4 0 0 Final

E-Commerce
UNIT – 1 INTRODUCTION TO E-
COMMERCE
STRUCTURE
1.0 Objectives
1.1 Introduction
1.2Meaning and concept
1.3 Electronic commerce versus traditional commerce
1.4 Media convergence and e- business
1.5 Channels of e-commerce
1.6 Business applications of e- commerce
1.7 Need for e-commerce
1.8 Let Us Sum Up
1.9 Key Words
1.10Some Useful Books
1.11 Answer to check your progress
1.12 Terminal Questions
1.0 OBJECTIVES
After studying this unit, you will be able to:
 Describe the nature of E-commerce

 Identify the scope of Organization Applications
 State the need and comparison of traditional commerce and
electronic commerce
 List the Channels of E-Commerce
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1.1 INTRODUCTION
E-commerce, also known as electronic commerce or internet commerce,

refers to the buying and selling of goods or services using the internet,
and the transfer of money and data to execute these transactions. e-
commerce is often used to refer to the sale of physical products online,
but it can also describe any kind of commercial transaction that is
facilitated through the internet.
Whereas e-business refers to all aspects of operating an online business,
e-commerce refers specifically to the transaction of goods and services.
The history of e-commerce begins with the first ever online sale: on
August 11, 1994, a man sold a CD by the band Sting to his friend
through his website NetMarket, an American retail platform. This is the
first example of a consumer purchasing a product from a business
through the World Wide Web—or “e-commerce” as we commonly know
it today.
Since then, e-commerce has evolved to make products easier to discover
and purchase through online retailers and marketplaces. Independent
freelancers, small businesses, and large corporations have all benefited
from e-commerce, which enables them to sell their goods and services on
a scale that was not possible with traditional offline retail.
Electronic commerce (e-commerce) refers to companies and individuals
that buy and sell goods and services over the Internet. E-commerce
operates in different types of market segments and can be conducted over
computers, tablets, smartphones, and other smart devices. Nearly every
imaginable product and service is available through e-commerce
transactions, including books, music, plane tickets, and financial
services such as stock investing and online banking. As such, it is
considered a very disruptive technology.
As noted above, e-commerce is the process of buying and selling
tangible products and services online. It involves more than one party
along with the exchange of data or currency to process a transaction. It is
part of the greater industry that is known as electronic business
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(ebusiness), which involves all of the processes required to run a

company online.
E-commerce has helped businesses (especially those with a narrow reach
like small businesses) gain access to and establish a wider market
presence by providing cheaper and more efficient distribution channels
for their products or services. Target (TGT) supplemented its brick-and-
mortar presence with an online store that allows customers to purchase
everything from clothes and coffeemakers to toothpaste and action
figures right from their homes.
Providing goods and services isn't as easy as it may seem. It requires a
lot of research about the products and services you wish to sell, the
market, audience, competition, as well as expected business costs.
Once that's determined, you need to come up with a name and set up a
legal structure, such as a corporation. Next, set up an e-commerce site
with a payment gateway. For instance, a small business owner who runs
a dress shop can set up a website promoting their clothing and other
related products online and allow customers to make payments with a
credit card or through a payment processing service, such as PayPal.
History of e-commerce
Most of us have shopped online for something at some point, which
means we've taken part in e-commerce. So it goes without saying that e-
commerce is everywhere. But very few people may know that e-
commerce has a history that goes back before the internet began.
E-commerce actually goes back to the 1960s, when companies used an
electronic system called the Electronic Data Interchange to facilitate the
transfer of documents. It wasn't until 1994 that the very first transaction.
took place. This involved the sale of a CD between friends through an
online retail website called NetMarket.
The industry has gone through so many changes since then, resulting in a
great deal of evolution. Traditional brick-and-mortar retailers were
forced to embrace new technology in order to stay afloat as companies
like Alibaba, Amazon, eBay, and Etsy became household names. These
companies created a virtual marketplace for goods and services that
consumers can easily access.
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New technology continues to make it easier for people to do their online

shopping. People can connect with businesses through smartphones and
other devices and by downloading apps to make purchases. The
introduction of free shipping, which reduces costs for consumers, has
also helped increase the popularity of the e-commerce industry.
1.2MEANING AND CONCEPT
E-commerce means using the Internet and the web for business
transactions and/or commercial transactions, which typically involve the
exchange of value (e.g., money) across organizational or individual
boundaries in return for products and services. Here we focus on digitally
enabled commercial transactions among organizations and individuals.
E-business applications turn into e-commerce precisely, when an
exchange of value occurs. Digitally enabled transactions include all
transactions mediated by digital technology and platform; that is,
transactions that occur over the Internet and the web.
Hence, e-tailing is a subset of e-commerce, which encapsulates all
“commerce” conducted via the Internet. It refers to that part of e-
commerce that entails the sale of products merchandise and does not
include sale of services, namely railway tickets, airline tickets and job
portals.
There are three types of destinations that cater to retail sales:
i. Traditional retail- brick-and-mortar
ii. Corporatized retail- brick-and-mortar
iii. Corporatized retail- e-tailing
The term electronic commerce or e-commerce refers to any sort of
business transaction that involves the transfer of information through the
internet. By definition, it covers a variety of business activities which use
the internet as a platform for either information exchange or monetary
transactions or both at times.
For example, the numbers of consumer brand retail sites like
Amazon(dot)com and Flipkart(dot)com, which normally provide
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information about products and also allows monetary transactions to

happen over the internet.
On the contrary, there are the auction sites like Quickr(dot)com and
Ebay(dot)com where information about certain listed products and
services isprovided, but the monetary transactions normally happen
physically.
Apart from these two categories of e-commerce sites, there are some
sites which enable businesses to exchange trading goods and also
services between two or more companies. All of these forms of internet
based business platforms are known as e-commerce.
Over the last decade, the advent of e-commerce has actually transformed
the manner in which people use the internet. People now not only just
using the internet for gathering information, leisure or socializing online,
but also, at the same time, they are seeking measures to conduct business.
Even popular social networking sites like Facebook(dot)com are
allowing people to promote and sell products and services online and the
introduction of computer and mobile-based e-commerce application
software like Shopify provides evidence of how e-commerce has boomed
over the past 5 years.
The various objectives of e-commerce can be laid down as follows:

1. Development of Business-Relationship:
Business development can be done through e-commerce being the
primary and the basic object. As their direct contact in between the
company and the consumer, their business relationship will be enhanced.
Hence the area of the market can be increased.
2. Better-Customer Service:
As it is done round the clock, the customer will always have online help
regarding the products. As all the information is furnished to the
customer, it becomes easy for him to choose the best product from all
other alternatives. As even the service can also be done through the net
immediately, the customer service will be increase. By highlighting
customer service, the companies are trying to subjugate a lion-share in
the market.
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3. Getting more customers:

Thesedays, it has become the mandate of companies to double its
customers, and this can be done by rendering the value-add service and
maintaining the quality. Hence, it is also one of the primary objectives of
the companies which supply impetus for the robust growth in sales and
overall profit.
E-Commerce has key features which are explained as follows:
Feature # 1. E-Commerce is Technology-Enabled:
Traditional commerce is taking place since times immemorial but E-
commerce is result of integration of digital technology with business
processes and commercial transactions. The technological foundations of
E-commerce are internet, WWW and various protocols.
Feature # 2. Technology Mediated:
In E-commerce, buyers and sellers meet in cyber space rather than in
physical place. Hence E-commerce does not involve face-to face contact.
Feature # 3. Universality:
Buying and selling take place through websites in E-Commerce. The
websites can be accessed from anywhere around the globe at any time
therefore it possess the feature of universality.
Feature # 4. Intercommunication:
E-commerce technology ensures two-waycommunication between buyer
and seller. On the one hand, by using E- commerce, firms can
communicate with customers through E-commerce enabled websites. On
the other end, customers can also fill out order forms, feedback forms
and can communicate with business operating firms.
Feature # 5. Delivery of Information:
E-commerce serves as the best channel of communication. E-commerce
technologies ensure speedy delivery of information at a very low cost
and considerably increase information density as well.
Feature # 6. Electronic Completion of Business Processes:
By using E- commerce we can perform business transactions like
accounting and inventory through computers at global level.
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Feature # 7. Virtual Communities:

Virtual Communities are online communities created by means such as
chat rooms and specifically designed sites like, where people can interact
with each other having common interests using the internet.
Feature # 8. Inter-Disciplinary in Nature:
Implementation of E-Commerce needs a lot of knowledge of managerial,
technological, social and legal issues. Besides this, understanding of
consumer behaviour, marketing tools and financial aspects is as crucial
as designing interactive E- Commerce websites.
Feature # 9. Customization:
With the use of E-commerce technology, the world is moving from
mass-production to mass-customization. Product customization ensures
that goods are tailor made as per the requirements and preferences of
customers.
Like Dell Computer Website WWW(dot)dell(dot)com enables the
consumers to mention the configuration of a computer and then the
product is made available and delivered as per the configuration ordered
by the customer.
1.3 ELECTRONIC COMMERCE VERSUS
traditional commerce
Gone are the days when the commercial activities like the exchange of
goods and services for money, between parties, took place only in the
traditional mode, i.e. the customer has to go to the market, look at the
variety of products, choose the required stuff and purchase them by
paying the specified amount. But with the advent of e-commerce, people
can buy goods, pay bills, or transfer money in just one click.
Many people, still prefer traditional commerce over e-commerce, due to
their dogma that the latter is not safe, However, this is just a myth. Both
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modes have their pros and cons, so we have simplified the difference
between traditional commerce and e-commerce.
Definition of Traditional Commerce

Traditional Commerce or Commerce is a part of business, which
encompasses all those activities that facilitate exchange. Two kinds of
activities are included in commerce, i.e. trade and auxiliaries to trade.
The term trade refers to the buying and selling of goods and services for
cash or kind and auxiliaries to trade, implies all those activities like
banking, insurance, transportation, advertisement, insurance, packaging,
and so on, that help in the successful completion of exchange between
parties.
In finer terms, commerce encompasses all those activities that simplify
the exchange of goods and services, from manufacturer to the final
consumer. When the goods are produced, theydo not reach the customer
directly, rather theyhave to pass from various activities, which are
included in commerce. Its main function is to satisfy the wants of
consumers by making goods available to them, at the right time and
place.
Definition of e-Commerce
e-Commerce or electronic commerce refers to the exchange of goods and
services, funds or information, between businesses and consumers using
the electronic network, i.e. internet or online social network. e-
Commerce means trading and providing assistance to trading activities,
through the use of the electronic medium, i.e. all the activities like
purchasing, selling, ordering and paying are performed over the internet.
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Comparison Chart
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Table :1.1 Key Differences Between Traditional Commerce and e-

e
Commerce
The following points are noteworthy so far as the difference between

traditional commerce and e-commerce is concerned:
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1. A part of business, that focuses on the exchange of products and

services, and includes all those activities which encourage
exchange, in some way or the other, is called traditional
commerce. e-Commerce means carrying out commercial
transactions or exchange of information, electronically on the
internet.
2. In traditional commerce, the transactions are processed manually
whereas, in the case of e-commerce, there is automatic processing
of transactions.
3. In traditional commerce, the exchange of goods and services, for
money can take place, only during working hours. On the other
hand, in e-commerce, the buying and selling of goods can occur
anytime.
4. One of the major drawbacks of e-commerce is that the customers
cannot physically inspect the goods before purchase, however, if
customers do not like the goods after delivery they can return it
within the stipulated time. Conversely, in traditional commerce
physical inspection of goods is possible.
5. In traditional commerce, the interaction between buyers and
sellers is direct, i.e. face to face. As against this, there is indirect
customer interaction, in the case of e-commerce, because it may
be possible that the customer is miles away from where they
place an order for the purchase of goods.
6. The scope of business in traditional commerce is limited to a
particular area, i.e. the reach of business is limited to the nearby
places where it operates. On the contrary, the business has
worldwide reach in case of e-commerce, due to its ease of access.
7. As there is no fixed platform for information exchange in
traditional commerce, the business has to rely on the
intermediaries for information fully. Unlike e-Commerce,
wherein there is a universal platform for information exchange,
i.e. electronic communication channel, which lessen the
dependency on persons for information.
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8. Traditional commerce is concerned with the supply side. In

contrast, the resource focus of e-commerce is the demand side.
9. In traditional commerce, the business relationship is vertical or
linear, while in the case of e-commerce there is directness in
command leading to a horizontal business relationship.
10. In traditional commerce, due to standardisation, there is mass/one
way marketing. However, customization exists in e-commerce
leading to one to one marketing.
11. Payment for transactions can be done by paying cash, cheque or
via credit card. On the other hand, payment in e-commerce
transactions can be done through online payment modes like
credit card, fund transfer, etc.
12. The delivery of goods is immediate in traditional commerce but
in the case of e-commerce, the goods are delivered at the
customer’s place, after some time, usually within a week.
Therefore, with the above discussion, it is quite clear that both the
methods have their advantages and disadvantages. e-Commerce is just
like the traditional commerce, i.e. when you log in to the website, you
enter into the e-world for shopping, wherein you choose a category,
specifications and you get the desired results. e-Commerce is not suitable
for perishable goods and also for high-value items, while traditional
commerce is not suitable for purchasing software or music.
CheckYourProgress- 1
1. Explain Key Differences Between Traditional Commerce and e-

Commerce
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2. State the features of electronic commerce
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3. Define Traditional commerce
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1.4 MEDIA CONVERGENCE AND E- BUSINESS
Media Convergence simply refers to the merging of different types of

mass media such as Traditional Media, Print Media, Broadcast
Media, New Media and the Internet as well as portable and highly
interactive technologies through digital media platforms. This results in
the combination of 3Cs, i.e. Communication, Computing and Content as
all three are integrated through technology. The most relevant example of
media convergence is a Smartphone that blends together various media,
i.e. print media (e-books, news apps), broadcast media (streaming
websites, radio, music apps) as well as new media (the internet) into a
single device that performs various functions from calling and texting to
photography, videography, gaming and so much more.
Examples
The most popular examples of Media Convergence are:
 Smartphones (converging cameras, music, the internet, books,
and all other media together)
 Online Radio (converging radio with the Internet)
 E-books (converging paperbacks with digital technology)
 News Websites and Apps

Advantages
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Media convergence has proved to be beneficial in the digital era which is

filled with content seeking our attention continuously. Here are the most
important advantages of Media Convergence:
 The instant availability of news and moment-based content is one
of the top advantages of media convergence between traditional
media and new media.
 The content producers can specifically target the best audience or
group they are aiming towards by publishing customized content.
 With media convergence, the audience has also become the
creator themselves. From memes to social media posts, media
convergence has truly been beneficial to integrate audience on a
global level.
 Another important benefit of media convergence that it has
broadened the limitations of traditional media by blending it with
new media, thus providing instant and latest content on an
international level.
 With the media convergence between traditional media and new
media, the cost of digital marketing has also become economical
thus making this process beneficial and affordable.
Types of Media Convergence
Media convergence is an umbrella term that can be defined in the context
of technological, industrial, social, textual, and political terms.
The three main types of Media Convergence are:
 Technological Convergence
 Economic Convergence
 Cultural Convergence
Technological Convergence
Technological convergence is a term that describes the layers of

abstraction which enables different technologies to interoperate
efficiently as a convergent system. It is when new technologies are
created and take over from past technologies and perform the same task
in a more efficient manner. Technological convergence is the
combination of computing, communication, and content around
networked digital media platforms. It further aims to convert existing
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media into a digital form of technology, for example, viewing a book

online (E-books, Kindle). We have compiled some of the basic
fundamentals of Technological convergence below:
 Technologies convergence is when new technologies are created

that mostly take over or get upgraded from past technologies and
perform the same task but in a more advance manner, for
example, people used to listen to music using the radio but now
technological convergence but now the convergence has evolved
majority use smartphones.
 Technological convergence is the tendency that as technology
sometimes evolves towards performing a similar task.
Economic Convergence
Just like the general definition of Economic convergence which suggests

that countries with lower GDPs are going to grow faster than countries
with higher GDP, the Economic media convergence allows a single
company to target larger interest groups through various kinds of media.
Some of its key features are:
 In Economic convergence large companies use old and new

media to their advantage by selling merchandise or the rights of the
product.
 It is the horizontal integration of the entertainment industry
companies such as Sony, AOL, Time Warner now has an interest
in film, TV books, games, and the internet, music real estate, etc.
Cultural Convergence
This concept of media convergence occurs when two or more cultures

adopt each other’s traits and become more alike. Those Increasing
similarities between cultures are not limited to beliefs of consumer
brands and media. Some of the major forms of cultural media
convergence are:
 Acculturation: When weaker among two cultures adopt traits

from more dominant culture e.g Indians mostly speaking the
English language.
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 Assimilation: When original traits of weaker culture are

completely erased and replaced by traces of more dominant
culture e.g war immigrants no longer speak the native language.
Importance of Media Convergence
Wondering why media convergence is important? It is important because

it blends together content, communication technologies and computer
networks thus leading to the immediate transformation of many
established industries, services as well as work practices and through all
this, new forms of content are born.
Here are the key points why Media Convergence is important:
 It transforms the modes of communication, news reporting, and

journalism. For example, Media journalism.
 It led to cross-media since a huge amount of content is now being
accessed through portable devices. For instance, news
organizations no longer simply rely on print or AV transmission.
 Many new media forms are born like news portals, podcasts,
news feeds, blogging, websites and mobile applications.
 The newly converged media platforms provide online access to
the archives, and endless opportunities for users to comment on
the story or provide links to relevant material.
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3Cs of Media Convergence
Fig :1.13Cs
3Cs of Media Convergence
The 3Cs of Media Convergence Are Computing, Communications,
and Content.
ontent. Media Convergence unites these 3Cs of Computing,
Communications and Content and is an immediate result of digitization
and promotion of the Internet. To put it even more simply, the
convergence of Content with Communication tech
technologies and
Computer Networks is what leads to Media Convergence.
Disadvantages of Media Convergence
While the advantages of this form of convergence focus on content
integration, faster access and international reach, disadvantages highlight
the impact off convergence on consumers as well as technology. Here are
the major disadvantages of media convergence:
 Difficulty in assessing consumer responses and
reactions scattered across diverse converged platforms.
 More competition for consumer’s time and attenti
attention with
various media platforms in one device.
 Audiences often feel overwhelmed with massive amounts of
information overload.
 The older generation and the disabled sections of the
community find it hard to learn the digital skills to use different
types of media
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 Highly relied on technology and the internet, thus the areas

deprived of these two aspects can face issues with using online
information.
 Prone to cyber-attacks and malfunctioning.
Universalization
Universalization is another lesser-known aspect of mass media that has
been highlighted with convergence. Media convergence has led to the
promotion of diversity and inclusion in our world as we get to know
about various cultures, their traditions and values and further learn to
imbibe a respect for every culture. Globalisation has played a central role
in universalization of cultures through media as the world is striving to
become more inclusive of everyone, irrespective of their culture,
religion, gender, etc. Here’s how media convergence has led to
universalization of popular culture:
 By providing open access to cultures around the world
 Increased cross-cultural consumption through digital media
 Promotion of pop culture on the Internet
 Diversity and inclusion in media (be it through the content we
consume or content creators)
 The internet is a hybridization of cultures and identities as we
consume content from around the world and learn about diverse
cultures.
1.5 CHANNELS OF E-COMMERCE
An "ecommerce channel" is a route through which an ecommerce

business sells or promotes its goods and services to its customers. Sales
channels are those in which a customer may select and pay for goods and
services. The ecommerce website is an ecommerce sales channel, as is
the mobile App. Marketing channels are used for promotion of a
business, for example pay-per-click advertising (paying to have your
website featured in a search engine's search results) is an example of an
ecommerce marketing channel.
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Retail makes use of many sales and marketing channels beyond

ecommerce. A physical retail store is a sales channel, as is a contact
center where orders are placed over the phone with a sales agent,
whereas outdoor media (such as billboards) is an example of a marketing
channel.
E-Commerce Sales Channels
There are several ecommerce sales channels. For most businesses, the
primary ecommerce sales channel is the website, the other channels
being a mobile App, ecommerce marketplaces, EDI and white label
websites. Social shopping, including live stream shopping, is an
emerging and growing area of interest.
1. e-Commerce website
The most common form of ecommerce sales channel is the ecommerce
website, very familiar to everyone as a website on which a customer can
view product information and place an order. This includes both B2C
and B2B ecommerce websites.
2. Mobile App
A mobile App is another common ecommerce sales channel, which has a
similar function to the website, but is installed and then accessed as an
App on a customer's mobile device (smartphone or tablet). Many
businesses' Apps appear and operate in a very similar way to their
ecommerce website.
3. Marketplace
When a business sells individual products to customers through a third
party website, this is called marketplace sales. For example, Amazon
operates as a marketplace, allowing retailers to sell individual products
on their website either handling the fulfillment of the orders or passing
them back to the retailer for fulfillment. This channel is different to the
concept of wholesale, where a brand sells a bulk quantity of a product to
a retailer that the retailer can then sell in individual units to a consumer.
Amazon is also a retailer and therefore buys product wholesale in this
way, but its marketplace business is a larger than its retail business.
4. EDI
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Electronic data interchange (EDI) is a method through which two

businesses agree to pass information between them in order to transact
orders between systems they each control. By placing orders
electronically, the human effort involved in creating an ecommerce order
is removed. For example a manufacturer's system might use EDI to
transmit automatically a re-order request for a raw material when
inventory becomes low at one of its plants.
5. White label website
A "white label" website is one that is constructed and operated by a
business on behalf of a corporate customer and designed to match the
customer's brand, not its own. For example a cellphone distributor can
offer to set up and run a website for a retailer who wants to offer
cellphones to its customers without the operational complexity inherent
in doing so. The distributor charges a commission to the retailer for
running the website and the retailer provides the service to its customers,
branded as if it were being operated by that retailer. By creating largely
cookie-cutter websites for each retailer, the distributor in this example is
able to gain economies of scale and the additional business generated by
these new customers. The white label website is an example of B2B2C
commerce.
6. Social and Live-Stream Shopping
Many retailers are experimenting with selling products directly from
social networking sites and Apps, including Facebook, Instagram and
TikTok. Many ecommerce platforms (BigCommerce and Shopify as
examples) includingintegration to these social networking apps to enable
this.
Live stream shopping is an ecommerce channel where influencers with a
strong social media following perform live shows to their audiences
to promote products that viewers can buy from within the live stream
App.
E-Commerce Marketing Channels
Another term often used in ecommerce is "marketing channel" or "digital
marketing channel". A marketing channel is a route through which a
business drives demand for its products and services by communicating
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with customers and prospective customers. Traditional examples include

