Digital Business

The Digital Revolution and Society

• The New Business Environment

• The Internet and unification with Technologies

• Global Village

• Digital Technology and associated economics increased

ERP and internet- marketing , order, sales, supply chain and delivery

Artificial intelligence – simulation , human actions/ behavior adopted

Data science – analysis of large amount of data

Embedded technologies – mechanical and electronic devices

or Switch on street lights ahead of the vehicle, and then to switch off the street lights as the

vehicle go past the street lights to conserve energy.

The Digital Revolution and Society

• Social networks and digital devices are used by government, businesses,

society, family and friends

• Customer’s need and wants are recognized for which he values most

• Companies focus on competitive differentiation

• Customers are changing

• New Organizational structures

• Technology are uniting to become agile , innovative, social and using mobile.

• The Digital Economy

• A collective term for all economic transactions that occur on the internet.( Web Economy or the Internet
Economy.)

• Digital economy is optimizing processes , production, reducing transaction costs, and transforming supply
chains into digital environement.

• The digital economy creates efficiencies , job opportunities and

• economic growth.

• Digital Enterprise

• An organization that uses digital technology as a competitive edge in its internal and external operations.

• As information technology (IT) has reshaped the infrastructure

• and operations of enterprises

• Digital enterprises one where all the business relationship with customers, suppliers and employees are
digitally enabled

Online Community

An online community is a group of people with common interests who use the Internet (web sites, email,
instant messaging etc.) to communicate, work together and pursue their interests .

E-Commerce – A form of business transaction in which the parties interact electronically rather than by
physical exchange of documents or direct meetings

• Doing the business online.

• Buying and selling of goods and services over the internet.

• Types of organizations

• Classification of e-commerce

• Brick-and-mortar (old economy) organizations Old-economy organizations (corporations) that perform

primary business off-line, selling physical products by means of physical agents

• Virtual (Pure-play) organizations that conduct their business activities solely online

• Click-and-mortar (click-and-brick) organizations - Organizations that conduct some ecommerce

activities with an additional marketing channel of online or offline

• Click and mortar organization is an integration of both online and physical business models. In online
shopping, a customer just buys a product online, and the company delivers the product at the customer’s
doorstep. On the other hand, brick and mortar stores offer in-store purchasing options.

• Click and mortar, however, works differently. In this type of business, the customers select or buy a
product online and then pick from any retail franchise of the company or have it delivered at their doorstep.
Companies who follow click and mortar store have their mobile apps or websites where all their products
are available. The customer just has to buy online and then pick up the product later.
• It is a business practice where customers examine products in brick and mortar stores but buy those
products later through online channels of the same company. This may look a bit awkward, but this model
offers discounts to the customers.

• Showrooming is also a great way to win your customer’s trust. That said, a lot of people don’t feel satisfied
with online purchasing because they fear the final product may have compromised quality. Showrooming
allows people to physically examine the product and then buy it online.

• Advantages of Click and Mortar

• As click and mortar is a combination of two approaches, it offers some amazing benefits such as:

• Improved After-Sale Service

• Access to a wider market

• Time-saving

• Customer’s trust

• Example Click and Mortar

• 1) Decathlon 2) Walmart
• Click and Mortar - disadvantage
• Channel Conflict/Difficulty in transition
• It is not easy to implement and maintain. Companies who follow online or brick and mortar find the
transition quite difficult. Moreover, it is difficult to maintain a balance, i.e., maintaining the original mode
of business and the new one.
• Cost to maintain website
• If a brick and mortar store converts to click and mortar, then it will have to bear the extra cost. That said,
the business will have to create a new website or an app. It will also need regular maintenance as well. This
process and maintenance are costly.
• Cyber Crime
• One of the biggest challenges with online platforms is that customers’ privacy and credentials are always at
risk. Hackers can mislead customers and get their personal information such as credit card numbers,
contact numbers, etc.
 Electronic market (e-marketplace)- An online marketplace where buyers and sellers meet to exchange
goods, services, money, or information
Interorganizational information systems (IOSs) Communications systems that allow routine transaction
processing and information flow between two or more organizations –
Intraorganizational information systems Communication systems that enable e-commerce activities to
go on within individual organizations
Intranet An internal corporate or government network that uses internet tools, such as Web browsers, and
Internet protocols
Extranet A network that uses the Internet to link multiple intranets
E Commerce becomes successful with five support areas
People
Public policy
Marketing and advertising
Service provision
Partnerships
Major business revenue
models in e-commerce
• Sales – Profit margin
• Money Transaction fees –
G pay, phone pay
• Subscription fees – amazon prime
• Advertising fees – to the
service provider /
 website owner
• Affiliate fees – affiliation
with a marketing firm –
Amway
Few more Revenue models in
• Tendering (bidding) system Model in which a buyer requests sellers to submit bids; the lowest bidder
wins – any government website- maharashtra.gov.in
• Self quoted price model : A buyer sets the price he is willing to pay and invites sellers to supply goods or
service at that price
• Affiliate marketing An arrangement whereby a marketing partner (a business, an organization, or even an
individual) refers consumers to the selling company’s Web site- Amway
• SMEs Small-to-medium enterprises
• Group purchasing Quantity (aggregated) purchasing that enables group of purchasers to obtain a
discount price on the products purchased

