.

Standard format– Because EDI documents must be processed by computers rather than humans,
a standard format must be used so that the computer will be able to read and understand the
documents. A standard format describes what each piece of information is and in what format
(e.g., integer, decimal, mmddyy). Without a standard format, each company would send
documents using its company-specific format and, much as an English-speaking person probably
doesn’t understand Japanese, the receiver’s computer system doesn’t understand the company-
specific format of the sender’s format.

There are several EDI standards in use today, including ANSI, EDIFACT, TRADACOMS and
ebXML. And, for each standard there are many different versions, e.g., ANSI 5010 or EDIFACT
version D12, Release A. When two businesses decide to exchange EDI documents, they must
agree on the specific EDI standard and version.
 Businesses typically use an EDI translator – either as in-house software or via an EDI service
provider – to translate the EDI format so the data can be used by their internal applications and
thus enable straight through processing of documents.

Business partners – The exchange of EDI documents is typically between two different
companies, referred to as business partners or trading partners. For example, Company A may
buy goods from Company B. Company A sends orders to Company B. Company A and
Company B are business partners.

 Steps the Sender Must Take

Document Preparation
 Information necessary to produce a business document (purchase order, invoice, etc.) is collected
in an electronic file.

Outbound Translation

The electronic file is converted by the sender’s translation software into the standard format
(following ASC X12 standards and Rail Industry Guidelines).

Outbound Communication

The sender’s computer connects to a VAN. Upon successful receipt, the VAN processes and
routes the transaction to the electronic mailbox of the receiver.

 Steps the Receiver Must Take

Inbound communication

The receiver’s computer connects with the VAN and receives any files waiting in its electronic
“in” box.

Inbound translation

The receiver’s translation software “maps” or translates the electronic file from the ASC X12
standard message format into a format that the receiver’s internal system can understand.

Document processing

The receiver’s internal document processing system takes over and the newly received document
is handled according to normal internal procedures.