TV, radio, print-media (e.g. newspaper advertising) and direct mail. E-
Commerce (or digital) marketing channels are channels that are online or
electronic in nature and therefore lend themselves well to promoting
ecommerce sales.
1. Email Marketing
The most common ecommerce marketing channel is email marketing,
as it is simple and very low cost. Over 300 billion emails are sent
worldwide every day, the vast majority of which are marketing, spam
and other business emails. Travelocity alone sends 3 billion emails per
year. To send marketing emails, a business must contract with an Email
Service Provider (ESP), if only to avoid limits on number of emails that
can be sent with other services, for example Google restricts Gmail users
to sending 500 emails per day.
Popular choices of email service provider range from Campaign
Monitor and Mailchimp for small businesses up to Adobe Marketing
Cloud and Salesforce Marketing Cloud for large enterprises.
2. Pay Per Click Marketing
Pay Per Click (PPC) is a marketing channel in which a business places
concise advertisements onhigh-traffic web properties and payment is due
to that website owner each time a visitor both sees and clicks on that
advertisement. Google and other search engines provide opportunities for
businesses to "bid" for keywords and promote their content and products
within the search results. In the example below, the red box highlights
PPC adverts, the green box the organic results.
3. Banner Advertising
The banner advertising marketing channel involves a business paying

to place a marketing image on a website that receives traffic from the
types of people it wishes to attract as customers. For example, a
cosmetics company may pay to show a marketing image on a popular
website that describes makeup tips and techniques. When a visitor clicks
on the banner, they are redirected to a so-called "landing page" on the
website of the company that is advertising.
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Banner advertising is a relatively simple method of promoting a business,

albeit one where it is easy to spend money without making a clear return.
A business must track conversion rates of traffic from each website and
from each banner in order to refine where, when and what it shows.
Another issue with banner advertising is widespread use of ad blocking
software and browser plug-ins which prevent banners being shown.
While the number of people using ad blocking software is unknowable, it
is clearly a significant percentage of all Internet users.
4. Content Marketing
Producing high quality, informative or entertaining content as a means to
promote a business is called content marketing. content is useful for
encouraging website visitors to buy, i.e. improving conversion rate, as
well as to spending more time on the website and returning more
frequently. Good content encourages people to view a company as more
trustworthy and more authoritative in a field and are therefore more
likely to accept their recommendations and to buy from them. Content
marketing is not the same as simply writing about a product. Content
marketing focuses on positioning the business as an expert in their sector,
for example by producing informative how-to guides, care instructions,
expert reviews of products, or lifestyle information that relates to
situations in which the products they sell are useful.
5. Search Engine Optimization (SEO) Marketing
Publishing content on a business's website can help with improving its
visibility in search engine results, in particular in the billions of
searches (Source: Google Blog, Oct 2019) conducted on Google every
day, of which 15% have never been searched for before. However,
improving the ranking of that content on Google and other search
engines is an art and science in its own right, one that is called search
engine optimization. Google takes into account a vast array of data in its
algorithms used to present search results for any given query. Ranking as
high as possible in those results for the search terms that your
prospective customers will be searching is the ultimate goal of SEO.
6. Social Marketing
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E-Commerce
Social marketing refers to unpaid marketing activities a business

conducts on social media networks such as Facebook, Twitter, YouTube,
Instagram, Pinterest, Snapchat, TikTok or LinkedIn. Social networks are
chosen that work most effectively for a business's product and its
customers. Social media usage outside the US varies tremendously and
reaching international audiences demands additional care.
As an example, at time of writing, Saks 5th Avenue on Facebook had 1.2
million "likes". When it posts content to this page, potentially this many
people are notified.
7. Influencer Marketing
Whereas social marketing relies on the word-of-mouth of ordinary
customers, influencer marketing seeks to promote a business through
people with an established fan base and widespread appeal. An
influencer can be a major celebrity (e.g. a TV personality, sports star or
well-known musician), or people whose social media activities are
known to a smaller but no less passionate audience in a specific niche,
for example owners of YouTube channels, Instagram accounts, TikTok
creators and so on. Influencers are paid (or provided with free products)
in return for talking about those products on their social channels,
thereby promoting them to their followers. In the US influencers must
declare when they are promoting products, as the FTC guide for social
media influencers makes clear.
Influencers are sometimes also used as "the talent" in live stream
shopping, which can be considered both a marketing channel (building
awareness of the brand and its products) and a sales channel (actually
selling products during the live stream).
8. Re-targeting Marketing
Re-targeting is a marketing channel that attempts to re-engage with a
prospective customer that has been to a website and shown interest in a
product but has since left the site. It is distinct from banner advertising in
that to be shown re-targeting ads, the visitor must have already been to
the site of the business that is paying to show this marketing, whereas in
banner advertising any visitor to the website can be shown the content.
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E-Commerce
If a known customer has placed an item in the ecommerce cart without

buying it, a so-called "abandoned cart email" is a simple form of re-
targeting. By emailing the customer a few hours to a few days later, the
customer is encouraged to re-visit the site and complete their purchase,
potentially with the addition of an incentive such as a discount coupon or
code.
For other customers who have looked at products on an ecommerce site,
they can be shown display advertisements for those same products when
they later visit an unrelated website. This is enabled by dynamic re-
targeting technology operated by companies such as Adroll and Criteo.
These re-targeting companies contract with large numbers of ecommerce
businesses as well as businesses looking to sell advertising space on their
websites. By tracking visitors across these two types of website,
advertisements can be shown on websites that are otherwise unrelated.
Check Your Progress-2
1. Discuss social marketing
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2. What is PPC?
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1.6 BUSINESS APPLICATIONS OF E- COMMERCE
E-commerce applications is a bit misleading terminology, as it leads to

two possible perceptions: one, where it refers to the use of e-commerce
as a medium of marketing; retail and wholesale; auctioning; e-banking;
booking and so on.
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E-Commerce
The second idea one gets is that of a software application like Amazon,
eBay, Groupon, etc. It may be a web application or mobile application
(now popularly known as m-commerce applications). Mobile e-
commerce applications are nothing but an extension of e-commerce.
Mobile app ideas are the driving force behind every successful business
app, be it an Uber-like taxi app or a DoorDash like a food delivery app.
The picture below describes the two meanings accurately. The orange
color implicates the use of e commerce applications with the first
intention, and the green shows the use for the second.
Fig :1.2Most Common E-Commerce Applications

1. Retail and Wholesale
E-retailing or online retailing refers to the transaction of goods and

services through online stores from businesses to consumers. It is
achieved through means such as virtual shopping carts and e-catalogs.
The applications of e-commerce in this sector is numerous.
2. Finance
Finance and e-commerce is more connected today than ever. Banks and
stock markets use e-commerce significantly in their operation. Online
banking provides provisions such as balance check, bill payment, money
transfer, etc. Online stock trading enables people to carry out trading
29
E-Commerce
electronically by giving information about stocks such as performance

reports, analysis, charts, etc. through websites.
3. Manufacturing
In manufacturing, e-commerce forms a medium for companies to execute

the electronic exchange. Combined buying and selling, sharing market
status, inventory check information, etc. enables groups of companies to
fluidly carry out their operations.
4. Auctioning
Applying e-commerce to auctions takes it to a more significant level
where people can participate without any geographical boundaries. That
leads to more participation, more negotiation, and helps to make auctions
successful.
5. Marketing
Marketing activities such as pricing, product features, and building
customer relationships can be strengthened using e-commerce to provide
users with an enhanced and customized shopping experience. Digital
marketing strategies has become a significant way to promote
businesses.
6. Online Shopping
The shopping preferences of people have undergone a massive change in

the last few years. “Go online” has become a mantra for all businesses to
succeed. Online shopping is comfortable, convenient, and at most times,
cost effective. The prosperity of online shopping apps such as Flipkart,
Amazon are proof of this.
7. Mobile and Web Applications
Popularly called mobile commerce or m-commerce applications, this is a

subset of retail e-commerce. Mobile or web application
development has become a staple for brands to showcase their business
capabilities. The consumer carries out purchases through mobile or web
applications that are optimized for the retailer. These applications also
ensure payment security through safe e-payment methods.
8. Online Booking
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E-Commerce
Travel and tourism is a thriving industry today, and online booking is an

ecommerce application that is growing as a result of it. Online booking
helps people book travel essential services like train/flight tickets, hotel
rooms, tourism packages, transportation services, etc. It makes travel
very convenient and easy for people as everything can be set from the tip
of the fingers.
9. Online Publishing
Digital magazines and e-books are slowly replacing traditional printed

books. It has several advantages such as portability, lightweight,
accessible from everywhere, etc. They are also environment friendly as
they help in reducing paper and saving trees. Due to these reasons, online
publishing or e-publishing has been seeing a rise in popularity.
10. E-banking
E-banking or internet banking, is an e-commerce application that has

simplified time-consuming and complex banking processes for people. It
enables bank users to perform transactions easily online without having
to wait in long queues in banks. Every major bank has its own online
application today to provide virtual banking services to its customers.
Types of E-Commerce Applications
We can classify e-commerce applications in many ways, but here we

present a classification that is in line with the mobile app
development of e-commerce.
1. B2B (Business- to – Business)
A B2B e commerce application is concerned with providing goods and

services between two businesses. Hence, the products they are selling
will be such that it becomes a raw material for another industry. Mobile
apps that sell spare automobile parts, machine parts, etc. come into this
category of apps. Boodmo is an example of such an app.
2. B2C (Business- to – Consumer)
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E-Commerce
It represents the majority of the mobile apps that we use today. It

connects a business offering a product or service to an individual
customer. The dealing here is direct with the consumer. PIU, a taxi
booking solution, is an example of such an app.
3. C2C (Consumer -To- Consumer)
Here the exchange happens between two or more consumers. The best
example of such dealings are the apps that facilitate the auctioning of
products.
4. C2B (Consumer -to -Business)
Though thesekinds of apps are very few, agencies like Clutch and
GitHub are building foundations for such possibilities. Designers,
content writers, or experts in various fields can offer their masterpieces
to businesses through such C2B e-commerce applications. If you have
such amazing mobile app ideas, don’t just wait, start working upon
them.
The Anatomy of Ecommerce Applications
How do these e-commerce applications work? What are the different

elements that constitute an e-commerce application? Let us take a look at
their anatomy and discuss them in some detail.
1. Multimedia content for e-commerce applications
Multimedia content is the life of e-commerce applications that makes

them unique and innovative. It basically involves the use of content in
several formats, such as images, animations, audio, video, text, etc. The
idea behind the use of multimedia content is to increase the interactivity
of users by making digital content imitate everyday human
communication.
2. Multimedia storage servers and e-commerce applications
Powerful servers are the lifeline of e-commerce applications as they aid

the storage and distribution of digital content to people. These servers
must be capable of storing large and diverse content, must support large
scale distribution, and provide complete security and reliability.
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E-Commerce
 Client-server architecture: The architecture followed by all e-

commerce applications, the client-server model implements a standard
called message passing to execute the interaction between client and
server. This interaction takes the form of a “request-reply” sequence.
While the client device handles the user interface, the server handles the
tasks, storage, security, and scalability.
 Internal processors of multimedia servers: Multimedia servers take
raw data as input and give legible information as output. The internal
processes that deal with the storage and manipulation of data are crucial
for e-commerce applications. It requires cutting edge symmetric
multiprocessors and enormous parallel systems to handle thousands of
users and manage their executions simultaneously.
 Video servers and e-commerce: On-demand videos are an integral
feature of e-commerce applications. These will include
telecommunicating, video-conferencing, corporate multimedia servers,
shopping kiosks, etc. These video servers must be capable of delivering
information to thousands of users simultaneously.
3. Information transport and ecommerce applications
In e-commerce applications, telecommunication, cables, and wireless

services are the primary transportation providers. Telephone lines, local
and long-distance, are managed by telecommunication companies, while
cellular, paging, and radio are managed by wireless communications.
Cable operators manage coaxial, optical fiber, satellite lines, and
computer-based services to handle the internet and related services.
4. Consumer access devices
The way users access e-commerce applications is dependent on the

devices that they use. Access devices can be videophones, personal
computers, consumer electronics like television and game boxes, digital
assistants like voice-driven, pen-based computing, etc.
Why You Need Ecommerce Applications for Your Business?
According to statista.com, the number of consumers who will be making

digital means to shop for their essentials will be exceeding 65% by 2021.
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E-Commerce
This alone is a good reason enough for you to switch our business to e-
commerce applications. Another reason is that by the end of this year,
almost 75% of the US population is bound to be smartphone users.
A well-fitting e-commerce app will give you a cutting-edge over your
competitors. It does so through by providing :
1. Mobility
You cannot take your store from one town to another, but you can
definitely refer a mobile app from one smartphone user to another. And
that is possible with a simple share button from the USA to Japan, from
Finland to Papua New Guinea within seconds. This is the power of
mobile apps. It adds infinite mobility to your store small or big, size just
doesn’t matter at all.
2. One-to-One Marketing
Before the progress in the e-commerce app development, it was
impossible to think that you can market to every person in a town
personally. But today it is possible. The other side of this is that you can
target the customer one to one. New analytic tools like Big Data and
others in the stream help you reward, persuade, and win customers who
are most loyal to you and impress new ones as well.
3. Faster Payment
E-commerce apps come with integrated features like in-app payments.
The digital banking boom and m-banking in particular is the new style of
paying the debts. An e commerce app will help your customers get easy
refunds and pay you faster. A surprise cashback offer kicks off best when
it is an app that gives them the good news!!!
4. Fit to Need
How often can you arrange the things in your shopping complex? Maybe
in a year, at max quarterly. Imagine you can do it every week or if your
resources permit even daily. A new look awaits your customers every
single day. Well, this happens only in a mobile app. The feedback you
receive can be turned into actions to show how responsive to customers
you are. What can be a better way to build brand loyalty?
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E-Commerce
1.7 NEED FOR E-COMMERCE
We all are living in the age of e-commerce and digital marketing, where
people prefer to shop more online rather than visiting any physical stores
to buy the products of their choice. Though for generations the concept
and mindset of people remain the same that, people who want to buy
something they usually should visit any local store near his/her home.
Well, we don’t need to mention here that time has changed
tremendously. And with the rising popularity of e-commerce websites
people have started purchasing online and this trend is increasing at a
booming pace. In this regard, many small business owners have already
dived into this fast-growing sector to woo the generation x and y with
lucrative deals and offers online. As per the data revealed by some
leading market research firms now the retailers have to make a strong
presence across the online community, if they desire to retain their
current market position in the future, and that’s why there has been rising
popularity of digital marketing services as well.
Reason for Growing Number of Online Shoppers
The reason behind this massive online shopping trend is that, here
customers get great deals with fast, sometimes even free shipping with
simple cost comparisons, different paying options. This is why many
people are shifting to online shopping stores from the traditional retail
market.
In the given context, it is worth noting that, on 6th October
2014 Flipkart held a flash sale campaign called “Big Billion Day” and
registered a record sale, where their server got crashed as it received
millions of hits in a very short range of time.
So, you can see e-commerce has been gaining such popularity with time.
It gives you the advantage to shop online in the comfort of your home
and also provides you with unlimited buying choices and several paying
methods.
On any physical store, the number of stocks is limited, but in an online
store, you get a huge range of products to choose from with stock alerts.
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E-Commerce
Then all these online shopping site offers easy shipping of goods straight
to your home where you can pay in cash on delivery basis.
Thus, all these factors are the fundamental reasons on which small
business owners must focus to boost their sales volume. These online
shopping websites allow even a small vendor to reach a wider mass and
sell their products on a national or international level.
Here, people get to shortlist items from an array of products based on
their preferred brand, quality, price or features and hence it’s much easier
to start shopping online rather than visiting any nearby physical stores.
Why There Is A Need & Emergence of E-commerce?