What are the drivers for Web 2.0

No. 1: Customer Reviews
Ninety-six percent of retailers rate customer ratings and reviews effective. Reading reviews helps sellers
better understand their customers and their own products, which will also help them improve product
descriptions and marketing strategies.
Example- on Amazon
No. 2: Shopping Widgets
Displayed on the Internet.
Graphic user interface (GUI) that displays product information, which retailers can use to push out an
interactive experience to affiliate sites, customer sites and social networks .le

Drivers of web 2.0 ….

No. 3: Questions and Answers ( FAQ)
Some sites offer question and answer tools in addition to customer reviews. Customers may ask the
shopping community or the merchant to address specific concerns about a product, such as “Does this
brand fit true to size?”
Like reviews, questions and answers improve product information and can improve conversion.
They also help retailers improve their product copy by allowing them to understand what’s important to
their customers.
Example – on company website- samsung.com
Drivers of web 2.0 ….
 No. 4: Twitter
• Another way to ask and answer questions.
• Instant answers to questions at Twitter universe.
• Allows retailers to know customer views
• An alternative form email marketing, a way to share deals and coupons, promote contests or other simply
put a human face to a company.
• Customers prefer Twitter to communicate rather than telephone or email
Example – Dell uses for sales
Used for service also
Drivers of web 2.0 ….
No. 5: Business page
• User generated cross sells/photos provide suggestions to consumers on available related products or
services and are ideal for fashion, cosmetics and home decor.
• Big brands, SME upload their page on ‘ Meta Business Suit.’
• Supports Discussions and Polls, sales , awareness, monetization.
• Drivers of web 2.0 ….
• No. 7: Co-Browsing
• Co-browsing describes navigation of a Web site by several people at the same time and is ideal for
consultative situations where people want to shop together. It holds great potential for customer service,
especially when it comes to improving live chat capabilities.
• A retail site offers to invite prospective customers and their known to co-browse an online store in real-
time.
Drivers of web 2.0 ….
No. 8: Blogging
• Blogs can be a great way to connect with customers, talk about new products, share interviews, videos,
podcasts, news , photos
• For branding and attract customer loyalty.
• Updated on regular basis
Encourage and support long-term engagement anDrivers of web 2.0 ….
No. 9: Video Sharing
• Greatly improve conversion rates and reduce returns.
• Simple to set up an account with YouTube or any other video-sharing site and upload videos.
• However, there’s a disconnect between watching a video and buying a product through a video-sharing
site. This could change if YouTube builds out its click-to-buy capabilities (The click-to-buy feature embeds
links to purchase products right in the video.)
• Can be reposted on other sites
• Adding video to Youtube and other video-sharing sites can help retailers obtain additional search engine
exposure, since Google likes to mix in video results with regular Web pages, news stories and image
results (blended search).d loyalty through blogging that hopefully translates into sales
• Payment Gateway • A payment gateway would be required for a proprietary ecommerce website to
process customer payments.
• • Payment gateway accepts credit card, debit card, net banking, internet banking payments from multiple
banks and credit card companies. • Therefore, one payment gateway is sufficient to accept many forms of
online payments.
• • Once, a payment is received from the customer, the payment is sent to the bank account of the business
by the payment gateway in one or two business days.

• Mode of payments in e-commerce

• Credit cards – The most widely used form of electronic money today. Several million credits cards are
being used to make online payments in India. Many E-Commerce sites allow to pre-store customer’s credit
card number securely so that you don’t have to key in the number each time. Currently, the largest user
base in e-commerce uses credit cards for payments.

• Debit card – The second largest e-commerce payment medium in India. Using a debit card proves to be a
preferred choice for customers who want to stay within their spending capacity.

• Net Banking – Another easy way to make online payments. It is similar to using a debit card for paying
money that exists in the user’s current or savings account but it does not require the user to have a card for
the payment purposes. While completing the purchase the consumers needs to put in their net banking id
and pin.

• Reward Points – An indirect way for online payments. On certain things that are purchased by a person, a
number of rewards points will be awarded which will get added to the his account.

• In the next transaction, the buyer can choose to pay for their next purchase using the accumulated rewards
points, which will replace what they would otherwise be paying as money.

• This is a relatively new and fast growing payment method. Typically a consumer may buy or be gifted a
prepaid card that can be used online.

• This would be for a particular brand or for a retailer. Some online retailers have their own gift cards which
are sold to their customers, who in turn may use it for themselves or as give them as gifts.

• Gift cards have their own authentication system and this may vary from issuer to issuer.

• Cash on Delivery and Bank Cheques, There is a separate process and this would have to be reflected on
the web site
• Summary : Contact a reliable payment gateway partner

• Mobile Money – Out of India’s 1.3 billion people, only a small percentage have bank accounts. Amongst
that massive unbanked population, many hundreds of millions have mobile phones, and for them, mobile
money is likely to be hugely beneficial. Even for smaller transactions, where credit cards are not accepted,
it might be simpler to just hand over cash. But sufficient cash is not available, then mobile money becomes
useful.

Setting up an E-Commerce business

1) Requires website development
2) Bank account
3) Shop act and GST
4) A payment gateway for receiving payments.
5) Online marketing
A long-term initiative and requires a good amount of investment and efforts
A general process of e-commerce
1.Order Processing
• Purchasing a product initiates the system of physical distribution. Using a successful order fulfillment
system, employees and customer both can track orders, locate products, and resolve any problems that arise
as items move from warehouse to shipping company to customer's doorstep.
2.Warehousing and Inventory Control
• Warehousing system makes it easier to take and fill orders quickly. Goods that sell quickly are placed near
the dock doors.
• Products that are similar to each other are kept together so they can be located easily
• 3.Order Fulfilment
• Shipping center picks up the order and delivers to the customer
 Advantages of e commerce
• No geographic limitations : No limitation of distance is there.
E-commerce has converted world into a global village.
Buyers and sellers meet via internet.
• Savings : Sellers need not to go to the store physically. Hence ,it saves both time and money.
• 24*7 Business : There is no opening and closing time for the stores.
• Huge variety : Customers can easily select products from different providers without moving around
physically.
• Least capital required: Business can be started with least amount of capital.
• Advertising / Marketing − E-commerce increases the reach of advertising of products and services of
businesses.
• 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.
• Inventory Management − Using E-Commerce, inventory management of products becomes automated.
Reports get generated instantly when required.
• Communication improvement − E-Commerce provides ways for faster, efficient, reliable communication
with customers and partners.

Advantages of e-commerce to Organizations

• Expand their market to national and international markets with minimum capital
• Easily locate more customers, best suppliers and suitable business partners across the globe.
• Reduce the cost of creating, processing, distributing, retrieving and managing the information by
digitization unlike paper based process.
• Improves the brand image of the company.
• Simplifies the business processes and makes it faster and efficient.
• Reduces paper work a lot.
• Productivity of the organization increases.
• 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.

Advantages of e-commerce to Customers

• Transactions or enquiry any time, any where from any location. 24x7
• More options and quicker delivery of products.
• More options to compare and select the cheaper and better product .
• Review comments before making a final purchase
• Relevant detailed information within seconds rather than waiting for days or weeks
• Increases healthy competition among the organizations
• Substantial discounts to customers.

Advantages of e-commerce to society

• No need to travel to shop a product thus less traffic on road and low air pollution.
• Reduces product cost, common people can afford to buy luxurious items
• Access to rural and remote areas.
• Public services like health care, education, social services at reduced cost and in improved way

Technical Disadvantages of e-commerce

• Lack of system security, reliability or standards owing to poor implementation of e-Commerce.
• 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 ecommerce
environment apart from network servers.
• Difficult to integrate E-Commerce software or website with the existing application or databases. There
could be software/hardware compatibility issue as some ECommerce software may be incompatible with
some operating system or any other component.