It gives a seller an opportunity to grab all online buyers to promote or
sell their products easily online.
Further, to add more this industry has come up with a great opportunity
for all small business owners to sell their products online.
It lets buyers choose from an unlimited number of attractively designed
product pages and almost never ending stocks, which drive the customers
to take action and buy from your links.
With the advent of E-commerce and online shopping sector, people are
getting more inclined towards your services and training that you are
going to promote.
Thus, E-commerce has emerged as a boon disguised for marketers and
business owners whose products got listed and then sold to target
customers. The customer buys the product at his/her personal
convenience. It is really a win-win situation for both the sellers and the
buyers.
Advantages to Organizations
Using e-commerce, organizations 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.
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E-Commerce
E-commerce helps organizations to reduce the cost to create process,

distribute, retrieve and manage the paper based information by digitizing
the information.
E-commerce improves the brand image of the company.
E-commerce helps organization to provide better customer services.
E-commerce helps to simplify the business processes and makes them
faster and efficient.
E-commerce reduces the paper work.
E-commerce increases the productivity of organizations. 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.
Advantages to Customers
It provides 24x7 support. Customers can enquire about a product or
service and place orders anytime, anywhere from any location.
E-commerce application provides users with more options and quicker
delivery of products.
E-commerce application provides users with more options to compare
and select the cheaper and better options.
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 purchase.
E-commerce provides options of virtual auctions.
It provides readily available information. A customer can see the relevant
detailed information within seconds, rather than waiting for days or
weeks.
E-Commerce increases the competition among organizations and as a
result, organizations provides substantial discounts to customers.
Advantages to Society
Customers need not travel to shop a product, thus less traffic on road and
low air pollution.
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E-Commerce
E-commerce helps in reduce the cost of products, so less affluent people

can also afford the products.
E-commerce has enabled rural areas to access services and products,
which are otherwise not available to them.
E-commerce helps the government to deliver public services such as
healthcare, education, social services at a reduced cost and in an
improved manner.
1.8 LET US SUM UP
E-commerce is the buying and selling of goods and services over the
Internet.It is conducted over computers, tablets, smartphones, and other
smart devices.Almost anything can be purchased through e-commerce
today; for this reason, e-commerce is often highly competitive.It can be a
substitute for brick-and-mortar stores, though some businesses choose to
maintain both.
E-commerce operates in several market segments, including business-to-
business, business-to-consumer, consumer-to-consumer, and consumer-
to-business.E-business models are used by companies to create value
and become profitable online. These models have taken advantage of the
proliferation and technological advancement of the internet, rendering
offline models almost obsolete.
Most e-business models will incorporate four components: value
proposition, customer relationships, revenue streams, and activities,
capabilities, and resources.Various e-business model types have been
developed over the years. In terms of functionality, some examples
include the community model, advertising model, and brokerage model.
1.9 KEY WORDS
1. Electronic commerce: Electronic Commerce means buying and

selling of goods, products, or services over the internet. E-commerce is
also known as electronic commerce or internet commerce. These services
provided online over the internet network. Transaction of money, funds,
and data are also considered as E-commerce.
2. Virtual auction: A virtual auction is simply a charity auction that is
hosted online instead of in person.
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E-Commerce
3. Customization: Customerization is a strategy by which an

organization's products or services are individualized through personal
engagement and dialogue with its customers. In
contrast, customization is a modification made to a product or service to
suit a specific purpose.
4. Media- coverage: Media coverage can be defined as the way in which
a particular piece of information is presented by media either as news,
entertainment or as infotainment. It can affect the extent of information
dissemination as well as influence the audience opinion while giving out
the information.
5. Mobility: Mobility is a term used to describe something's ability to
move or be moved. When assessing an individual's physical capabilities,
mobility refers to his or her ability to move in a given environment.
1.10 SOME USEFUL BOOKS
1. Agrawala k.n and deeksha agrawala: Business on the net: What’s how
of e-commerce; macmillan, new delhi.
2. Janal d.s.: Online marketing handbook, wiley, new york.
3. Agrawala k.n. anddeeksha agrawala: Business on the net: Bridge to
the online storefront: Macmillan, new delhi.
4. Cady, glcc harrab and mogregor pat: Mastering the internet, bpb publi
cation, new delhi.
5. Diwan prag and sunil sharma: Electronic commerce-a manager’s
guide to e-business, vanity books international delhi.
6. Kosice david: Understanding electronics commerce, microsoft press,
washington.
7. Minoli and minoli; web commerce technology handbook, tata mcgraw
hill, new delhi.
1.11ANSWER TO CHECK YOUR PROGRESS
1. Refer 1 for Answer to check your progress- 1 Q. 1 …
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E-Commerce
Answer:The following points are noteworthy so far as the difference

between traditional commerce and e-commerce is concerned:
1. A part of business, that focuses on the exchange of products and
services, and includes all those activities which encourage exchange,
in some way or the other, is called traditional commerce. e-
Commerce means carrying out commercial transactions or exchange
of information, electronically on the internet.
2. In traditional commerce, the transactions are processed manually
whereas, in the case of e-commerce, there is automatic processing of
transactions.
3. In traditional commerce, the exchange of goods and services, for
money can take place, only during working hours. On the other
hand, in e-commerce, the buying and selling of goods can occur
anytime.
4. One of the major drawbacks of e-commerce is that the customers
cannot physically inspect the goods before purchase, however, if
customers do not like the goods after delivery they can return it
within the stipulated time. Conversely, in traditional commerce
physical inspection of goods is possible.
5. In traditional commerce, the interaction between buyers and sellers
is direct, i.e. face to face. As against this, there is indirect customer
interaction, in the case of e-commerce, because it may be possible
that the customer is miles away from where they place an order for
the purchase of goods.
6. The scope of business in traditional commerce is limited to a
particular area, i.e. the reach of business is limited to the nearby
places where it operates. On the contrary, the business has
worldwide reach in case of e-commerce, due to its ease of access.
7. As there is no fixed platform for information exchange in traditional
commerce, the business has to rely on the intermediaries for
information fully. Unlike e-Commerce, wherein there is a universal
platform for information exchange, i.e. electronic communication
channel, which lessen the dependency on persons for information.
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E-Commerce
8. Traditional commerce is concerned with the supply side. In contrast,

the resource focus of e-commerce is the demand side.
9. In traditional commerce, the business relationship is vertical or
linear, while in the case of e-commerce there is directness in
command leading to a horizontal business relationship.
10. In traditional commerce, due to standardisation, there is mass/one
way marketing. However, customization exists in e-commerce
leading to one to one marketing.
11. Payment for transactions can be done by paying cash, cheque or via
credit card. On the other hand, payment in e-commerce transactions
can be done through online payment modes like credit card, fund
transfer, etc.
12. The delivery of goods is immediate in traditional commerce, but in
the case of e-commerce, the goods are delivered at the customer’s
place, after some time, usually within a week.

Answer:E-Commerce has key features which are explained as follows:
Feature # 1. E-Commerce is Technology-Enabled:
Traditional commerce has taking place since times immemorial but E-
commerce is the result of the integration of digital technology with
business processes and commercial transactions. The technological
foundations of E-commerce are internet, WWW and various protocols.
Feature # 2. Technology Mediated:
In E-commerce buyers and sellers meet in cyber space rather than in
physical place. Hence E-commerce does not involve face to-face contact.
Feature # 3. Universality:
Buying and selling take place through websites in E-Commerce. The
websites can be accessed from anywhere around the globe at any time
therefore it possess the feature of universality.
Feature # 4. Intercommunication:
E-commerce technology ensures two-way communications between
buyer and seller. On the one hand, by using E-commerce firms can
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E-Commerce
communicate with customers through E-commerce enabled websites. On

the other end, customers can also fill out order forms, feedback forms
and can communicate with business operating firms.
Feature # 5. Delivery of Information:
E-commerce serves as the best channel of communication. E-commerce
technologies ensure speedy delivery of information at very low cost and
considerably increase information density as well.
Feature # 6. Electronic Completion of Business Processes:
By using E- commerce we can perform business transactions like
accounting and inventory through computers at global level.
Feature # 7. Virtual Communities:
Virtual Communities are online communities created by means such as
chat rooms and specifically designed sites like, where people can interact
with each other having common interests using the internet.
Feature # 8. Inter-Disciplinary in Nature:
Implementation of E-Commerce needs a lot of knowledge of managerial,
technological, social and legal issues. Besides this, understanding of
consumer behaviour, marketing tools and financial aspects is as crucial
as designing interactive E- Commerce websites.
Feature # 9. Customization:
With the use of E-commerce technology, the world is moving from
mass-production to mass-customization. Product customization ensures
that goods are tailor made as per the requirements and preferences of
customers.
3. Refer 1 for Answer to check your progress- 1 Q. 3

Answer :Definition of Traditional Commerce
Traditional Commerce or Commerce is a part of business, which
encompasses all those activities that facilitate exchange. Two kinds of
activities are included in commerce, i.e. trade and auxiliaries to trade.
The term trade refers to the buying and selling of goods and services for
cash or kind and auxiliaries to trade, implies all those activities like
banking, insurance, transportation, advertisement, insurance, packaging,
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E-Commerce
and so on, that helps in the successful completion of exchange between

parties.
In finer terms, commerce encompasses all those activities that simplify
the exchange of goods and services, from manufacturer to the final
consumer. When the goods are produced, it does not reach to the
customer directly rather it has to pass from various activities, which are
included under commerce. Its main function is to satisfy the wants of
consumers by making goods available to them, at the right time and
place.

Answer :
Social marketing refers to unpaid marketing activities a business
conducts on social media networks such as Facebook, Twitter, YouTube,
Instagram, Pinterest, Snapchat, TikTok or LinkedIn. Social networks are
chosen that work most effectively for a business's product and its
customers. Social media usage outside the US varies tremendously and
reaching international audiences demands additional care.
As an example, at time of writing, Saks 5th Avenue on Facebook had 1.2
million "likes". When it posts content to this page, potentially this many
people are notified.

Answer :Pay Per Click Marketing
Pay Per Click (PPC) is a marketing channel in which a business places
concise advertisements in high traffic web properties and payment is due
to that website owner each time a visitor both sees and clicks on that
advertisement. Google and other search engines provide opportunities for
businesses to "bid" for keywords and promote their content and products
within the search results. In the example below, the red box highlights
PPC adverts, the green box the organic results.
1.12TERMINAL QUESTIONS
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E-Commerce
1. Explain the history of E-commerce

2. State the objectives of electronic commerce
3. Determine the essential features of E-commerce
4. Elaborate examples of media coverage, along with its advantages
5. List down the most common examples of e-commerce applications
44
UTTARANCHAL UNIVERSITY
(Established vide Uttaranchal University Act, 2012, Uttarakhand Act No. 11 of 2013)
Premnagar-248007, Dehradun, Uttarakhand, INDIA
Program Name OMBA Program Code 501

Course Code OMBA-115 Credit 4
Year/Semester 1/1 L-T-P 4-0-0
Course Name E- Commerce
Objectives of the Course
● To enable students to gain knowledge about E-commerce and its various components.
● To discuss Business Models of E-commerce and Infrastructures.
● To understand Business to Consumer E-Commerce.
● To discuss Electronic Payment Systems.
UNIT-I: Introduction to E-commerce
Meaning and concept; Electronic commerce versus traditional commerce; Media convergence and e-
business; Channels of e-commerce; Business applications of e- commerce; Need for e-commerce.
UNIT-II: Business Models of E-commerce and Infrastructures
E- commerce models; Supply chain management, Product and service digitization, remote
servicing pronouncement; Online marketing and advertising; E-commerce resources and
infrastructures.
UNIT-III: Business to Consumer E-Commerce
Cataloging order planning and order generation, cost estimation and pricing; order receipt and
accounting order selection and prioritization; order scheduling; order fulfilling and delivery; order
billing and payment management; post sales services. Business to Business E-Commerce: Need and
alternative models of B2B e-commerce.
UNIT-IV: Securities Issues in E-commerce
Security risks of e-commerce, exposure of resources, types of threats, sources of threats, security
tools and risk management approach, ecommerce security and a rational security policy for e-
commerce, Corporate Digital Library; I.T Act 2000. Regulatory and Legal Framework of E-commerce.
UNIT-V: Electronic Payment Systems
Special features required in payment systems for ecommerce; Types of e-payment systems; E-cash
and currency services; e-cheques, credit cards, smart cards, electronic purses and debit cards;
Business issues and economic implications; Operational credit and legal risks of e-payment systems.
Course Outcomes (CO)
CO1 To understand the significance of E- Commerce and its applications in Business.
CO2 To discuss Regulatory and Legal Framework of E-commerce.
CO3 To explain alternative models of B2B e-commerce.
CO4 To analyze E-commerce resources and infrastructures.
Books for References:
1. Agrawala K.N and Deeksha Agrawala: Business on the net: what’s how of E-commerce; MacMillan,
New Delhi.
2. Janal D.S.: Online Marketing Handbook, Wiley, New York.
3. Agrawala K.N. and Deeksha Agrawala: Business on the Net: Bridge to the online storefront:
Macmillan, New Delhi.
4. Cady, Glcc Harrab and Mogregor Pat: Mastering the internet, BPB Publication, New Delhi.
5. Diwan Prag and Sunil Sharma: Electronic Commerce-A Manager’s Guide to E-Business, Vanity
Books international Delhi.
6. Kosice David: Understanding Electronics Commerce, Microsoft Press, Washington.
7. Minoli and Minoli; Web Commerce Technology Handbook, Tata McGraw Hill, New Delhi.
E-Commerce
UNIT – 2 BUSINESS MODELS OF E-

COMMERCE AND INFRASTRUCTURES
STRUCTURE
2.0 Objectives
2.1 Introduction
2.2 E- commerce models
2.3 Supply chain management
2.4 Product and service digitization
2.5 Remoteservicing pronouncement
2.6 Online marketing and advertising
2.7 E-commerce resources and infrastructures.
2.8 Let Us Sum Up
2.9 Key Words
2.10Some Useful Books
2.0 OBJECTIVES
 Describe the nature of E-commerce models

 Identify the scope of supply chain management
 State the need and significance of online marketing and
advertising
 List the essential ecommerce resources and infrastructure
components
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E-Commerce
2.1 INTRODUCTION
The e-Commerce industry has undergone significant change since its rise
in popularity during the 1990s and early 2000s. As the separation
between offline and online has nearly disappeared, most companies have
adopted some sort of hybrid or omnichannel approach to marketing their
products or services. This guide outlines the most popular types of e-
Commerce business models.
Given the wide range of business models and approaches, we’ve created
this guide to help you quickly understand the various approaches, and
think about how to best set up your own business, or how to financially
evaluate an eCommerce business using a financial model.
Below is an illustration of the main types of eCommerce business
models. The three items highlighted in gold will be discussed in more
detail.
Fig :2.1 Marketplaces
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E-Commerce
The first main category in the top left of the diagram is marketplaces.
These are the various places where sellers can list their products or
services, with the marketplace operator providing a platform that
connects buyers and sellers. The marketplace charges a transaction fee
for its service. Classic examples include eBay (B2C and C2C), Amazon
(B2C), Alibaba (B2B), and Fiverr. Marketplaces can expedite the buying
and selling of both goods and services.
When building a financial model (there are various types of financial
models) for a marketplace, it’s important to build the model starting with
Gross Merchandise Value (GMV), which is the total value of goods and
services transactions on the platform. From there, the commission
structure determines revenue for the platform, and costs can vary widely
depending on the business.
In most cases, the sellers handle fulfillment (whether they pay for it
themselves or charge the customer), but in some cases, such as “Fulfilled
by Amazon (FBA)”, the marketplace will also take care of delivery.
From a financial modeling perspective, it’s important to clearly map out
the revenue model and expenses in a logical and easy to follow way.
Retailers
In the direct model, retailers are responsible for finding their own
customers and have full control over the customer experience. The direct
business model typically requires significant marketing spend and a
means of driving traffic to the website. Unlike marketplaces that
primarily just facilitate transactions, retailers often try to provide a
curated experience for their customers and help guide them through a
unique discovery process.
Retailers typically don’t own their own brands, and instead, sell other
companies’ brands. Given the pressure online retailers are feeling from
both sides of the buying and selling environment (marketplaces offering
the most competitive prices, and major brands now selling direct to
customers), they are probably in the most challenging position of the
eCommerce business models outlined in our diagram.
Learn how to build a financial model for an eCommerce business.
Brands
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E-Commerce
Brands are now using their own websites and social media accounts to
sell directly to customers. A classic example of this is Nike, which has
made its direct channel (the company website) a top business priority and
expects it to be one of their largest revenue segments by 2020.
Brands are on the other end of the spectrum from marketplaces – they
have the most focused selection, the highest level of customized
experience, and the strongest connection with the customer. In
comparison to other eCommerce marketplaces, they have a more limited
selection, and also bear full responsibility for the marketing and
fulfillment of their products and services.
Winners and losers
There are pros and cons to each of the various business models, and
while the size of the total eCommerce pie is still growing, there remains
a massive divergence between winners and losers in today’s rapidly
changing and increasingly global economy.
Online marketplaces and brands are best positioned to be winners, while
retailers are most likely to be squeezed as they sit in the middle between
brands and marketplaces.
At the end of the day, it all comes down to the customer lifetime value
versus customer acquisition cost to determine if the eCommerce business
model makes sense for a particular business. The ratio of lifetime value
to acquisition cost will largely be a function of Return On Ad Spend
(ROAS).
The focus for marketplaces will be price, service, execution, and
selection. The focus for brands will be connections and relationships with
the customer, exclusivity, and experience.
From a financial modeling perspective, it’s important to think how about
the e-Commerce business you’re modeling will benefit or struggle from
the issues described above.
2.2 E- COMMERCE MODELS
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E-Commerce
Electronic commerce encompasses all online marketplaces that connect

buyers and sellers. The internet is used to process all electronic
transactions.
The first thing to think about is the type of business transaction you’re
going for. When you think about how you want to sell online, who do
you see yourself selling to? Is your busine
business B2B, B2C, C2C, or C2B?
Do you have an idea for a type of ecommerce business that you’ve been
thinking about for a while? Do those acronyms make your head spin?
Let’s take a look at the most common ways online transactions occur or
you can check out a ton of these ecommerce business examples to
understand
tand the type of business you’re going after.
B2B: Business to Business Ecommerce
A B2B model focuses on providing products from one business to

another.. While many businesses in this niche are service providers,
you’ll find software companies, office furn
furniture and supply companies,
document hosting companies, and numerous other ecommerce business
models under this heading.
Fig :2.2 B2B: Business to Business Ecommerce
B2B ecommerce examples you may be familiar with include the

ExxonMobil Corporation and the Chevron Corporation, Boeing, and
Archer Daniel Midlands. These businesses have custom, enterprise
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E-Commerce
ecommerce platforms that work directly with other businesses in a closed

environment. A B2B ecommerce business typically requires more
startup cash.
B2c: Business to Cons

Consumer Ecommerce
The B2C sector is what most people think of when they imagine an
ecommerce business. This is the deepest market, and many of the names
you’ll see here are known quantities offline, too. B2c ecommerce sales
are the traditional retail model, w
where
here a business sells to individuals, but
business is conducted online as opposed to in a physical store.
Fig :2.3 B2c: Business to Consumer Ecommerce
Examples of B2C businesses are everywhere. Exclusively online

retailers include Newegg.com, Overstock.com, Wish, and ModCloth, but
other major B2C model brick
brick-and-mortar
mortar businesses like Staples, Wal-
Wal
Mart, Target, REI, and Gap.
C2C Ecommerce
B2B and B2C are fairly intuitive concepts for most of us, but the idea of
C2C is different. What does a consumer
consumer-to-consumer
consumer ecommerce
business look like?
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E-Commerce
Fig :2.4 C2c consumer

mer to consumer Ecommerce
Created by the rise of the ecommerce sector and growing consumer

confidence in online business, these ecommerce websites allow
customers to trade, buy, and sell items in exchange for a small
commission paid to the site. Opening a C2C site takes careful planning.
Despite the obvious success of platforms like eBay and Craigslist,
numerous other auction and classified sites (the main arenas for C2C)
have opened and quickly closed due to unsustainable models.
C2B: Consumer to Business Ecommerce
C2B is another model most people don’t immediately think of, but that is
growing in prevalence. This online commerce business is when the
consumer sells goods or services to businesses, and is roughly equivalent
to a sole proprietorship serving a larger busine
business.
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E-Commerce
Fig :2.5 C2B: Consumer to Business Ecommerce
Work and several

Reverse auctions, service provision sites like Up Work,
common blog monetization strategies like affiliate marketing or
Google AdSense also fall under this heading.
Government / Public Administration Ecommerce
The models listed above are the primary ecommerce retail structures, but
they aren’t the only ones. Other types involve government/public
administration conducting transactions with businesses or consumers.
 B2G (also called B2A)

B2A),, for businesses whose sole clients
are governments or type of public administration
administration. One example is
Synergetics Inc. in Ft. Collins, Colorado, which provides contractors and
services for government agencies.
 C2G (also called C2A): typically, individuals paying the
government for taxes or tuition to universities.
Two sectors that are closed for entrepreneur owners but are growing
include G2B for government sales to private businesses, and G2C, for
government sales to the general public.
Types of Ecommerce Business Revenue Models
The next most important thing to think about is how you w

want to
handle inventory management and sourcing products. Some people like
the idea of making their own products and others hate the idea of their
garage full of boxes.
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E-Commerce
1. Drop Shipping
The simplest form of ecommerce, drop shipping lets you set up a

storefront and take the customers’ money through credit cards or PayPal.
The rest is up to your supplier. This frees you from managing inventory,
warehousing stock, or dealing with packaging, but there’s a major caveat.
Fig :2.6 Drop Shipping