Non-Technical Disadvantages
 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. ECommerce 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.

Legal Aspects of e commerce

• The Information Technology Act, 2000 (“IT Act”) deals with contractual aspects of use of electronic
records.
• The act establishes that an ecommerce transaction is legal if the offer and acceptance are made through
universally accepted sensible mode. Example- Debit/ credit cards, UPI
• The objectives of the Information Technology Act, to provide legal recognition for E-commerce
transactions
• The Act lays down procedures for networking operations and punishments for civil dishonesty and
offences.
• A communication sent by an offer or to an offeree through indirect means, such as an email that is spam
mail, is not regarded as a reasonable mode under the IT act.

Legal Aspects of e commerce ….

• There must be Direct mail from the offeree to the offer
• Acceptance by conduct, which is pressing an ‘Accept’ button to an offer
• Section 43A of ITAA holds ecommerce companies accountable for protection of personal data, else the
company is totally liable to pay for damages in terms of money.

Contribution of e-commerce in Indian Economy ….

1) India ranked 2nd in most internet users in the world
2) Increasing number of young generation is pursuing technological skills related to e-business and e-
commerce in India .
3) Opening up more chances for work and education.
4) It is generating a completely new economy in terms of technology
5) E- commerce has evolved into one of the most effective channels for inter-organizational business
activities
6) Cashless economy in India has increased significantly
7) 4G, 3G service providers increased the nationwide reach of the internet
8) Incentives and schemes to promote digitalization has lead to opening up of many corporations and
operations of many global companies
9)  Smart phones allowed a much wider range of purchasing opportunities at attractive prices.
10) The Indian economy is receiving a free inflow of foreign revenue

The impact of E-commerce in various sectors

• Technology- New age technological solutions being taken up to solve the business problems to bring
commerce to everyone digitally. This is seen in both B2C and B2B sector.
• Example- Artificial Intelligence (speech recognition, language translation) , Machine Learning
( computers learn and act without instructions) , Data science ( analyses large amount of data) ,
virtual reality ( humans interact with 3 dimensional environment )

• Logistics - Logistics solutions have digitally connected different stakeholders across the country.
The Uber model of moving passengers is implemented in some form or the other in the logistic sector.
The growth of E-Commerce will drive innovation in the logistic sector to make the products available to
the end user.
Example- centralized logistic platform- Porter in Pune

• Travel- 70% of the contribution of E-Commerce is in the travel sector which includes online ticket
bookings.
• This has made the market competitive by bringing all players on the same platform and has also given
consumer more options.
• Travel industry is the early adopter to E-Commerce.
• Example- Ola , Uber, Make My Trip, Kesari tours and travels,
• Education- One of the industries to have the most profound impact of E-Commerce is the education. The
ability of E-Commerce to provide quality education to everyone is immense. India will have one of the
biggest set of youth population and hence the scope for education sector to be the biggest achievers
because of E-Commerce is sure
• Example- Udemy, Coursera, Zoom , Google meet, online educational platform

What is Marketplace?
Marketplace is a physical location of buyer and seller interaction.
Seller and buyer meet each other individually and share information.
Thereafter, negotiations take place and exchange of product or service occurs.
Examples- retail stores, outlets, supermarkets, etc.
A physical address and the buyers may routinely visit a marketplace
Also, at a given single marketplace, the number of buyers and sellers are limited due to demographics
factors, which relate to physical presence. For example, PCMC market will most probably have only their
residents as sellers and buyers. Other city inhabitants such as that of Pune , katraj might not visit PCMC
for their purchasing requirements. So, the demand and supply factors are decided by less number of people.
In a marketplace, brand equity is created by manipulating the content, context, and infrastructure, using the
traditional marketing mix. These three elements are usually interconnected and inseparable if the buyer is
to access the product or service. Customer perceived value is a combination of product or service, pricing,
communication, and supply chain activity related to the product or service.
For example, a furniture is an aggregated collection of content (raw material, product design), context
(organization, logo, style), and infrastructure (production plant, physical distribution system).
In order to create value to customers, producers should aggregate all three into a single value proposition.
Customers cannot access the furniture without interacting with these three.
What is Marketspace?
At the marketspace, the traditional marketplace transaction is eliminated.
Marketspace is  defined as the information and communication technology based electronic or online
exchange environment. Physical boundaries do not possess any interference for such transactions.
The buyers and sellers interact and transact in a virtual environment where direct physical
communication is not required. The sellers may exhibit their products on their own websites while buyers
can perform a targeted search query to find their relevant requirements.
For an online selling platform, the numbers of buyers and sellers are not decided by demographic factors
as no any physical boundaries exist. The world itself can sell and buy through a single platform. So, the
demand and supply is decided by a large number of people. If supply is limited, an auction will be an ideal
choice to fetch a higher price in the marketspace.
In a marketspace environment, value creation and value proposition are revolutionized. In the marketspace,
the content, context, and the infrastructure can be disaggregated to create new ways of value additions,
lowering costs and building customer relationships. These three elements of content, context, and
infrastructure can be easily separated in a marketspace.
For example, the same furniture sold via eBay® has different content as large number of sellers will be
exhibiting their products (variety) while, context would be that of eBay® itself. The infrastructure is not
fully company owned; it also belongs to customers such as PC, modem, and telephone also, as eBay®
infrastructure facilitates the transaction. Here, though the transaction occurs at eBay®, the delivery is the
responsibility of the seller. Therefore, the value dynamics are varied and can be managed in different ways.

Marketplace integration with market space means the process of developing a connection between e-
Commerce software with any marketplace. It enables to get access to the data from e-stores listed on those
 marketplaces. The services like, for example, shipping management, order and inventory management,
marketing automation, WMS, ERP, repricing software, etc., work with retailers’ stores and perform
their vital functions.
In other words, with the help of high-quality integration with various marketplaces, it is possible to
retrieve, add, delete and sync the data on products, orders, customers, shipments that are placed in e-stores
of those retailers The smooth connection with multiple marketplaces is beneficial and vital for B2B e-
Commerce solutions and enterprises of different kinds. To help e-store owners organize and automate their
e-retail business, various software solutions need to access their customers' store databases.
The development of connection with the companies like Amazon, eBay, Etsy, and the other different
marketplaces can be very important.
It allows the B2B software to access all the necessary data from the marketplaces' and manage it through
their systems.
In conclusion, integration with the main marketplaces is necessary for successful business.

E-commerce framework
1) Computers, communication networks and communication software
2) Common Business services for facilitating the buying and selling process
3) Distribution, sending and retrieving the information
4) Multimedia content for creating a product / service information

E-commerce framework
1) Requires the I-way infrastructure ( internet, switching systems, satellite and cabl communication ) in the
same way that regular commerce needs the inter-state highway network to carry goods from point to point.
2) Like toll-ways, revenues in e-commerce are based on vehicular traffic, transporting the information
3) Building the various highways is not enough. Transport vehicles are needed, routing issues must be
addressed, and of course the transportation costs must be paid.
4) In traditional transportation business, diesel/ petrol engines move the trucks along the roadways. On the I-
way, there are messaging software , email, EDI, or point to point file transfers.

E-commerce framework
5). Encryption and authentication methods have been developed to ensure security of the contents while
travelling the I-way to their destinations
6). Cost and permissions for accessing an information, regulation to protect consumers from fraud, to
protect their right to privacy and policing of global information traffic to detect information pirating or
illegal content are in place.
7). Standards laid down to ensure continuous and smooth integration of transportation network

Classification of E-Commerce by the Nature of the Transactions and the Relationships Among
Participants
Relationships Among Participants
1) Business - to - Business (B2B)
2) Business - to - Consumer (B2C)
3) Consumer - to - Consumer (C2C)
4) Consumer - to - Business (C2B)
5) Business - to - Government (B2G)
6) Government - to - Business (G2B)
Government - to - Citizen (G2C),
Nature of the Transactions
1).Virtual (Pure-play) organizations that conduct their business activities solely online
2).Click-and-mortar (click-and-brick) organizations - Organizations that conduct some ecommerce
activities with an additional marketing channel of online or offline

Impact of E-Commerce on the Government

1) Increase in GDP,
2) Increase in productivity in all administrative tasks
3) Transparency in all the activities
4) Speed of execution