If your sellers are slow, product quality is lower than expected, or there
are problems with the order, it’s on your head (and in your reviews).
Many dropshippers use Shopify and Spocket. Its quick and inexpensive
to set up. A popular
lar model is to set up a quick store and drive traffic with
Facebook Ads. Margins are thin and if you can squeeze out some profit
here, more power to you. I’m holding off on drop shipping for now, but
you can make money with it.
2. Wholesaling and Warehousing
Wholesaling and warehousing ecommerce businesses require a lot of
investment at the start – you need to manage inventory and stock, keep
track of customer orders and shipping information, and invest in the
warehouse space itself.
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E-Commerce
Fig :2.7 Wholesaling and Warehousing
DollarDays is an online wholesaler with a massive product catalog that

includes more than 260,000 products. They employ a key strategy for
retailers in this space – by offering case prices AND piece prices, they
can sell to the general public and to retailers. This gives them a higher
profit margin than a strictly wholesale model.
Solutions For Wholesalers
Wholesale businesses are all about volume. You’ll need to push products
out to eBay, Amazon, Google, etc. BigCommerce includes all this in
their Basic plan for $29 month. No tinkering needed. If you have dev
skills, you can use X-Cart.
3. Private Labeling and Manufacturing
If you’ve got an idea for the perfect product, but don’t have the cash or
desire to build your own factory, this might be the right business model
for you. Companies that manufacture products offsite for sale send the
plans or prototypes to a contracted manufacturer who produces the
product to meet customer specifications and can either ship directly to
the consumer, to a third party such as Amazon, or to the company
selling the final product.
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E-Commerce
Fig :2.8 How private labeling works
On-demand
demand manufacturing allows you to quickly change suppliers if you
encounter problems with product quality. The startup costs are minimal,
and if you’re interested in potentially opening your own production
facilities later, this is a good way to test a new product or concept.
 The Complete Guide To Finding The Best Privat
Private Label
Manufacturers
 29 Private Label Product Ideas to Kickstart a $100K+ Brand
4. White Labeling
White labeling is similar. You choose a product that is already
successfully sold by another company, but offers white label options,
design your package and label, and sell the product. This is common in
the beauty and wellness industries, but more difficult to encounter in
other niches.
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E-Commerce
Fig :2.9 How white labeling works
One problem with white labeling is demand. You’re stuck with whatever
you order, and most of these companies set a minimum production
quantity. If you can’t sell it, you’ll have to live with it. Consider this
option when you’re willing to work full time on your business and know
your product is in demand.
A common type of white labeling is Print On Demand.
5. Subscription
One of the most popular and successful pure ecommerce brands is the
Dollar Shave Club. Other examples of subscription services include
Stitch Fix, B
Blue
lue Apron, and Nature Box. On the local level, community-
community
supported agriculture boxes are popular.
These companies rely on a subscription model that delivers customers a
box of products at regular, scheduled intervals. Subscription companies
have relatively reliable income streams and can easily incentivize
customers to purchase additional subscriptions or encourage their
contacts to subscribe.
Picking the right products and niches can be difficult. Successful
subscription boxes tend to fall into a small han
handful
dful of product categories:
health and grooming, beauty, fashion, and food. Outside of these areas,
few subscription companies thrive.
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E-Commerce
2.3 SUPPLY CHAIN MANAGEMENT
One of the best ways for businesses to serve their customers well is to
make effective supply chain management a strategic priority. What is
supply chain management? Simply put, supply chain management
oversees all the processes that integrate suppliers to work efficiently
together to move a product from creation to the customer’s hands, taking
into account supply and demand along the way.
According to David Frayer, Assistant Dean for Outreach & Engagement
in Michigan State University’s Eli Broad College of Business and
instructor in the MSU’s online Supply Chain Management Certificate
programs, this is about enabling a very customized product delivery:
“The ultimate focus of the supply chain is to meet the consumer’s value
proposition, deliver the product at the location they want it in the form
they want it with the unique characteristics they want it.”
What Is a Supply Chain?
The supply chain includes all the activities, people, organizations,
information, and resources required to move a product from inception to
the customer. For example, in the consumer goods space, this likely
spans raw materials, production, packaging, shipping, warehousing,
delivery, and retailing. The end goal is simple: meet the customer’s
request. “By balancing supply and demand across all members of the
supply chain,” Frayer says, “organizations and channels work together to
move the product.”
The term “supply chain” can take on several meanings, iterations and
roles. These include:
 The concept of the supply chain, encompassing the process of
moving a finished good from procurement to fulfillment in a
cycle.
 The industry, which includes the carriers and regulations that
oversee transporting goods.
 The function, which is the practice of managing the
operations, logistics and inventory levels as part of coordinating
the buyers and suppliers.
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E-Commerce
These processes and functions, when done well, can add value to any
industry, which is why supply chain management should be an essential
component of business strategy.
What Is Supply Chain Management?
Supply chain management is the process of integrating the supply and
demand management, not only within the organization, but also across
all the various members and channels in the supply chain so they work
together most efficiently and effectively.
There are five basic components in a supply chain management
system:
1. Planning
To meet customer demands, supply chain managers have to plan ahead.
This means forecasting demand, designing the supply chain
intentionally, and determining how the organization will measure the
supply chain to ensure it is performing as expected in terms of efficiency,
delivering value for customers and helping to achieve organizational
goals.
2. Sourcing
Selecting suppliers who will provide the goods, raw materials, or
services that create the product is a critical component of the supply
chain. Not only does this include creating the contracts that govern the
suppliers, but also managing and monitoring existing relationships. As
part of strategic sourcing, supply chain managers must oversee the
processes for ordering, receiving, managing inventory and authorizing
invoice payments for suppliers.
3. Making
Supply chain managers also need to help coordinate all the steps
involved in creating the product itself. This includes reviewing and
accepting raw materials, manufacturing the product, quality testing and
packaging. Generally, businesses evaluate the quality, production output
and employee productivity to ensure overall standards are upheld.
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4. Delivering
Ensuring the products reach the customers is achieved through logistics
and it’s fundamental to supply chain success. This includes
coordinating the orders, scheduling delivery, dispatching, invoicing, and
receiving payments. Generally, a fleet of vehicles must be managed to
ship the products—from tankers bringing product manufactured overseas
to fleet trucks and parcel services handling last mile delivery. In some
cases, organizations outsource the delivery process to other organizations
who can oversee special handling requirements or home delivery.
5. Returning
Supply chain managers also need to develop a network that supports
returning products. In some cases, this may include scrapping or re-
producing a defective product; in others, it may simply mean returning a
product to the warehouse. This network needs to be responsible and
flexible to support customer needs.
The foundation for each of these components is a solid network of
supporting processes that can effectively monitor the information across
the supply chain and assure adherence to laws and regulations. This
involves a wide number of departments, including HR, IT, quality
assurance, finance, product design and sales, according to CIO.
Why Is Supply Chain Management Important?
Supply chain management is crucial for any organization because doing
it well can introduce several benefits to the organization; however, poor
supply chain management can result in very expensive delays, quality
issues, or reputation. In some cases, poor supply chain management can
also cause legal issues if suppliers or processes are not compliant.
Technology advances have unlocked huge potential for supply chain
management, enabling supply chain managers to work closely – and in
real time – with members of the supply chain. With supply chain
management, organizations can:
 Anticipate problems
 Dynamically adjust prices
 Improve inventory and fulfillment
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Examples of Supply Chain Management
Long before cutting-edge technologies like blockchain came on the scene

and supported information sharing, Walmart and Proctor & Gamble
(P&G) began connecting their supply chains in the late 1980s, according
to CIO. By sharing information, the two organizations would be able to
reduce costs. For example, Walmart linked its POS system to notify its
distribution centers to send additional products to the stores when
individual P&G products ran low. If the distribution center fell below its
threshold, an automatic alert was sent to the P&G distribution center to
ship additional product.
This constant cycle of communication helps balance manufacturing so
inventory can meet demand without reaching excess and enables billing
and payment to become automated processes.
What are the Benefits of Supply Chain Management?
Effective supply chain management provides three primary benefits to an
organization, according to MSU’s online Supply Chain Management
I course.
1. Lowered Costs
By integrating suppliers and applying technology, organizations can
lower operating costs by responding more dynamically to customer
needs. For example, managing based on demand keeps organizations
from over-producing, which not only reduces labor and raw materials
costs, but also cuts down on inventory management costs and
transportation costs.
2. Increased Revenue
When organizations use technology to stay closer to customer demand

and respond more quickly (as in the Walmart example, keeping shelves
stocked), it’s more likely for products remain available for customers to
purchase. When manufacturing is streamlined to produce just enough,
labor and materials can be devoted to developing new items to offer the
customer and expand the product mix. Outside the product realm, this
may mean offering additional services to customers.
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3. Asset Utilization
With effective supply chain management, organizations can use capitol

assets, like production or transportation equipment, most effectively.
Rather than adding wear and tear to manufacturing equipment
needlessly, businesses can produce to the needed.
Supply chain management allows organizations to deliver more quickly,
ensure products are available, reduce quality issues, and navigate returns
with ease, ultimately improving value, both within the organization and
for the customers.
1. Explain Benefits of supply chain management
.....................................................................................................................
.....................................................................................................................
.....................................................................................................................
.....................................................................................................................
2. Give the meaning of supply chain management
.....................................................................................................................
.....................................................................................................................
.....................................................................................................................
.....................................................................................................................
3. Which are the five components of supply chain management?
.....................................................................................................................
.....................................................................................................................
.....................................................................................................................
.....................................................................................................................
2.4 PRODUCT AND SERVICE DIGITIZATION
Businesses today are experiencing a significant shift in the way they

produce and distribute goods. This new wave is called Industry 4.0 and is
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characterized by automation and data exchange. These, in turn, are made

possible by connecting physical objects and digital assets, implying the
need for product digitalization.
The blurring of boundaries between the offline and online worlds is part
of the product digitalization process — and it’s changing business
models as we know them. No enterprise that produces goods can escape
the disruption that Industry 4.0 brings. Different industries need to
embrace product digitalization, from farming to fashion, to make the
most out of technologies like the Internet of Things and big data analysis.
It may be challenging to imagine digitizing a product, though, mainly
using traditional or natural production methods. How do you put a digital
stamp on organically grown tomatoes? How can you turn a wheel of
cheese into a digital asset?
This line of thinking comes with a misconception about digitalization.
Digitalization is not just about adding digital information to a physical
good. It’s about transforming your business model, operations,
and supply chain. Gartner defines digitalization as “the use of digital
technologies to change a business model and provide new revenue and
value-producing opportunities; it is the process of moving to a digital
business.”
Below, we’ll talk about the steps you need to take to digitize your
products:
Why you need to digitize your products
According to PwC, a highly digitalized supply chain and operation can

bring companies efficiency gains of 4.1 percent annually and boost
revenue by 2.9 percent per year.
A digital supply chain gives you a competitive advantage in many ways.
One is that it allows you to track and trace your products as they move
from producer to buyer to distributor until it reaches the end consumer.
Armed with such data, enterprises can identify trends and anomalies,
improve supply forecasts, and spot inefficiencies and bottlenecks in the
manufacturing and distribution processes.
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You will know exactly where products are in the supply chain, whether
they’re making a journey across an ocean or being held up at customs.
You can understand where products are purchased or quickly identify
batches of defective goods. You can identify warehouse operators that
fail to store goods at the correct temperatures or shipping partners that
send items to the wrong destination.
Another reason to digitize your products is simply that digitalization is
inevitable. That means that it’s an expensive risk to wait and see what
everyone else is doing as an enterprise. The most strategic step is to
adopt digitalization now. As Ernst & Young points out, “it has been
established that disruptive technology deployment has been one of the
most effective ways of gaining competitive advantage, increasing
efficiency, and driving business growth.”
How to digitize your product
As we’ve discussed, digitalization is not just about connecting a physical

good to a digital asset, but that is part of the picture.
Different companies may vary in how they implement digitalization,
such as the physical tools they use and the choice to integrate blockchain
into the process. But there are essential steps to digitizing products.
1. Identifying your goals for product digitalization
When identifying goals for digitalization, look beyond supply chain

managers. Consider your entire operation and discuss digitalization with
different departments. What types of data insights do marketing,
category, and brand managers need? How can digitalization help with
gathering these data or deploying strategies relevant to these insights?
For example, category managers might be dealing with a surge of
counterfeits that ruin their brand reputation. Digitalization can help
sellers and consumers identify authentic products by scanning a non-
reproducible QR code.
A multinational convenience store chain might not know who is buying
their prepared meals. They can integrate digitalization into their existing
app. Users of the store’s app can scan the packaging of the ready meals
to pay online or score points. Because the users are registered on the app,
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this simple scanning gives marketing managers’ insights into the types of
consumers who are buying their prepared meals in different countries.
2. Physical aspect
The first step is determining the most suitable way to place a digital asset
on your physical product. The most obvious answer might be the product
packaging, as it offers printable space visible to people working along
the supply chain and end consumers.
If it isn’t practical or feasible to print directly on the package, the next
solution would be to use printed labels or product tags.
3. Embedding
The next step is to add a tamper-proof physical unique identifier on the

physical aspect. This usually comes in a barcode, a QR code, a complex
sequence of numbers, or a sensor tag — or a combination of two or more
of these.
The critical step here is to make sure that the digital ID is not easily
replicable so that you can avoid counterfeits and fraud.
One way to do this is through 3D-printed, readable sensor tags. You can
also use secured QR codes that lose detail when copied, which means
reproductions won’t work.
4. Enabling
To do this, you need to register and activate the tamper-proof physical

unique identifier digitally. The digital ID should then be connected with
the appropriate digital asset by entering it into a database or blockchain.
This transforms the physical good into digital data. A shampoo bottle is
no longer just a bottle of shampoo; it is a digital record in your system.
Cloud registration creates a record of the identifier and associates it with
all the data that belongs to it. On the other hand, registration in a
blockchain creates an immutable digital twin. The identifier effectively
“lives” in a blockchain and can no longer be modified.
5. Making use of the data
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A company may have massive amounts of data but still fail to improve
its operations, customer service, and bottom line. That’s why the
digitalization process is incomplete without data analysis.
To thrive and compete in the era of Industry 4.0, businesses need to
track, monitor, and analyze product-related data to optimize supply chain
management and improve the customer experience. That means a
digitalized supply chain must also come with business intelligence
capabilities.
The types of metrics that your business intelligence tool reports would
depend on each depar
The types of metrics that your business intelligence tool reports would
depend on each department and its goals.
For example, you can track:
 Length of time between order placement and delivery

 Number of goods delivered in a day
 Damage rate (and where, within the supply chain, the damage
occurred)
 Product freshness (for perishable goods)
 Product return rate in each location
 Number and location of users that scan the product code
 Actions taken by users on a customized app after scanning the
product code
Product Digitalization: Key considerations
If the steps to digitalization seem straightforward, how you implement

them is another story. There are plenty of aspects to consider when
transforming your supply chain process.
Some are relatively simple questions to answer, while others can make or
break your digitalization efforts.
What will you digitize?
Can you digitize every single item, or do you need to focus on batches?
For example, it’s impractical to digitize every single coffee bean or every
piece of grape. Consider grouping them instead into harvest date, source,
and other classifications that make sense for the product.
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Or, if you’re dealing with beverages, you can classify them by brew
batch or bottling date. Non-perishable goods can be classified according
to which factory produced them and when they were manufactured.
How will you keep the data secure?
Data on your products and their movement throughout the supply chain
is helpful for your enterprise and end consumers. However, obtaining
transparency in your supply chain requires collaboration and data sharing
with parties you don’t necessarily trust. For this reason, your
digitalization process has to come with tight security measures that allow
you to share data with other players along the entire supply chain.
One way to achieve this is through the use of blockchain. Blockchain
technology can help you establish a secure and shared single source of
truth on a product history with all the parties involved in your supply
chain, with no party being in complete control of that information.
Different parties can have additional permissions concerning what input
and information they can add while still guaranteeing that the data cannot
be manipulated afterward.
This ensures that the product history an enterprise or consumer accesses
can be trusted not to have been altered since its moment of entry. This
enables you to increase transparency, trust, and security in the
management of your data.
How to educate consumers on product digitalization?
It’s important to develop a plan for educating your consumers about

digitization. They’ll need to know what to look for and how to interact
with the product and what benefits they will gain from doing so.
First, you’ll need to determine whether this requires your customers to
adopt new technologies and behaviors. For example, your digitalization
marketing campaign might rely on customers using a customized app to
scan a QR code on your product package. This will determine the extent
of the educational marketing campaign that you’ll need to undertake.
For example, if you’re using QR codes, you’ll need to consider if people
in your target geography have the habit of scanning products and if they
even know what QR codes are in the first place. If you rely on a sensor
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E-Commerce
tag that communicates with a smartphone’s Near Field Communication

(NFC) capability, you’ll need to show consumers how to use that feature.
Next, you’ll have to assess whether they can use a generic QR code
scanner or if they need to use your app. The former works if you want
the customer to find out information, such as the vintage, origin, and
backstory of a bottle of wine or the ethical sourcing of cacao beans.
However, that won’t give you any idea on who’s scanning the codes,
perhaps apart from where they are located. Having them sign up for a
customized app and use that app to scan the code will allow you to find
out more about these consumers, as you will own the data inputted into
the app.
The question now is if your consumers are willing to change their habits
enough to suit your process. Consider how you can catch their attention
by making the QR code look like an attractive pattern and displaying it
prominently on the product package.
You can even tie in the act of scanning with fun experiences. AMC
Theatres, for example, developed an augmented reality feature in their
app to encourage moviegoers to scan posters. Once users scan a
scannable movie poster, the app would direct them to that film’s trailer
and a page to purchase tickets.
It also helps offer an incentive, such as a rewards program or the chance
to win a free item to scan the code or use your app.
At other times, the incentive may be a practical one. Johnnie Walker, for
example, rolled out printed sensor tags for their Blue Label whisky
bottles.
Using their smartphones’ NFC capability to read the tags, consumers
could find out when the bottle was sealed and opened. This is an
incentive because it gives them information that could improve their
enjoyment of the drink.
The skills to roll out a digital transformation
In a global survey of more than 2,000 respondents from nine major

industrial sectors, PwC found that people, not technology, are the biggest
challenge to digital transformation.
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This echoes the findings of Deloitte, which surveyed respondents from

logistics and distribution companies. For 63 percent of the respondents,
the difficulty of hiring and retaining people with the right skills was
deemed as the biggest barrier to transformation.
Business leaders and the people tasked with implementing new
technologies and systems need the right digital qualifications. IT staff
will need to understand business operations and goals, and operations
teams need to have a working knowledge of programs such as data
management and business intelligence software. Companies will need
experts in big data, the Internet of Things, machine learning, robotics,
and automation.
Leaders also need to convince employees to welcome and adopt a change
in processes. For example, employees will need to learn to work with
automated machines equipped with sensors to gather data. They’ll need
to adopt new habits, such as regularly checking reports on metrics and
KPIs, identifying data patterns and outliers, and following data security
protocols.
How to implement the system across the supply chain?
One major challenge in digitalization is achieving buy-in from the

relevant stakeholders. And once you have their cooperation, you’ll need
to deploy your system and enforce your standards across the supply
chain. This can involve plenty of subsidiaries and third parties in
different countries across two or more continents.
As a result, the digitalization process takes a long time to implement.
Even the relatively simple task of printing QR codes on product packages
or printing and sticking QR code labels can take three to four months to
process. You’ll need to coordinate with the packaging supplier, printer,
and QR code maker, not to mention supply chain and inventory
managers, and data engineers.
Once you complete the planning and deployment phases, you will have
in place a system that you can use for many years to come.
Digitalization, after all, is a long-term play.
Plan for maintenance and measurement
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To make the most out of this system, implement clear maintenance

protocols and regularly update the system in line with technological
developments in your industry. Get feedback from different
departments—manufacturing, packaging, distribution, marketing, and
other relevant teams—to discover gaps between the system’s intended
usage and its practical application.
The effectiveness of the system is not limited to its practicality, of
course. Go back to your goals for digitalizationand see whether you are
achieving them. These goals will also guide you in measuring the return
on investment of digitalization.
For example, if your goal is to protect your brand from counterfeits, has
digitalization helped you achieve this? Have sales of counterfeits
dropped, complaints from duped customers lessened, and your brand
reputation strengthened? Do customers actually scan the tag or code on
your product to verify its authenticity? Keep in mind that specific goals
are the first step towards understanding your investment returns.
After adding IoT sensors to its compressed air systems, manufacturer
Kaeser Kompressoren captured environmental and performance data and
used predictive analytics to avoid unexpected outages. This helped
reduce unplanned equipment downtime by 60 percent and contributed to
annual savings of around $10 million in break-fix costs.
The future is digitalization
Digitalization expands the capabilities and lives of physical products by

giving them a digital identity. Long after a pack of juice is consumed, its
data lives on to contribute insights to companies. Weeks after being
harvested and shipped out across dozens of cities, heads of lettuce can
help you trace E.coli outbreaks and prevent the spread of infection.
Implementation is complex, but enterprises need to see digitalization as a
global strategy. Return on investment must be measured in the medium
and long term. After all, businesses that keep up with technological
innovations know that digitalization is inevitable. It’s now a matter of
adopting it strategically and successfully.
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2.5 REMOTE SERVICING PRONOUNCEMENT
From a management standpoint, hiring a remote tech team seems to put

you at a decision-making crossroads. But, some of the biggest companies
out there are growing and thriving with remote teams, and we have
definitely entered an era of change.
1. Access to a Global Talent Pool
Online businesses are not competing just in small geographies, naturally,
it’s only fair that your talent pool isn’t limited to the local area. It’s
possible that your business is headquartered in a developed city/country.
But, when you choose your team, you are already competing with large
brands for talented hires. In fact, with astronomical salaries being a
hallmark of tech hubs, even established e-commerce platforms are
looking at remote tech partners as a solution. The big advantage with
remote working is that you have access to quality talent from around the
world. As an additional lure, a global talent pool also promotes diversity,
which is increasingly being seen as an important innovation driver.
Choosing between remote hires & remote tech partners
We don’t mean to bypass the many challenges that accrue from hiring
remote employees, in-house. Right from identifying people with the right
competencies, the logistics and cost of hiring them to supervise their
work and tracking performance, there are a whole lot of challenges. Add
to this, aspects of assimilating them into the company culture and
keeping their morale high can add to the human resource nightmare.
Areas where a remote partner outshines
Outlined above are the very areas that a remote partner, with proven
experience in delivering tech solutions, frees you from. A successful e-
Commerce operation requires a wide range of competencies. In fact,
evolving technologies demand skill sets that fall outside the scope and
knowledge of limited eCommerce development teams.
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Leveraging an array of emerging technologies such as Mobile, IoT,

Social, and Cloud, the remote tech partner can offer agile development
services tailored to meet your bespoke e-Commerce development
requirements. Besides there are various other complex and specialized
requirements such as ensuring website security, mobile compatibility,
payment gateway optimization, having a robust internal recommendation
engine, ensuring conversion optimization, seamless third-party
integrations and more. You also need strong competencies when it comes
to data engineering and analytics that allow you to build custom
performance reports, which in turn aid informed decision making. Hiring
each of these competencies in-house can be a big drain on your time and
resources.
With an engagement model with a remote tech partner, you aren’t just
controlling costs but also ensuring that your business stays relevant to
today’s digital consumers. All of this while leaving you with enough
time to focus on your core business areas. Clearly, what you are doing,
therefore, is accelerating innovation!
2. Diverse Culture Can Bring Different Perspectives
When you recruit and retain a diverse pool of talent, it brings in a whole
bunch of different benefits to the organization as well as its employees. A
diverse group of employees accrue their varied experiences, mindsets,
talents, and different skill sets to come up with innovative and creative
solutions to specific problems. Also, the benefits of language diversity
can be reaped in order to be a part of global business opportunities. So
while building a remote eCommerce development team, keep in mind the
benefits of having a diverse workforce.
3. Keeping costs in check
In today’s milieu, agile companies with flat hierarchies thrive, while
traditional top-heavy giants are likely to come under pressure. Naturally,
an advantage of a remote working structure is the reduced overhead
costs. Not only are you reducing the need for large office spaces and
sizable real estate costs, but also other operating expenses. While
partnering with tech providers, you are also taking away the logistics and
the cost involved in hiring specialized people on your payrolls. Not to
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mention the fact that, despite the many tech tools available, you still
would need to provide adequate supervision to ensure tasks get done on
time. Massive savings and the reduction of tedious tasks are bound to
have a positive impact on your bottom line. And, isn’t that the basic
point?
With a remote tech partner what you also have is the ability to level the
playing field with other players who may have been in the business far
longer or have a stronger financial muscle.
4. Protection against disruption
The recent pandemic has been proof that any unforeseen disruption can
cause havoc to businesses, and how! With remote tech teams, you are
that much less vulnerable to challenges, especially the ones that impact
certain geography.
5. A Huge Competitive Advantage
Clearly, better talent at a lower cost with improved productivity is a great
formula for improved competitive advantage and for your business to
stand out. E-Commerce businesses grow at an exponential pace, making
the need for talent overwhelming. This is especially taken care of when
you hire a remote tech partner, you never need to worry about scale, of
course, you’ll need to give your partner agency a heads up!
6. Better Efficiency
By going beyond geographical boundaries to fulfil your tech
requirements, you have access to a world-class team with the necessary
experience and expertise to drive your business. When collaborating with
tech partners, you also do not have to worry about the aspects of social
isolation and lack of motivation that can come in the way of efficiency.
Also, when you move away from the 9-5 working model, you realize that
your team has a lot more to offer in terms of productivity. When you
factor in the different time zones your remote tech team members would
be working in, a 24 hours working model can benefit your company. A
lot of techies are night owls and choose to work with fluid timelines. As
long as you set expectations clearly and have the communication lines
open, you are setting yourself up for success with your remote tech
partner.
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Remote Tech Team Management Tools

Efficiently managing remote teams has become the need of the hour. In
this scenario, using the right websites, apps and productivity tools to
effectively communicate and get work done is important.
Project Management tools:

Some useful project management tools are Instagantt, ProofHub, Pintask,
Basecamp and Trello.
Productivity tools:
The productivity of your e-Commerce development team is obviously a
crucial part of the remote work culture. Todoist, Blink, Krisp and
PukkaTeam are some tools that can help you with it.
Collaboration tools:
Google Docs, Troop Messenger, GitHub, Jira and Slack are a few of the
tools that’ll come in handy while managing a remote team.
Cloud Storage tools:
The most popular cloud storage platform out there is Google Drive.
Another efficient platform for storage is Dropbox.
Tips for Managing Remote Tech Teams
If done right, managing remote teams can be a piece of the cake! Here
are a few pointers you need to remember to manage your team
efficiently:
Communication is the key. Right from setting clear project goals and
objectives to evaluating progress and appreciating individual
contributors, being in contact with your team members is crucial for a
remote team.
Incorporating a flexible work culture goes a long way in showing that
you believe in your employees and their work methodologies.
Using team management tools to share data and resources relevant to the
project benefit everyone, from you to your team members to ultimately,
the organization.
Since the pandemic, many people have already adapted to the remote
work culture. But there are a few out there that are still struggling with
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the concept. Don’t forget to give extra attention to these new-to-remote

employees as they might need your help.
A remote work setup might not be for everyone. Some employees might
feel isolated and depressed; some might be going through tough times.
Being understanding and showing empathy is always the right thing to
do, no matter what the situation.

1. Discuss Remote Tech Team Management Tools
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2. How Diverse Culture Can Bring Different Perspectives?
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2.6 ONLINE MARKETING AND ADVERTISING
Online marketing is the art and science of selling products and services
over the internet. The art involves finding marketing strategies that
appeal to your target market and translate into sales, while the science is
the research and analysis necessary to measure the success of those
strategies.
How Does Online Marketing Work?
Online marketing uses a variety of digital, online, and electronic means
to push a message to current and potential customers. The message might
be crafted as an image, a piece of text, or a video, and distributed in any
number of places. It could be as simple as a social media feed or it could
be as complex as a wide-ranging and comprehensive strategy that
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encompasses multiple modes including social media, email newsletters,

websites, and other channels.
The type of online marketing that will be right for your business will
depend on the nature of your business, the habits and demographics of
your target market, and your budget, among other things. Market
research will lead you to the right strategy or mix of strategies for your
offerings, and detailed performance measurements will indicate which
are most successful for you.
For example, a hair salon that wishes to incorporate online marketing
might add an Instagram feed featuring photos of hairstyles completed by
its stylists to show off their talent. A Facebook page could highlight rave
reviews from happy customers and display a link to the salon's website,
where prospects could find information on reservations, available
services, and photos of the salon's interior.
Online marketing is increasingly important to small businesses of all
types.
In the past, internet marketing was something that local brick-and-mortar
businesses could ignore in favor of traditional methods. However, as
consumer habits change, shoppers are much more likely to research their
purchases online before buying. In fact, they're likely to research a
product online even while they're standing in the
store.https://assets.kpmg/content/dam/kpmg/xx/pdf/2017/01/the-truth-
about-online-consumers.pdf
Generally, all businesses should include some online marketing in their
marketing mix or they risk missing out on business.
Types of Online Marketing
There are nearly as many types of online marketing as there are ways of
finding information online. However, there are several methods which
tend to see success.
Search Engine
Online marketing includes search engine optimization (SEO) and search
engine marketing (SEM). SEO is the process of fine-tuning the text on
your business website so that the site ranks higher in search engine result
listings when your potential customers enter search terms that match
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your product offerings. It doesn't cost anything to optimize your website

to perform better in search results, and a high-ranking website could
bring in tons of organic traffic (website traffic that happens naturally).
SEM, on the other hand, is a paid search marketing strategy. Search
engines such as Google charge a fee to display your ad when a user
conducts a search using one of your keywords. These fees are also
called pay-per-click (PPC) fees.
Note
SEM statistics can provide excellent feedback on the effectiveness of
your advertising. For example, a metric called the click-through rate tells
you the number of times your ad has been clicked relative to the number
of times the page containing the ad has been viewed. It gives an
indication of how appealing people find your ad to be. The more
appealing it is, the more likely they are to click through.
Online Advertising
There are many types of online advertising opportunities. One method is
to use banner ads embedded into web pages. Other options include
interstitials, which are ads that appear before or between pieces of
content. Different social media providers, such as Facebook, also sell
advertising on their platforms.
Email
You can use email to send out newsletters and customized product or
service offerings specific to the customer's needs. You can also keep
your customers up-to-date with company news, upcoming events, and
special offerings.
Once you have built a subscriber email list of potential customers who
may be interested in your products or services, email marketing is a very
effective way to reach them, because your message arrives in their email
inbox, where they are likely to see it.
Social Media
Social media platforms such as Twitter, Facebook, LinkedIn, Instagram,
and Pinterest (to name a few) are all opportunities for marketing online.
They work best when part of an overall content marketing strategy,
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which emphasizes the quality and usefulness of the content you create for
your brand.
Note
Don't forget the "social" in social media. Social media marketing works
best as a conversation with your customers. It requires active
participation rather than just posting ads for your products or services.
Blogging
Maintaining a blog is another way to converse with your customers and
keep them informed about your products or services. A blog can be used
to provide advice and get useful feedback.
The more value you can provide to customers through the expertise you
share in your blog, the better you position your brand as a trustworthy
source. This can help customers be willing to take a chance on your
offering.
In the era of Internet, people can get a lot of information online, which
increases their awareness about lifestyles, products, and services. For
them, the Internet serves as a channel for not only communication but
also for transaction and distribution. People can visit the website and can
pay online for what they purchase.
You can increase the business profit in multifold by online advertises of
your products and services.
What is Online Advertising?
Online advertising is a type of business promotion which uses Internet to
deliver marketing messages to attract customers.
With the rapid growth of Internet users and Internet technology, a
number of businesses started to advertise their products and services
online.
Publishing an Online Advertise
Publishing an online Ad is a sequential process. The following diagram
shows the basic steps an Ad publisher takes to create and post the Ad
online −
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Ad Planning
The marketing team conducts analysis of various domains.
Marketing analysis
Product targeting analysis
Audience analysis
Customer targeting analysis
Based on the analysis results, the advertiser decides on −
Selecting a publisher
Ad presentation approach
Approach of posting the Ad
Ad posting schedules
Creating Ad Space Catalog
Ad space list is created to record Ad space availability status, space
profile, location, presentation, scheduling method, frequency, etc.
Trading Ad Space
Advertisers and Publishers interact to determine online Ad space. There
are three types of Ad space trading −
Buy and Sell − Publishers sell the Ad space schedule to Advertisers on
first-come-first-serve basis.
Space Auction − Ad space bidding is conducted to settle the trade.
Space Exchange − Multiple publishers interact with each other to sell the
space schedules available with them, which have not been sold.
Scheduling the Ad Space
The online publishers create and maintain advertising schedules for the
online Ad space. They help the advertisers for booking, purchasing, and
confirming various schedules for online advertisements.
Materializing the Ad Space
The online publishers collect advertisement from the advertiser and
materialize the specified ad spaces by displaying the advertisement as per
the specified schedules.
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Measuring an Ad Space
All active Ad spaces in the publishing websites are monitored and
measured. After the Ad is actually visible and accessible online, it is
evaluated regularly for performance. The analyzers collect data and
evaluate the effectiveness on the viewers, its popularity, Ad space
management, etc.
Ad Closure
The advertisers pay the publishers by pre-decided terms of payment for
the published online Ad.
Online Advertising Performance Measurement
The performance of an online Ad is measured to enable the marketing
team to analyze the readings of measurement.
What Does the Performance Measures Tell?
The performance measurement can uncover the following facts −
Effectiveness of the Ad on views.
Problems related to the Ad such as inappropriate content, incorrect

targeting of people, Ad place, and timing for publishing.
Estimation and prediction of sales in short and long terms.
Online Advertising - What to Measure?
The performance metrics of Online Ad are as follows −
Clicks − It is the number of times viewer clicks the Ad. It can be taken as
viewer’s acknowledgement to your Ad. It suggests that the viewer has
seen the Ad and wants further information.
Impressions − It is the number of times your Ad is displayed on the web
page.
Click Through Rate (CTR) − It is the ratio of Ad clicks to Ad
impressions. The higher the CTR, the more relevant your Ad is.
Cost Per Click (CPC) − It is the amount advertiser pays for each click on
the Ad. The number of clicks determines the amount of payment. The
lower CPC is better.
Cost Per Thousand Impressions or Cost Per Mille (CPM) − It is the
amount the advertiser pays for thousand clicks.
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Return On Investment (ROI) − It is (Return – Investment) X 100. The

higher ROI is better.
Advantages of Online Advertising
Online advertising is beneficial over conventional advertising in many
ways.
Internet access is easy and affordable. Today, the number of global
internet users is almost 3 billion. No other conventional advertising
medium can bring such huge audience for your products or services.
Internet is capable of serving multimedia substance such as audio and
video content apart from text and graphics. Multimedia advertisements
are highly persuasive.
Internet by nature is interactive. It can provide a reliable platform for
smooth shopping experience for people. The conversion rate is high for
compelling advertises.
No time or demographic constraints on delivering the online advertise.
Online advertising is promotional as well as informational.
It brings speedy outcomes.
It provides effective performance tracking.
2.7 E-COMMERCE RESOURCES AND

INFRASTRUCTURES.
In the changing world, there is a necessity to improve the business

requirements according to the changing needs of technologies, trends
in the market, and customers.
Whether you are new to ecommerce or already into ecommerce, your
major priority is to increase the overall efficiency of the
organization. When you want to improve efficiency, you must have a
strategy and the right infrastructure to address the needs of the user
and flexible enough to satisfy their requirements.
Infrastructure is the foundation that makes your business stand
out. Ecommerce infrastructure is a collection of hardware, software,
network, facilities, etc. that you need to run an ecommerce
business. When you have the right infrastructure, you will have an
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optimized business performance. Here are some important

components that you must consider while planning your ecommerce
infrastructure.
Ecommerce Infrastructure Categorization
1. Ecommerce environment: This defines general guidelines and

frameworks that will make your business suitable for running
ecommerce. It is a standard like technical tools, legal and regulatory
frameworks, and the involvement of service providers.
2. Infrastructure services: These are the services that specify
ecommerce functions. One or more services will work together to
provide particular functions to the ecommerce business. Services
like user authorization, payment processing, order validation,
etc., help in during products checkout by the user.
The infrastructure services can further be classified in terms of the
services they provide to the user or an organization. Network
services, directory services, payment services, and security services
are common infrastructure service providers to the user.
3. Ecommerce solution providers: They offer an end-to-end
solution for ecommerce business who does not have their
implementation team.
Ecommerce Infrastructure Components
Ecommerce infrastructure identifies each functionality of the

hardware, software, and network with their key role. When you
know about the functionality of the components in ecommerce, then
you can organize the ecommerce platform more efficiently.
Hardware:
Hardware does several things, which includes allowing you to

connect to your network and have access to the outside world.
It allows you to store data, recover and use your data. Some
important hardware components are:
Devices: Computers, hubs, routers, data centers, etc.
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Servers: Server provides the necessary functionality for other

programs. It can be a computer program or a device and can be used
for different purposes. Some common servers are a proxy
server, web server, application server, etc.
Software:
Software components include services like system management

tools, analytic tools for estimating your business and service
providers.
Management services: When you run an ecommerce business you
need to manage various services like content, database and
resources. Enterprise resource planning, content management, and
data centers are some software services that help in managing the
resources of the company efficiency.
Analytics: Ecommerce business is more competitive since it is
growing day by day. So, it's important to analyze your
capacity, which helps in improving your system to perform
better. Web analytics and text analytics tools will help in estimating
your ecommerce site.
Middleware: Middleware is an intermediate between service
providers and service users. It could be data access for components,
communication protocols, specialized servers, or a mix of all.
API: An application program interface is a protocol or a tool for
building the software applications. It specifies how a software
component should interact with each other.
Network:
Network provides the communication path and services between

users, processes, applications, services, and external
networks through the Internet.
Internet connectivity: Establishing the connection between various
devices and processes.
Firewalls: Firewalls protect your networks from outside
attackers. It enables you to specify what kinds of traffic are
permitted through, adding a layer of security.
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Security services: Even some times firewalls may lack in protecting

against the hackers including security services.
Load balancer: It uses load balancers to distribute the overall load
on your web or application servers. It also distributes demand
according to the kind of task to be performed.
DNS: Domain Name System is naming a system for your website.
They locate the internet protocol address for your domain name.
Criteria for Choosing Ecommerce Infrastructure
Choosing the right infrastructure to match your ecommerce

business strategies enables your operations to run efficiently and
increase your revenue.
Flexibility: An ecommerce environment must be easy to manage for
all users. They must have the ability to respond quickly for all the
changes and must adapt the new technologies and features as a
scalable factor.
Usability: Usability is an important factor while you are choosing
the services for ecommerce platforms. When any one of the services
fails, it will cause a major effect in delivering efficient performance.
Scalability: Ecommerce grows rapidly where new technology and
services get added regularly so it needs to have an environment that
does not collapse during additional
services. The infrastructure should be scalable in terms of
technology, human recourses, high traffic, etc. Also, the performance
of the system should not be slowed down.
Security: Ecommerce business is vulnerable to various sources like
hackers, malware, security attacks, etc. Your infrastructure must
allow firewalls to protect your ecommerce from network attacks and
other paid security services.
Effective Planning and Management
As an ecommerce business owner, ignoring the importance of

planning and developing an ecommerce infrastructure is a major
failure for a business in the long run. You need to have an
infrastructure based on the needs and priorities of your company.
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Even managing your ecommerce infrastructure is challenging, but

well-defined planning and management can reduce risk and ensure
uptime.
E-Commerce Infrastructure Planning and Management
E-Commerce is the magic word in the era of web enablement. In this era
of internet driven innovations, a rising number of professionals are
engaging in innovative business models and services within their own.
There are further numerous professionals employed within the domain as
experts. This article provides an overview of E-Commerce Infrastructure
Planning and Management.
So why do we need to focus on e-commerce infrastructure and how
should we plan it? To define its Mission: It would be to design, develop
and maintenance of e-commerce business venture and enable three
critical objectives:
1. First objective (what we are building): An open, distributed and

safe infrastructure which is scalable and thus has provisions for future
needs
2. Second objective (how we can use): Using internet based
technologies to demonstrate the value creation for the users, and facilitate
the delivery
3. Third objective (who will pay repeatedly): Define the right
business model to sustain in the future, in tandem with the IT
infrastructure
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Fig :2.8E-Commerce Infrastructure Planning and Management
E-Commerce Infrastructure identifies the functionalities of the

Hardware and Software components, specifies the corresponding service
level requirements, and describes the management and operations of the
whole system. It may comprise briefly of the following components at a
very abstract level.
 Software components used: Content management systems, Web

analytics, Text analytics, Application Programming Interface (API),
Database server, Middlewares etc. Object oriented (e.g. CORBA),
Transaction processing, communication (https, messaging), data base
(e.g. ODBC), application middleware (CGI)
 Hardware components used: Servers, proxy servers, load
balancing systems. Firewalls, encryption devices and interactive voice
response units etc.
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Fig :2.9E-Commerce Infrastructure

Some of the major components, which a techno-functional professional
in the domain is expected to know are as follows:
 Middleware: Systems that resides between the client (user) and

the server (database and application resources). These could be
data access components, communication protocols, specialized
servers, or a mix of all.
 Directory services: Email Directory Services enables users to
locate other users for sending emails. LAN Directory Services
facilitates functions like connecting to the web, sharing printers,
LAN chats, LAN based KMS
 Lookup Database: This is the database that stores information
about network resources and user profiles. Enables usage of
network resources based on entitlements.
 Meta-Directories: Facilitates the flow of data between one or
more directory services and databases. Enables synchronization
of data across databases or data warehouses
 Groupware: Facilitate the automation and streamlining of
business processes not implemented in legacy/ERP systems.
Group communications and information sharing enabling
collaboration between teams and individuals
 Internet Domain Name Service (DNS): DNS facilitates the
unique identification of an organization or entity on the Internet.
DNS maps the domain name of an organization to its IP address
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 Further, as a systems or a business analyst, typical criteria

for evaluating infrastructure for e-commerce setup could
comprise of the following:
 Flexibility: The ability to respond quickly to changing

requirements, and scale up based on the need of the customer.
Resource virtualization can be an important factor in such a
scenario.
 Costs: The CapEx & WorkEx, like acquisition and maintenance
costs for servers, licenses and other hardware and software.
License cost and its renewal policy would also play a significant
part of the evaluation.
 Scope & performance: Factors include degree of fulfillment of
specific requirement, knowledge about service and performance
quality. Service uptime could be another sub-criteria.
 IT security & compliance: Factors like government, industry
and firm specific needs in the areas of security, compliance and
privacy are covered. How the information assets are protected
could be a regulatory issue.
 Reliability & trustworthiness: Factors like service availability,
consistency of delivery and fulfillment of the Service Level
Agreements. Whether the consumer can get the same uniformity
of service every time, is the evaluation parameter.
 Service & cloud management: Factors like offered support and
functions for controlling, monitoring and individualization of the
web interface.
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Fig :2.10 Criteria for Evaluating E-Commerce

Commerce infrastructure
Beyond this, another important dimension to deliberate upon, is to focus
on the key metrics of an e-commerce
commerce infrastructure policy.
policy These
could be noted and elaborated as follows:
Fig :2.11 Focus points for web infrastructure strategy

Further, professionals need to understand the Performance
Models associate
associated with E-Commerce
Commerce Infrastructure, which may be
useful during audits. A model is a representation of an information
system. It could be physical, logical or functional. The model should be
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as simple as possible. It should be capable of capturing the most relevant

characteristics of the system under evaluation or audit.
The performance of e-Commerce site depends on the pattern of services
requested by customers, as described by customer model. It also depends
on the demands that each service places on the site’s resources and the
intensity at which customers arrive at the site.
In view of this, it would be pertinent to focus on the following aspects
of E-Commerce Infrastructure:
 Monitoring and Reporting on Web and other e-Business

Applications, and the Response Times for Web transactions
 TCP/IP Performance focusing on End-to-End network response
times and the Effects of operational performance control
 Network Routes and Equipment focusing on the End-to-End
route response times, Identify route patterns and defects and Identify and
minimize loss of data in the network
 Other important dimensions include adequate site capacity,
Scalability and Fault-tolerance.
Basic Question for the evaluation would attempt to address the key
question: What portions of my “service-product” are popular? This
would need renewed focus on the Capacity Issue and the Method of
Analysis
Capacity Issue:
 Which files are being requested frequently?

 Which content configurations are requested frequently?
 Which processes deliver that content?
 Am I paying too much for my ISP service contract?
 Can I get by on a lower-bandwidth contract?
Method of Analysis:
 Site log file analysis

 Add up all http: transactions made to your web site during some
time period
 Visitor on site trend analysis
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 Purchase trend analysis
Capacity planning would address these requirements through a cycle of

workflows of analysis in a multi-stage approach.
Fig :2.12 High level view of a capacity planning

During the Business & Functional Planning, focus would be on the
following components:
 Interaction Model: It focuses on how a user interacts with the e-

Business site to execute the function. Example: two consecutive
HTML forms may be needed to implement the function of online
application to a course.
 Web Technology Used: Different technologies may be used to
implement an e-Commerce function. E.g. HTML forms, Java
Applets, Active X controls. Suitability of technology chosen to
fulfil functional needs would have paramount importance.
 Use of User Credentials for Authentication: This information
specifies if an authentication protocol such as SSL is used to
implement the e-Commerce function. This would have significant
importance in terms of security and information assurance.
The Customer Behaviour Planning would comprise

predominantly on the Business Intelligence aspect to mine the
customer’s preferences and purchase behavior and make suitable
recommendations. Techniques like classification, pattern
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association and sequential rule mining may be used to meet the

requirements of this stage.
The IT Resource & Infrastructure Planning would focus
predominantly on the specification of the workload model. This
would entail a series of activities focusing on workload
estimation, workload specification, performance
modeling and calibration for validation. Further, based on the
performance modeling output, cost-benefit analysis of the system
needs to be completed. Subsequently the IT Infrastructure
Evolution Plans can be drawn based on the completion of this
analysis
2.8 LET US SUM UP
1. Online marketing is the strategic use of digital networks and

electronic devices to promote your business.Online marketing can
encompass many different methods of reaching customers, including
social media, email, websites, blogs, and search engine traffic.Nearly
every business will benefit from online marketing because it's a great
way to reach people where they already are: online.
2. Network infrastructure is the infrastructure that supports a

business network. It encompasses servers, data storage solutions and all
networking equipment used to connect users to each other and to their
computers.Due to the fact that infrastructure has become such an
important part of any business, it’s worth noting that infrastructure is not
confined to just within a company.Network infrastructure may exist
between multiple businesses or even outside the boundaries of the
organization; infrastructure exists in all layers including hardware and
software.
3. Supply chain management (SCM) is the centralized management

of the flow of goods and services and includes all processes that
transform raw materials into final products.By managing the supply
chain, companies can cut excess costs and deliver products to the
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consumer faster and more efficiently.Good supply chain management

keeps companies out of the headlines and away from expensive recalls
and lawsuits. The five most critical elements of SCM are developing a
strategy, sourcing raw materials, production, distribution, and returns.A
supply chain manager is tasked with controlling and reducing costs and
avoiding supply shortages.
2.9 KEY WORDS
1. Omnichannel: Omnichannel is a term used in ecommerce and retail to

describe a business strategy that aims to provide a seamless shopping
experience across all channels, including in store, mobile, and online.
2. GMV : Gross merchandises value (GMV) is the total value of
merchandise sold over a given period of time through a customer-to-
customer (C2C) exchange site. It is a measure of the growth of the
business or use of the site to sell merchandise owned by others.
3. Revenue model: A revenue model is a framework for generating
financial income. It identifies which revenue source to pursue, what
value to offer, how to price the value, and who pays for the value. It is a
key component of a company's business model.
4. Subscription: subscription-based ecommerce is a buy-in service for
membership or recurring orders. Subscriptions can take many forms.
Some include memberships to retailers (like Amazon and Walmart.com),
discounts (like Subscribe & Save), or buying boxes or specialty products
from boutique brands.
5. Digitization: Digitization is the process of converting information into
a digital (i.e. computer-readable) format. The result is the representation
of an object, image, sound, document, or signal (usually an analog
signal) obtained by generating a series of numbers that describe a
discrete set of points or samples.
6. SEO: SEO stands for search engine optimization, which is a set of
practices designed to improve the appearance and positioning of web
pages in organic search results. Because organic search is the most
prominent way for people to discover and access online content, a good
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SEO strategy is essential for improving the quality and quantity of traffic
to your website.
cation, new delhi.
washington.
hill, new delhi.
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2.11 ANSWER TO CHECK YOUR PROGRESS
Answer1: Effective supply chain management provides three primary

benefits to an organization, according to MSU’s online Supply Chain
Management I course.
1. Lowered Costs
By integrating suppliers and applying technology, organizations can
lower operating costs by responding more dynamically to customer
needs. For example, managing based on demand keeps organizations
from over-producing, which not only reduces labor and raw materials
costs, but also cuts down on inventory management costs and
transportation costs.
2. Increased Revenue
When organizations use technology to stay closer to customer demand

and respond more quickly (as in the Walmart example, keeping shelves
stocked), it’s more likely for products remain available for customers to
purchase. When manufacturing is streamlined to produce just enough,
labor and materials can be devoted to developing new items to offer the
customer and expand the product mix. Outside the product realm, this
may mean offering additional services to customers.
3. Asset Utilization
With effective supply chain management, organizations can use capitol

assets, like production or transportation equipment, most effectively.
Rather than adding wear and tear to manufacturing equipment
needlessly, businesses can produce to the needed.
Supply chain management allows organizations to deliver more quickly,
ensure products are available, reduce quality issues, and navigate returns
with ease, ultimately improving value, both within the organization and
for the customers.
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2. Refer 2. for Answer to check your progress- 1 Q. 2 …
Answer2: Supply chain management is the process of integrating the

supply and demand management, not only within the organization, but
also across all the various members and channels in the supply chain so
they work together most efficiently and effectively.
Answer3: There are five basic components in a supply chain

management system:
1. Planning
To meet customer demands, supply chain managers have to plan ahead.

This means forecasting demand, designing the supply chain intentionally,
and determining how the organization will measure the supply chain to
ensure it is performing as expected in terms of efficiency, delivering
value for customers and helping to achieve organizational goals.
2. Sourcing
Selecting suppliers who will provide the goods, raw materials, or

services that create the product is a critical component of the supply
chain. Not only does this include creating the contracts that govern the
suppliers, but also managing and monitoring existing relationships. As
part of strategic sourcing, supply chain managers must oversee the
processes for ordering, receiving, managing inventory and authorizing
invoice payments for suppliers.
3. Making
Supply chain managers also need to help coordinate all the steps
involved in creating the product itself. This includes reviewing and
accepting raw materials, manufacturing the product, quality testing and
packaging. Generally, businesses evaluate the quality, production output
and employee productivity to ensure overall standards are upheld.
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4. Delivering
Ensuring the products reach the customers is achieved through logistics

and it’s fundamental to supply chain success. This includes coordinating
the orders, scheduling delivery, dispatching, invoicing, and receiving
payments. Generally, a fleet of vehicles must be managed to ship the
products—from tankers bringing product manufactured overseas to fleet
trucks and parcel services handling last mile delivery. In some cases,
organizations outsource the delivery process to other organizations who
can oversee special handling requirements or home delivery.
5. Returning
Supply chain managers also need to develop a network that supports

returning products. In some cases, this may include scrapping or re-
producing a defective product; in others, it may simply mean returning a
product to the warehouse. This network needs to be responsible and
flexible to support customer needs.

Answer4: Efficiently managing remote teams has become the need of
the hour. In this scenario, using the right websites, apps and productivity
tools to effectively communicate and get work done is important.
Project Management tools:
Some useful project management tools are Instagantt, ProofHub, Pintask,
Basecamp and Trello.
Productivity tools:
The productivity of your e-Commerce development team is obviously a
crucial part of the remote work culture. Todoist, Blink, Krisp and
PukkaTeam are some tools that can help you with it.
Collaboration tools:
Google Docs, Troop Messenger, GitHub, Jira and Slack are a few of the
tools that’ll come in handy while managing a remote team.
Cloud Storage tools:
The most popular cloud storage platform out there is Google Drive.
Another efficient platform for storage is Dropbox.
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Answer5: When you recruit and retain a diverse pool of talent, it brings
in a whole bunch of different benefits to the organization as well as its
employees. A diverse group of employees accrue their varied
experiences, mindsets, talents, and different skill sets to come up with
innovative and creative solutions to specific problems. Also, the benefits
of language diversity can be reaped in order to be a part of global
business opportunities. So while building a remote eCommerce
development team, keep in mind the benefits of having a diverse
workforce.
2.12TERMINAL QUESTIONS
1. Give the names of essentials ecommerce infrastructure components

2. How does online marketing work?
3. Why do we need ti digitize our products and services
4. Which are the different types of online marketing?
5. How to educate customers on product digitization
6. Discuss different types of business models used in today’s world
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UNIT – 3 BUSINESS TO CONSUMER E-

COMMERCE
STRUCTURE
3.0 Objectives
3.1 Introduction
3.2 Cataloging order planning and order generation
3.3 Cost estimation and pricing
3.4 Order receipt and accounting order selection and prioritization
3.4.1 Order scheduling
3.4.2 Order fulfilling and delivery
3.4.3 Order billing and payment management
3.5 Business to Business E-Commerce
3.6 Need and alternative models of B2B e-commerce
3.7 Let Us Sum Up
3.8 Key Words
3.9 Some Useful Books
3.0 OBJECTIVES
 Describe the nature of theB2C E-commerce model

 Identify the scope of Catalogue planning and order generation
 State the need and significance of Order selection
 List the alternatives models of B2B ecommerce
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3.1 INTRODUCTION
B2C business-to-consumer ecommerce, also called retail ecommerce, is

a business model that involves sales between online businesses and
consumers. B2C ecommerce is one of four major ecommerce business
models, the other three being B2B (business-to-business), C2B
(consumer-to-business), and C2C (consumer-to-consumer).
A popular example of a B2C ecommerce platform
is Amazon. Ecommerce sales happen almost entirely over the internet,
apart from the shipping and delivery processes, so they give sellers and
buyers the comfort and freedom to make transactions at any time and
from any place. This increased ease of both buying and selling online, as
compared to traditional sales, has made B2C ecommerce one of the
fastest growing sectors in the global economy and it’s estimated to make
around 6.3 trillion USD in global sales by 2024.
There are five popular types of B2C ecommerce businesses:
Direct sellers
Direct sellers are what most people think of when they they hear B2C
ecommerce. These are the online retail stores that either sell products
from their own brand or sell a variety of brands. For instance, Zara’s
online store sells products that specifically come under Zara’s brand.
Other stores like Walmart and Costco sell products from all sorts of
brands, but they’re still direct sellers.
Online intermediaries
Online intermediaries are mediators who use their websites to bring
businesses and potential customers together. Online intermediaries do not
own any product, service, or brand, and their only job is to form a path
between those who sell and those who buy. For example, Etsy allows
individuals and small businesses to sell their artistic products and
services on the Etsy website under their own individual brands.
Customers can then visit the site and make purchases directly from the
sellers.
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Advertisement-based
Advertisement-based ecommerce sites also do not own any products or
services. Instead, they sell advertisements for products and services that
other businesses own. Over time, as these sites grow more popular, they
start to be referred to as influential websites that promote other
businesses. The Huffington Post and the Guardian are examples of this
type of ecommerce model, where both sites post ads for products and
services sold by other businesses.
Community-based
In the community-based ecommerce model, businesses target online
forums that are related to the products and services they sell, and market
their products there. For example, Facebook hosts groups and
communities related to specific interests, so businesses can find an
appropriate one in which to pitch what they offer.
Fee-based
Fee-based ecommerce sites charge customers to use their websites,
because their products or services can be directly accessed there.
Examples include subscription-based entertainment service sites like
Netflix, Amazon Prime, and Hulu, or sites that offer articles and stories,
like Medium.
How can B2C ecommerce benefit you over a traditional store?
Reach more customers
With a traditional store, you can expect that most of your customers
either live in your area or have some reason to visit it. While you might
have customers who don’t visit in person, they probably won’t make up
the majority of your business. So your primary audience is limited to
people with access to your store.
The “ecommerce” part of B2C ecommerce can overcome this problem.
By putting your business on the internet, you’re making your store
available to everyone who’s online, regardless of where they live. This
not only includes potential customers who live in your area, but also
customers across the country and even global customers if you choose to
expand internationally. With ecommerce, your primary audience
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becomes everyone who can access your online store and is looking for
the products you sell.
Reduce your overhead costs

Every business incurs some form of overhead costs. With traditional B2C
commerce, running the physical store alone can entail expensive
overhead costs like rent, employee salaries, property taxes,
maintenance, utility bills (like water, phones, and electricity), and
insurance. But the business also has other overhead costs that aren’t
related to the physical store, like inventory purchases and the warehouse
space to store them. So the physical store adds even more overhead to the
already expensive process of running a business.
By switching to ecommerce, you can significantly reduce your total
overhead costs, since you will be able to run your store entirely online
and won’t require a physical store.
Create detailed customer profiles
If you run a traditional store, you may have a few trusted or favorite
customers who place regular orders with you. With these customers, you
usually already know what they’re looking for. So you can help them
shop for their usual items quickly, or you can convince them to try new
products or services that they might be interested in, or you could even
reserve highly desirable products just for them. While these are all good
options to offer, you will probably only be able to do this with customers
you actually know, which means that your other customers may not get
the same personalized experience.
A B2C ecommerce store can change this for you, with the help of
customer or consumer profiles. Customer profiles (or customer profiling)
is when businesses use an online analytical tool to gather data about each
customer’s individual shopping interests, shopping history, patterns,
frequency, regions they buy from, age group, occupation, how they
learned about your business, and any issues or complaints that they have
had in the past. Using this information, you can put together a thorough
profile for each customer, which can help you offer them all a more
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customized shopping experience. Additionally, the information that you

collect from each customer can help you pick out common factors
amongst all of your customers. This can further help you identify other
potential customers who share these characteristics, and target them in
places you know they will see, like online ads on social media.
B2C ecommerce is essentially an online version of traditional retail
stores, where instead of walking into a store to make a purchase, the
customer just has to go online. Processes like placing and accepting
orders and payments take place over the internet, which can make things
easier for you. Besides simplifying your sales, B2C ecommerce can also
help your business in ways that a traditional store can’t—like making
your store available to everyone who’s online regardless of where they
live, saving physical overhead costs, and offering all of your buyers a
customized shopping experience. Learning about all of these advantages
can help you understand what running a B2C ecommerce business entails
and determine whether your business can really benefit from it.
3.2 CATALOGING ORDER PLANNING AND ORDER

GENERATION
Nowadays, both B2C and B2B customers are well accustomed to

searching for product information and shopping online. Therefore, your
business needs to have a well-managed online product catalog to meet
these customer behaviors, ensure your products are found and accessible
online, and stay competitive. A clear and detailed e-commerce catalog
will also help you be seen as a leader in your industry and build trust
between you and your web store visitors.
Challenges for product catalog management in e-commerce
In general, businesses face 4 main challenges when managing their

product catalog online:
 The involvement of multiple stakeholders from inside and

outside your organization: This can make managing and
updating your product catalog complex and time-consuming. For
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example, if the units of measurement differ between your

suppliers and your systems, this requires frequent manual
updates.
 Usability: All internal product data needs to be translated into
clear, customer-facing information. In addition, you want to make
sure the product display and categorization fit your customers’
expectations.
 Choosing a catalog management tool: This requires you to have
a deep understanding of both the functions of the tooling options
and your business situation. For multinational companies, it can
be even more challenging to find a scalable catalog management
solution if your internal operational systems (such as ERP, PIM,
marketing or e-commerce systems) differ across the globe.
 Business and catalog growth: Business growth often means
catalog growth. However, is your current catalog structure ready
to be expanded? Any inconsistency or lack of organization in
your current catalog structure (such as messy product assortment)
can lead to challenges when you’re expanding your catalog.
To help you overcome these challenges, we’ve put together the

following 8 best practices on how to manage your e-commerce
product catalog:
1. Build trust with quality product information
When managing your digital product catalog, your first goal should be to
ensure your (potential) customers are comfortable with shopping on your
e-commerce site. You want your web store visitors to trust your business,
so that they are more likely to place an order with you.
In order to reach this goal, it is crucial that you provide comprehensive
and accurate information in your product catalog. Your potential
customers can only start trusting your business when the information
they use to assess your brand and products is complete and accurate.
You can start with the below 3 aspects to achieve good quality product
content:
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 Include comprehensive information in your product catalog.

You should provide all the details your customers need to easily assess
your products. This includes technical attributes, images, videos,
inventory information, units of measurement, and product usage
combinations. This information needs to be clear and easy to navigate.
 Make sure that all your information is up to date. This will
optimize your customers’ shopping experience by helping them make
accurate decisions. Think here both of your static information, such as
product details, as well as ever-changing inventory information. Assign a
person to be responsible for each of these adjustments if needed.
Alternatively, you can also try to connect your web store inventory to
your ERP inventory records, so that your web store inventory levels are
updated automatically.
 Illustrate your products using high-quality visuals. This will
help attract the attention of web store visitors and keep them engaged.
Take it one step further by using multiple media formats.
Learn how you can master e-commerce product catalog management

with Sana Commerce, and what our solution offers to simplify the
process
2. Tag and Categorize Your Digital Product Catalog
Help your customers easily browse through your digital product catalog
by offering them the option to filter, refine, and sort your web store
product information. You can do this by systematically tagging and
categorizing all your products.
But be sure to do this from your customers’ perspective. That is,
think about how they look for information and how they want to search
your website. For example, if you know that your customers often search
for product information based on material, make sure you do not limit
attributing your products to size and color only.
In addition to this, we have the following tips for categorizing your e-
commerce catalog products:
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 Ensure all product tags are consistent. For example, use only
“medium” to represent a product size; do not switch between tagging
products with “medium” and “M”.
 Ensure all measurement units are consistent. For example, use
either inches or centimeters in your product specification, do not use
both.
 Don’t limit all your products to the same set of
attributes. Make sure to include additional product attributes when
necessary to help your customers make the correct selection. For
example, if you’re selling vegan or gluten-free food, you should add
these attributes and categorize them — and not limit attributes to only
flavor, package size, etc.Report: 84% of IT leaders say their e-
Learn what IT leaders have to say about e-commerce and it across

business.
3. Map your catalog management process
As mentioned earlier, the involvement of multiple stakeholders makes e-

commerce catalog management a complex process. One way to
overcome this challenge is to first map out your catalog management
process. Then, you can pinpoint where your internal and external
stakeholders are located along this process.
This mapping process can provide you with a clear understanding of:
 Which parts of the catalog management process are touched by

stakeholders
 Who is affected by your catalog changes
 When are they affected during the process
When your e-commerce product catalog needs to be updated, the

mapping process allows you to quickly find the exact stakeholder(s) to
approach.
For instance, let’s say you’re a wholesaler who wants to add a couple of
products to your e-commerce catalog. A clear map of your catalog
management process would help you understand what steps you need to
take and in which order. You’ll then know you need to first collect the
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new product information from the suppliers, check if your courier is able
to pack the new products using current resources, commission a product
photo shoot with your agency, ask your internal content team to create
the product description, speak to your logistics department to get the new
stocking keepi
keeping units (SKU) documentation, etc.
4. Upsell and cross

cross-sell
sell with related and alternative products
Suggesting related products in your e-commerce

commerce catalog is an easy way
to increase your average order value.
Think about your own experiences shopping online
online.. If you’re browsing
for a new camera, most web stores will also suggest the best battery,
memory card and case to go with it. How many times have you added
those additional items to your cart? Usually, you do — because you
actually really need them, and iit’s
t’s super helpful not to have to go
searching for them.
You can also suggest alternative products to tempt your buyer into
purchasing an even better quality camera, or to encourage them to keep
browsing in case they have not yet found the exact product the
they are
looking for.
Fig: 3.1Upsell
Upsell and cross
cross-sell
5. Easily manage your ee-commerce
commerce product catalog database
Since e-commerce
commerce catalog management is a type of information
management, maintaining a database is an unavoidable part of
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optimizing the catalog. The below suggestions can help you keep a clean
product catalog database:
 Keep a single source of truth for your product catalog. This

means keeping your information in one database only, without
replicating it in any other systems. Not only is this more efficient,
it will also prevent any errors.
 Specify the roles and authorization flows for database
modification. In this way, stakeholders will know their exact roles
and responsibilities when changing the product catalog database.
Authorization flows also help you maintain and safeguard your
data quality and avoid data redundancy.
 If you’re considering expanding your business and e-commerce
product catalog alongside it, assess the feasibility of your
database expansion. Think about whether any new product
catalog data can be collected, organized quickly, and managed in
the foreseeable future within your current data structure. If not,
you need to look at re-organizing your internal data structure first
to ensure it is scalable.
6. Select a catalog management tool
There are many tools in the market that can help you manage your e-
commerce product catalog. Depending on your business needs, your e-
commerce product catalog can be managed through:
 A stand-alone e-commerce platform

 A spreadsheet software (e.g. Microsoft Excel)
 A product information system (PIM)
 An e-commerce platform that integrates with your ERP
When choosing a product catalog management tool, you should consider

your existing tech stack, business size, the complexity of your product
catalog, the availability of your labor resources, and whether you have
plans to expand to multiple web stores in the future.
No matter which solution you choose, as mentioned above, try to keep a
single source of truth to avoid duplicating product data and risk making
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mistakes. For example, if you are already using an ERP or PIM system to
manage your product catalog, you want to avoid replicating the existing
data into a separate e-commerce platform. This can be done with ERP-
integrated e-commerce.
7. Personalize your B2B e-commerce product catalog
If you run a B2B business, you’ll likely have to deal with an extra level
of complexity: your product pricing can differ per customer or per
ordering situation. That is why catalog personalization can be an
important thing to consider for your B2B web store. Pay close attention
therefore to whether your web store can control the price displayed.
In addition, if you choose to serve different contents to different
customer segments, check whether your e-commerce solution supports
tailor-made catalogs. With a tailored catalog option, the content served to
your customers will be more relevant to them.
8. Balance Your Offline and Online Catalogs
If you are using an offline product catalog in addition to your online

catalog, you should think about how to make the two catalogs
complement each other. For instance, your offline catalog can serve as an
easy-to-read product overview for a broad understanding and quick
decisions; while the online catalog can serve as an extensive and up-to-
date product information hub for product deep-dives and comparisons.
3.3 COST ESTIMATION AND PRICING
Cost Estimate is the preliminary stage for any project, operation, or

program wherein a reasonable calculation of all the project costs is done
and, therefore, involves precise judgment, experience and accuracy.
Cost Estimation is often done by separate individuals trained to estimate
costs accurately. It is a challenge considering the ever-changing
economic environment. If a project is significant, then companies need to
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pass the Tender. Once the Tender is accepted, the particular company
gets the project and starts working.
So to pass the Tender, the company will have to estimate all the costs
related to the project. If the project is going to take a long time, then the
company will have to determine the inflation and other changes that may
occur. So the cost estimation for big projects is complicated and needs to
be performed accurately.
Characteristics
 There are several ways by which cost estimates can be prepared.
The most important characteristic is the preparation of cost
estimates. Companies often use models to precisely estimate the
cost.
 Quality is directly proportional to cost, so options for different
deliveries involving different costs are set up. So the project
manager has to choose the quality he wants, considering the cost.
 The budget for the overall project or operation is set. Since the
scariest thing is the capital, acceptance of a project depends on
the budget set for the project.
 Another essential characteristic is keeping the whole operation
within the budget mentioned.
Types of Cost Estimate
The three most important types of cost estimate are:

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Fig :3.2Types of Cost Estimate

#1 – Historical Estimating
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So when a method is being set up using historical cost, it is not so

accurate but can be used during the initial stage of a project. It doesn’t
involve lots of judgment. So it is quick and not so accurate. Under this
similar past, projects are being searched, and costs are adjusted
considering inflation and other economic changes.
#2 – Parametric Estimating
Parametric estimation is an estimation done based on parameters. So

recent ongoing projects are taken, and it is used as a parameter. Say a
similar project is being constructed somewhere, and the cost per square
foot of the project is known. So multiplying the total space you will
create in your project can help you get the total cost. This process helps
to get costs more accurately as it is recent, and all
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incorporated.
#3 – Bottom-Up Estimating
This process is hugely time-consuming but accurate. It involves a

thorough analysis of all the labor and raw materials included in the
project. So granular cost estimation is done first, and then after adding
everything, you get the total cost.
Methods of Cost Estimate

#1 – Least Square Regression
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statistics is used to find the best fit line for variable and fixed costs. So
this method helps to build a model which shows that for a particular
production level, this much should be the variable cost, and this much
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once a model is set, this method becomes easy as new data can be
incorporated easily.
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formula/ shows you the highest and lowest level of cost that you may
incur. So it doesn’t throw the possibility of the cost that lies in the
middle. This method is generally easy to compute and helps to have a
preliminary idea regarding the cost.
#3 – Statistical Modelling
This method is the most sophisticated. It involves estimating several

economic factors that may lead to a change in cost estimation. Statistical
models are extremely accurate as several factors are considered to set up
costs. These models are costly to set up, making it difficult for small
businesses to build statistical models.
Process
Optimally how much productivity can be obtained given a certain

amount of cost is the main objective of Cost Estimation. This process can
involve determining the total cost required to accomplish a project in a
given time. It is not an accurate measure; it is an approximation. Correct
estimation of labor and raw material cost is also required.
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Importance
Cost Estimation is the most critical step for project management. Without
proper estimation, it will be complicated to make a budget for the
project. Incorrect estimation may lead to losses. A
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profitability/ are decided based on the cost that is estimated. So
inaccurate estimation of the cost may lead to acceptance of a wrong
project or rejection of a profitable project.
Cost Estimate vs. Budget
Cost Estimation is the preliminary stage, so the cost is first projected,

then the budget is fixed accordingly. The budget is decided based on the
cost that is estimated. So the budget is the total money allocated for a
particular project. The budget can be set more than the cost to be safe in
case of an incorrect cost projection.
Advantages
 It helps in deciding how much funds and resources are needed to

carry out a particular project. Without cost estimation, it will be
challenging to decide on a budget.
 It helps to teach discipline in project handling. Once a project
manager knows the cost estimation, he will not spend
unnecessarily and will try to finish the project within the estimate.
Cost estimation breakup helps stakeholders to challenge in case
of discrepancies. So if they feel that the estimation is wrong or
manipulated, they may not provide funds.
 Disadvantages
Inaccurate estimates may lead to acceptance of wrong projects
which will lead to capital erosion for the firm
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Projections are always risky as they involve events that have not
occurred yet. So depending too much on the estimation and not
keeping a haircut may lead to the failure of projects.
Meaning of Pricing:
Pricing is a process of fixing the value that a manufacturer will receive in
the exchange of services and goods. Pricing method is exercised to adjust
the cost of the producer’s offerings suitable to both the manufacturer and
the customer. The pricing depends on the company’s average prices, and
the buyer’s perceived value of an item, as compared to the perceived
value of competitors product.
Every businessperson starts a business with a motive and intention of
earning profits. This ambition can be acquired by the pricing method of a
firm. While fixing the cost of a product and services the following point
should be considered:
 The identity of the goods and services
 The cost of similar goods and services in the market
 The target audience for whom the goods and services are
produces
 The total cost of production (raw material, labour cost, machinery
cost, transit, inventory cost etc).
 External elements like government rules and regulations, policies,
economy, etc.,
Objectives of Pricing:
 Survival- The objective of pricing for any company is to fix a
price that is reasonable for the consumers and also for the producer to
survive in the market. Every company is in danger of getting ruled out
from the market because of rigorous competition, change in customer’s
preferences and taste. Therefore, while determining the cost of a product
all the variables and fixed cost should be taken into consideration. Once
the survival phase is over the company can strive for extra profits.
 Expansion of current profits-Most of the company tries to
enlarge their profit margin by evaluating the demand and supply of
services and goods in the market. So the pricing is fixed according to the
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product’s demand and the substitute for that product. If the demand is
high, the price will also be high.
 Ruling the market- Firm’s impose low figure for the goods and
services to get hold of large market size. The technique helps to increase
the sale by increasing the demand and leading to low production cost.
 A market for an innovative idea- Here, the company charge a
high price for their product and services that are highly innovative and
use cutting-edge technology. The price is high because of high
production cost. Mobile phone, electronic gadgets are a few examples.
What is Pricing Method?
Pricing method is a technique that a company apply to evaluate the cost

of their products. This process is the most challenging challenge
encountered by a company, as the price should match the current market
structure and also compliment the expenses of a company and gain
profits. Also, it has to take the competitor’s product pricing into
consideration so, choosing the correct pricing method is essential.
Types of Pricing Method:
The pricing method is divided into two parts:
 Cost Oriented Pricing Method– It is the base for evaluating the

price of the finished goods, and most of the company apply this
method to calculate the cost of the product. This method is
divided further into the following ways.
 Cost-Plus Pricing- In this pricing, the manufacturer calculates
the cost of production sustained and includes a fixed percentage
(also known as mark up) to obtain the selling price. The mark up
of profit is evaluated on the total cost (fixed and variable cost).
 Markup Pricing- Here, the fixed number or a percentage of the
total cost of a product is added to the product’s end price to get
the selling price of a product.
 Target-Returning Pricing- The company or a firm fix the cost
of the product to achieve the Rate of Return on Investment.
 Market-Oriented Pricing Method- Under this category, the is
determined on the base of market research
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 Perceived-Value Pricing- In this method, the producer establish

the cost taking into consideration the customer’s approach
towards the goods and services, including other elements such as
product quality, advertisement, promotion, distribution, etc. that
impacts the customer’s point of view.
 Value pricing- Here, the company produces a product that is
high in quality but low in price.
 Going-Rate Pricing- In this method, the company reviews the
competitor’s rate as a foundation in deciding the rate of their
product. Usually, the cost of the product will be more or less the
same as the competitors.
 Auction Type Pricing- With more usage of internet, this
contemporary pricing method is blooming day by day. Many
online platforms like OLX, Quickr, eBay, etc. use online sites to
buy and sell the product to the customer.
 Differential Pricing- This method is applied when the pricing
has to be different for different groups or customers. Here, the
pricing might differ according to the region, area, product, time
etc.
1. Explain market oriented pricing model
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2. State objectives of pricing
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3. Explain cost oriented pricing model
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3.4 ORDER RECEIPT AND ACCOUNTING ORDER

SELECTION AND PRIORITIZATION
When you first opened your small business, prioritizing orders might not
have been a concern. However, as your sales have grown, you have
realized that efficient operations and customer satisfaction require you to
develop an order-processing method. If you have installed a software
package, the program may ask you to define your order priority rules.
There is no single rule that is ideal for all businesses, but there are five
basic rules that you can match to your needs.
Assign Priority at the Customer Level
You might prefer to prioritize orders by customer. Incoming orders from
customers with the highest priorities are then processed first. To
illustrate, suppose you have three customers, and their priority rankings
are A, D and J. Each customer places an order on the same day for the
same in-stock product. If you were able to ship just one order per day,
the customer with an A priority would ship first, followed by the
customer with the D priority and finally the J-priority customer.
First Ordered, First Shipped
If you choose to prioritize according to this rule, you ship orders as they
are received. Oldest orders receive the highest priority, and new orders
go to the bottom of the list. Although at first glance this might appear to
be the simplest and fairest method of prioritizing orders, it might not be
the best choice for your business if you have one or two very important
customers who might be unhappy at the delay.
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Promise Date
When accepting an order, you might promise a ship date, or the customer
might request a specific date for shipment. Orders with the earliest dates
receive priority over those with later dates. This rule requires you or your
system to continuously update your list of priority orders as new orders
arrive.
Processing Time
You might opt to prioritize orders according to processing time. Orders
with either the shortest or the longest processing times can receive
priority. For example, orders for a single item might ship before orders
with dozens of different items. An order for which all items are in stock
might receive a higher priority than one for an item that must be ordered.
Conversely, you might prefer to process the order for which you must
order merchandise first to reduce the amount of time the customer must
wait for delivery. If you manufacture your own products, you might want
to prioritize orders that require the most steps or those that require the
fewest steps, depending on your manufacturing capacity.
Availability of Product
If all products are in your inventory, your priority order is simplified.
However, consider orders that you manufacture on demand or that
require customization. Assuming that machine availability is not an
issue, if a product requires two days to manufacture, that order can ship
sooner than an order for a product that requires seven days to
manufacture. If a product can only be made on a single machine, you
must take into account when the machine will be available to produce the
item. If an item can be produced on a variety of machines, you might
prioritize orders for that product according to the slack or idle time
available on a specific machine. You might also want to prioritize groups
of orders according to the complexity of changing a machine over to
make a product to reduce the time and cost of making the switch.
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3.4.1 Order scheduling
Scheduling is a communications tool that helps balance customer

demands with your ability to fulfill that demand. The following are some
aspects of this tool that Oracle Order Entry/Shipping provides:
Enables you to make delivery commitments to customers
ATP Inquiry while taking an order, or to verify from where a line can be
fulfilled
Communicates current or future product needs to Oracle
Demand Inventory and other manufacturing products for forecasting
and planning purposes
Allocates inventory to a specific order line from a
Reservation
warehouse, subinventory, lot, or revision
Lets you split a line's supply so that part of a line may be
Schedule
fulfilled from one lot, or part may ship at a different time,
Detail
without requiring separate lines
Requires that all lines with the same ship set number ship
Ship Set
together
Order scheduling is managed differently from company to company.

Some may place demand for a product at order entry and reserve it upon
release. Others place demand for a product and promise it to customers at
order entry. Still other companies may place demand and promise a
product at order entry but, because they have high inventory levels, do
not need to reserve the product at release. Oracle Order Entry/Shipping
supports a variety of scheduling environments. If you schedule at order
entry, you can use the Sales Orders window. If you have a special
department that schedules orders, you can separate the functions and use
the Schedule Orders window. Or, if you never schedule but simply enter
and release orders, you can set up Oracle Order Entry/Shipping to
support your business.
You can schedule order lines with multiple ship-to locations, shipping
warehouses, request dates, promise dates, schedule dates, and inventory
details. With ship sets, you can specify which lines on an order must be
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shipped together, thus guaranteeing that a ship set is released only when
all lines in the ship set are available for pick release.
From the Sales Orders or Schedule Orders windows, you can request on-
line ATP inquiries and schedule shipment dates for a single order line or
detail, a ship set, a configuration, or an entire order. If the date and
quantity you request are not available, Oracle Order Entry/Shipping
displays the earliest date (after the schedule date) that you can ship the
quantity you require according to your inventory and planning
parameters.
You can also schedule shipments for models with options, just as you can
with regular lines. You can change warehouse and shipping information
for each shipment schedule. You can also add, change, or delete model
options, which allows you to rearrange your scheduled shipments to
support customer or internal requirements.
All scheduling activity is actually perfomed on schedule details, not
order lines. However, when you request a scheduling action on a line, the
action will apply automatically to all associated schedule details.
You can either enter a schedule preference in the Schedule Action field
for each order line or order line schedule detail, or choose a scheduling
action from the Schedule dialog window via the Schedule button. You
may want to indicate your scheduling preference on each order line or
order line schedule detail when you want to demand some and reserve
others. However, if you want to perform the same scheduling action on
all items in one configuration, order, or shipment, it is more efficient to
assign scheduling actions from the Schedule dialog window.
Oracle Order Entry/Shipping recognizes demand and reservations for
orders or order lines on hold.
Sales Orders Window

If you choose to schedule orders as you enter them, you can perform all
scheduling functions for a schedule detail, order line, or group of order
lines using the Sales Orders window. You can communicate or negotiate
with your customer on product availability and shipment dates and enter
a promise date reflecting your agreement with your customer.
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Schedule Orders Window

Order Entry/Shipping also provides a separate group of windows that
you can use to schedule or reschedule an order, group of orders, an item
or group of items. Only booked orders are displayed in the Schedule
Orders windows. This window group is ideal for use in your scheduling
department because it does not allow addition or deletion of order lines
or changes to ordered quantities or promise dates.
Internal Sales Orders
You can only change the schedule date, schedule status, quantity
reserved, freight carrier, shipment priority, ship set number, and ship-to
contact when scheduling an internal sales order. You cannot split an
internal sales order line into multiple details; you can only change the
schedule date for the entire line.
3.4.2 Order fulfilling and delivery
While order fulfillment is, by definition, the method by which a company

processes a sales order to the customer's specifications, that understates
its importance. Customers hold more power than ever, are more informed
and have higher expectations. Efficient order fulfillment is key to your
brand's reputation, your company's profits and your ability to retain
clients.
Without sales there is no business. Without order fulfillment, there are no
sales.
Order Fulfillment Explained
A new sale is almost always something worth celebrating, but the work
isn’t done until the order is fulfilled, and the customer has the order in
hand. Order fulfillment is the critical task of assembling the order and
shipping it off to the customer, plus the supporting processes that support
those tasks.
The complete order fulfillment lifecycle is made up of five primary steps
starting with strategic sourcing and ending with shipping. Many
businesses include inventory management, supply chain management,
order processing, quality control, and customer support in the umbrella
of order fulfillment.
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Much of the order fulfillment process can take place under one roof in a
well-organized warehouse, depending on the size of your business. Many
small businesses handle order fulfillment themselves in-house through a
simple process. Large enterprises require a more complex, multi-layer
distribution center strategy. But in either case, the main goal is efficiently
getting the customer what they ordered as quickly, reliably, and
inexpensively as possible.
Order Fulfillment Process: How Does It Work
The order fulfillment process takes place in one or more distribution

centers and typically involves inventory management, supply chain
management, order processing, quality control and support for customers
that need to report problems or make product exchanges or returns.
Order fulfillment occurs in these five, distinct steps.

Fig :3.3 Order Fulfillment Process
Receiving Inventory
Goods may come from a third party, another company department or a

company warehouse; a pipeline (as with oil, fuel, water or some other
fluid product); as digital data from a database; or in a variety of forms
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from other external or internal sources.

In any case, the incoming inventory must be counted, inspected and
inventoried to ensure the proper amount was received and the quality is
acceptable. SKUs or bar codes on the arriving products are used in the
receiving and storage processes, and to retrieve goods from internal
storage later.
Inventory Storage
Once goods are received in the fulfillment center, they are inventoried
and either immediately disbursed or sent to short- or longer-term storage.
Items are ideally stored just long enough to help organize the orderly
distribution of goods for existing sales, rather than to hold product for
future sales.
Order Processing
An order processing management system dictates the product picking

and packing activities per each newly received customer order. In the
online marketplace, order management software can be integrated with
the shopping cart on an ecommerce website to automatically initiate
order processing.
Picking
A picking team or automated warehouse robots select items from the

warehouse according to a packing slip's instructions. The packing slip
contains specific information, such as a list of item SKUs, product
colors, sizes, number of units and location in the distribution center's
warehouse.
Packing
Packing materials are selected by a packing team or automated

fulfillment robots to achieve the lowest practical dimensional weight,
which is calculated by multiplying package length times width times
height. Since space on delivery trucks is at a premium, optimizing
dimensional weight (or DIM weight) is important to speed transport
while also potentially lowering shipment costs.
Further, packing teams often include return shipping materials and labels
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in case the customer wishes to exchange or return the item for a refund
later.
Shipping
The order is sent to a transportation channel or shipping node to be

shipped to the customer. Shippers and carriers — be they freight lines or
airlines, FedEx, UPS, the U.S. Postal Service (USPS) or other carriers —
determine freight billable costs by whichever is greater: actual package
weight or its dimensional weight.
Even if the actual weight is low, such as with a t-shirt, packing it in the
lowest DIM is often worth it to keep the packaging from adding
significantly to the overall package weight. Also, most carriers have
packaging rules to optimize their own profits from the shipping space
they have available. Failing to meet those requirements can delay
shipments if carriers refuse to accept the order.
Delivery
It is common for shipping routes to include more than one carrier. For
example, FedEx may pick up a package at the fulfillment center that will
later be delivered by the USPS to the customer's home. There are many
reasons for these hybrid shipping methods. One common example is that
the USPS delivers even to remote areas where most other commercial
carriers do not. It's simply more practical to use the USPS for the last
mile of delivery in those cases
Returns Processing
Returns processing begins with including shipping materials and a return

label with the original customer's order. When a customer does return a
product for exchange or a refund, the process must be executed carefully
to ensure it's appropriate to restock it. Obviously if the product
malfunctions, it can't be restocked. Nor can a soiled item. Returns
processing involves quality control checks and sorting returned products
accordingly. Return products are then restocked, returned to a vendor or
manufacturer for a distributor refund or credit, or sent to a recycling
center.
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Why Is Order Fulfillment Important?
Companies make money by selling goods, products and services to

businesses or direct to consumers. No matter whether you’re B2B or
D2C, the sale is not complete until the sold items are received by that
customer. Order fulfillment is how companies complete the sale and it’s
at the heart of every business.
Order Fulfillment Challenges
Order fulfillment challenges run the gamut from supply shortages and
inventory management issues to failures in demand and logistics
planning to kinks in the supply chain.
Inventory Management
Running out of stock leads to customer dissatisfaction, failures in the

overall customer experience and harm to brand reputation. It is difficult
for companies to repair the damage once it's done. But there are
exceptions: Customers tend to be more forgiving if shortages and delays
are caused by a widespread weather event, a natural disaster or a Black
Swan event.
Demand Planning
On the other hand, keeping too much stock on hand drives up storage and
carrying costs. It also increases your risk since demand for those items
may drop before you get them sold. It's important to carefully predict and
plan for demand levels in order to keep adequate supplies in stock
without ever dipping too low or stocking too much of any given item.
Logistics Planning
Slow or missing deliveries, broken items and battered or wet packaging

are all factors that can harm a company's reputation and future sales, and
in turn its profitability. It is essential then to carefully manage logistics so
shipping doesn't go awry and items aren't damaged. Simply put, customer
satisfaction is greatly affected by logistics, so keep a close eye on end-to-
end — or warehouse to mailbox — performance.
Supply Chain Execution
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Having a supply chain strategy entails evaluating cost versus benefit

tradeoffs in terms of operational choices. For example, a company may
choose a sole supplier for a given product to gain price breaks for the
higher purchase volume. That's also a good strategy to gain priority
status with the vendor, which can make a difference in getting goods on
time during periods of high demand. However, using a sole supplier
model can backfire if anything goes wrong for that vendor — from
employee strikes to natural disasters to their own supply shortages.
Supply chain execution (SCE) is the flow of tasks in the supply chain.
Software applications are used to manage every activity within that
chain. Specifically, material management, tracking the physical status
and movement of the product, tracking data shares and data feeds, and
managing financial information — particularly transactions among all
parties.
SCE typically involves the use of multiple applications, such as order
management, inventory management, warehouse management, transport
management and logistics software.
Order Fulfillment Best Practices
Remember that the efficiencies to be gained in order fulfillment depend

on great organization. Best practices boil down to organize, organize,
organize.
Start with the basics.
Streamline your receiving processes so incoming shipments are

processed quickly and damaged goods returned swiftly to the
manufacturer for replacement. This will go a long way in preventing
back-orders or long wait times for your customers.
Organize your warehouse for more efficient picking times.
Place hot-ticket items upfront and close to human or robot pickers and
packers. Place other items in your warehouse according to demand, with
items least in demand being at the very back.
Organize shipping and logistics.
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This is so you get the fastest possible delivery times to customers at the
least cost. But also plan a shipping backup strategy in case something
goes wrong, or carriers unexpectedly raise rates too high for your
margins.
Automate.
Automating as much as you can saves labor costs, improves working
conditions, and makes operations safer.
How Do You Choose an Order Fulfillment Strategy?
Businesses have several choices when deciding on an order fulfillment

strategy. Depending on the skills and resources available in your
company, you may prefer either internal fulfillment or outsourced
fulfillment.
If you have the means in-house, you gain more control over operations
and costs by handling fulfillment internally. If your company’s in-house
talent and resources are somewhere in the middle, you may want to opt
for a hybrid model to give you some of the benefits of both worlds.
If fulfillment and logistic skills and resources are scarce, you may be
better off outsourcing order fulfillment completely. This allows your
team to focus its efforts on producing and selling the product, and it often
leads to more predictability. With internal fulfillment, you employ the
staff, own the warehouse, and have to make sure every order goes out
perfectly. When you outsource order fulfillment, many of those
challenges are no longer your problem.
To make the right decision for your business, look at the product,
potential fulfillment options, and fulfillment costs. A detailed financial
analysis should guide you to the best solution.
Order Fulfillment Models
Order fulfillment models have been refined over many decades, but the
basics hold true, and that is for very sound business reasons.
What are the types of order fulfillment?

There are four order fulfillment models to choose from: in-house,
outsourcing, drop shipping and hybrid. Each model fills specific business
needs.
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In-house:
The in-house model simply means that all steps in order fulfillment are
performed internally.
Third-party:
This model entails outsourcing all order fulfillment activities to an order

fulfillment vendor or other third-party.
Drop shipping:
The order is produced and shipped by the manufacturer. On the pro side,
this lowers the barrier to entry and minimizes overhead costs, key for
startups and ecommerce companies. It also eliminates the middleman,
which can potentially save the buyer money. On the cons side, it can also
strip control from merchants, particularly in terms of inventory
management and order fulfillment. It can also greatly delay shipments to
customers, since many manufactures are in other countries, far from the
merchant's customer base. In that case, shipping may take more time and
cost more or a distribution center is set up and items ship from there.
Hybrid:
A hybrid model simply means a combination of two or more of the three

models above. For example, a company may choose to handle order
fulfillment of all or just popular products internally, but also choose to
outsource fulfillment during peak periods, such as the holidays, and drop
ship big and bulky items directly from the manufacturer.
7. Tips to Improve Order Fulfillment
Companies managing their own order fulfillment process should plan

ahead for a smooth order process that’s automated where possible. Using
a fully-featured ERP helps you track orders, inventory, and shipments
from end-to-end for enhanced visibility, the best customer and employee
experience, and ideally maximized profits.
Choose the best order fulfillment ERP system:
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Start by choosing a system that offers end-to-end tracking for orders,

inventory, and all other aspects of your business. An ERP like Oracle
NetSuite features helpful modules to help you and your team track the
entire business, including order fulfillment, finances, and human
resources, through one secure, cloud-based system that’s always
accessible.
Integrate with suppliers and vendors:
Modern ERP systems enable you to integrate directly with suppliers and
vendors. For example, your entire restocking and accounts payable
process can tie together and run without extensive human intervention.
Set up your rules, connect with your vendors and suppliers, and your
systems can handle things from there.
Set clear customer expectations:
Most businesses are wise to heed the business adage to “under promise
and over deliver.” Customers are likely willing to work with you and
your expected timeline, particularly in the post-COVID era where delays
are commonplace. Set clear expectations when you receive an order, then
work hard to meet those expectations. If anything looks to be delayed,
communicate the issue as soon as possible so your customer knows what
to expect and isn’t disappointed.
Optimize inventory management:
If you hold too little inventory, you risk running out of stock and coming
up short for a customer order. When you hold too much inventory,
working capital and storage costs may spiral out of control. A quality
inventory management module in your ERP is tremendously helpful for
this task.
Select the right order picking strategy:
When an order comes in, chances are you don’t have a fleet of automated
warehouse robots to pick and package orders. Using your human capital
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effectively is vital to keeping costs down and efficiency up in your order

fulfillment operation. Common order picking strategies include discrete
order picking, where orders are picked one at a time, zone and batch
order picking, where multiple orders are picked at once, and other
strategies intended to limit travel time and increase picking speed.
Treat your shipper as an essential partner:
Organizations like the United States Postal Service, UPS, FedEx and
DHL play a key role in your fulfillment process. Don’t treat your shipper
like any other vendor. Spend the time and effort negotiating the best deal
and delivery schedule for your fulfillment needs, and work proactively
with your shipper to avoid delays.
Prepare for customer service and returns:
As much as you try to leave every customer with a perfect experience,

mistakes, defects, and delays happen from time to time. Whether the
issue was your fault, your customer’s, or a vendor’s, it’s best to be
prepared to make it right.
Improve Order Fulfillment with Order Management Software
When building your order fulfillment process, don’t discount the value of
high-quality order management and fulfillment software. When you use
the right ERP, these systems seamlessly work together, enabling the most
efficient and enjoyable sales process possible.
When you shop online, you may not realize that you’re interacting with a
series of interconnected systems to handle ordering, shipping estimates,
payments, warehouse fulfillment, and delivery. Some companies choose
a hodgepodge approach where they use different tools for each other
these functions while others choose an order management software that
fits into a larger ERP strategy.
NetSuite Order Management is a part of the NetSuite ERP that brings
owners, managers, and fulfillment teams quick access to essential
information as the system tracks every order through your sales and
fulfillment process. Users can securely view and any order, and the
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system handles complex order needs such as split orders and outsourced
drop shipping.
The Order Management module enables ordering, fulfillment, and
returns from anywhere in the world with a single data set and automated
order management process. That’s a big help for any business involved
with order fulfillment.
Whether you’re the exciting beginning stages of a startup or have
decades of order fulfillment experience, it’s never too late to look at your
order fulfillment and management systems with fresh eyes. You could
find opportunities to cut costs while offering an improved customer
experience. That's a win-win for any business, and its valued customers.
3.4.3 Order billing and payment management
Payment is a vital part of eCommerce. With streamlined eCommerce

payment processing, you can deliver a smooth and secure checkout
experience to your customers. This will help you lower your costs,
reduce shopping cart abandonment, and improve the customer
experience. Let’s find out in this article how eCommerce payment
processing works and which the best payment solution providers are.
What Is Ecommerce Payment Processing?
Fig :3.4Ecommerce Payment Processing
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Due to the extensive usage of internet

internet-based shopping and banking,
eCommerce payment processing has grown in popularity. It is the
process of accepting electronic payments for online transactions.
Although each eCommerce business is different, the objective should be
the same: to make the online checkout experience as simple as possible
while still ensuring secure payment transaction
transactions.
There are three elements of eCommerce payment processing, including:
 Payment gateway: an online payment service integrated into

the eCommerce platform through which customers can make payments
for online purchases.
 Payment processor: a company that communicates with and put
money in your merchant account on behalf of customers.
 Merchants accounts: It is the gateway that talks to your bank. The
store’s gateway connects to the merchant account and it charges the
customer’s payment information directly.
Payment Gateway Vs Payment Processor
Fig :5.5Payment
Payment Gateway Vs Payment Processor
There is some misunderstanding about payment gateway and payment

processor. Both two elements attach and run together to help users in
carrying out the payment process. However, they are different and have
specific functions.
Payment Processor
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Payment processors handle the actual money transactions like taking the
customer’s money and crediting you. A payment processor acts as an
intermediary between your store and your merchant account.
Payment processors provide three main functions:
 Transmit the payment data between the customer’s bank and the
merchant’s bank.
 Provide merchants with the physical equipment needed to accept
card-based transactions.
 Help you create a merchant account by yourself or collaborate
with third-party merchant services providers.
To make it easy to understand, I will give you an example. When a

customer buys a shirt from your store, he chooses to pay using his stored
credit card. After the customer fills in his payment information on the
store’s website, the store is actually charging that credit to his account.
The store notifies the merchant’s gateway that the charge was processed.
The merchant’s gateway sends information to the payment processor to
set up the payment in your merchant account. The payment processor
then credits the merchant account, and the merchant now has money that
comes from that stored credit card.
Payment Gateway
A payment gateway is the most common interface between your website

and a payment processor. It is what you use to get customer data from
your website to your payment processor. They are the payment methods
customers see on your website’s checkout page, such as PayPal, Stripes,
Opayo and more.
Payment gateways provide two main functions:
 Take the customer payment data stored on your site and send the
data directly to the payment processor.
 Accept payment information directly from the payment processor
without involving your store’s website.
How Does Ecommerce Payment Processing Work?
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Fig :5.6Ecommerce Payment Processing Work
Step 1: Open payment gateway
Whether customers are buying a present, paying a bill, or making an

online donation, they begin an eCommerce transaction by entering their
credit or debit card details at the checkout.
Step 2: Communicate to the payment processor
The encrypted payment details are sent to the payment processor via the
payment gateway once they click the button to submit the information.
Step 3: Authorized or rejected
The payment processor alerts the card-issuing bank to check the

transaction before deducting the sale amount from that user’s account. If
the bank confirms that the consumer has sufficient funds, the transaction
will be authorized. But if the transaction is rejected because of
insufficient money, relevant parties are notified, including the customer
and payment processor.
Step 4: Notify the successful transaction
Your payment processor then informs the payment gateway of the

authorization or refusal. If the transaction is successful, the merchant’s
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website will receive a notification from the gateway. But at this point,
funds from the transaction haven’t shown up in the merchant account yet.
We need a final step.
Step 5: Credit the account
Within a few days, the money from customers officially appears in your
account. The customer receives a receipt or order confirmation if the
transaction is approved, and the funds are deducted from the client’s
available credit or bank account and deposited into the merchant’s bank
account.
Popular Online Payment Methods
Fig :5.7Popular Online Payment Methods
Now you have understood how eCommerce payment processing works,

let’s take a look at some of the most popular payment methods that may
involve in this process.
Credit Card
Credit card payments are one of the most frequent forms of electronic
payment, which is a little plastic card linked to an account by a series
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number. It also has a magnetic stripe implanted in it that may be read.

When a customer uses a credit card to purchase anything, the credit card
issuer bank pays on the customer’s behalf, and the customer has a
specific amount of time to pay the credit card bill.
Debit Card
A debit card is similar to a credit card, a little plastic card with a unique
number corresponding to the bank account number. The main difference
between a debit card and a credit card is that when you pay with a debit
card, the money is immediately deducted from your bank account, and
you must have enough money in your bank account to complete the
transaction. However, there is no such requirement with a credit card
transaction. A daily limit on the amount that can be withdrawn with a
debit card helps consumers keep track of their expenditures.
Smart Card
In appearance, a smart card is similar to a credit card or a debit card, but

it contains a small microprocessor chip. It has the capability of storing a
customer’s professional and/or personal data. Money is also stored on
smart cards, and the amount is deducted after each transaction. Smart
cards can only be accessed with a PIN that is provided to each customer.
Smart cards are safe since they store information in an encrypted manner
and they are less expensive, and process information faster.
E-Money
E-Money transactions are those in which a payment is made via the

internet and the funds are moved from one financial institution to another
without the use of an intermediary. It helps you to efficiently and easily
conduct online payments link credit cards, debit cards, or smart cards
8 Best Ecommerce Payment Processing Companies

PayPal
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Fig :5.9PayPal
PayPal
Paypal is one of the most well

well-known and well-established
established methods of
online money transfer. It is available in a variety of countries and
supports over 25 different currencies. The Payflow gateway from Paypal
is simple to set up and has no monthly costs. It accepts credit cards, has a
digital wallet, and even offers loans.
Opayo
Fig :5:8 Opayo
Considered as the first

first-ranked
ranked UK payment provider, Opayo (formerly
Sage Pay) is one of the best eCommerce payment solutions that help
merchants to optimize their checkout process, accelerate payment online
processing and secure pa
payment
yment information carefully. Customers can use
any paying card to purchase their items online via Opayo easily.
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It is simple to integrate this payment gateway into your website. With

our Opayo extension,, your eCommerce site will be supported with all
options from Opayo – PI, server, form, direct, and PayPal.
Learn more
Amazon Pay
Fig :5.9 Amazon pay

Amazon Pay is also the best eCommerce gateway for mobile platforms.
With this eCommerce payment solution, merchants can process both
online and offline payments on their smartphones. The transaction is
immediate and can be done without any registration. The eCommerce
payment processing uses a tap
tap-to-pay technology which is a peer-to-peer
approach. To use the Amazon Pay services, you need an Amazon
Payments account. It has provided all the requirements of eCommerce
merchants like billing address, business and its owner
owners’ information.
Stripe
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Fig :5.10Stripe
Stripe works with some of the country’s most well-known B2C, SaaS,
and product companies. There are no monthly fees, but processing fees
are calculated based on the transaction size. They can handle high
transaction volumes and provide good integration and support.
With our Stripe extension, you can easily integrate this payment gateway
into your website. It provides a fast and simple checkout process and
secures online payment with PCI DSS and PSD2 Compliance.
2Checkout
Fig :5.112Checkout
Unlike Stripe, 2Checkout is available in a wide range of countries and is

one of the most cost-effective payment processors available. They offer
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both hosted and in-line

line shopping carts. However, the API is complicated,
making integration with eCommerce platforms difficult.
Square
You can sell online, and offline that is suitable for your busine
business. For in-
person payments, you don’t have to use the physical card; just using the
mobile POS app that helps you to scan QR codes. You can charge with
online invoicing, online store checkout, the virtual terminal. You can
export and send invoices and paym
payment links with the Square POS app.
ChronoPay
This is the best payment processing company if you want to purchase

mainly via bank cards like Visa, JCB, American Express, or any payment
systems such as WebMoney, Qiwi. The special thing about ChronoPay is
thatt its services are free. You only have to pay on a commission basis
after one month.
Payeezy
Fig :5.12 Payeezy

This is one of the oldest payment solutions that has served users in 30
years. It provides simplified eCommerce payment solutions to all
companies in diverse industries such as Commerce, F&B, retail, finances
so more. It accepts various payment methods like credit cards, debit
cards, gift cards, and other prepaid card offerings.
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Considerations When Choosing Ecommerce Payment Processing

Solutions
Fig :2.13Payment Card Industry (PCI)
The Payment Card Industry (PCI) is a non-profit global standards group

dedicated to encouraging credit card acceptance and promoting trust in
commerce. The PCI is the governing organization in charge of payment
card data security. They are in charge of determining the amount of
protection that a merchant requires. It is usually advisable for shops to
purchase or build a PCI-compliant credit card form. Payment card
providers have specific criteria for how you should handle your clients’
credit card information. This is not only plain sense, but it is also a best
practice in the industry.
Tokens for sensitive payment information should be created
Some payment processors do not use the customer’s credit card

information. They utilize a “card hash” that is not the same as the
customer’s credit card number. The payment card industry (PCI) handles
card information with care, and using card information safely
necessitates at least “tokenization.” When the payment processor only
looks at a number, this is known as tokenization. As a result, the
merchant is unaware of the customer’s credit card number, and the
payment processor is unaware of the customer’s credit card information.
The payment methods
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It’s crucial to accept credit cards, EFT, or the merchant’s own CC

mechanism as a payment method for processing. You may be able to take
less than the entire CC procedure since the retailer does not charge a
processing fee. Processing using a debit card is often less expensive than
processing with a credit card. Processing, however, is never without risk,
as we have seen with fraudulent charge-backs from credit card
companies and protection from huge charge-backs going through.
Fees
The types of fees vary depending on the provider you use. There are
three fees you have to charge when using an e-Commerce payment
solution, such as: set up fees, transaction fees and monthly fees. Some
providers will require a membership fee.
When looking into service providers, you must define your budget and
expect sales revenue. This can help you to find out the most suitable e-
Commerce payment service providers, and avoid over budget and save
your money in the long run.
3.5 BUSINESS TO BUSINESS E-COMMERCE
For many entrepreneurs, selling to consumers is their objective. You

develop products that you offer to your consuming customers. However,
this is not the only way to operate your business. The B2B business
model is where businesses sell to other businesses or simply called
business to business. It is a situation where a business offers its products
to another business instead of selling them directly to the consumers.
Here, businesses make products destined for use by other businesses.
You sell what you make to another business that can either use it to
generate other products or sell the same product to the final consumers.
So, this model does not involve transactions between a business and
consumers.
How Does B2B Work?
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Typically, B2B business involves transactions between one

company/business to another business. Your company makes products or
services for consumption in another company. For instance, your
company can be a supplier of raw materials to company B which
produces a given product. Or else, you might be selling products to
wholesalers and retailers in bulk for them to sell them to the consumers.
In this model, your targets are other businesses and not consumers. This
means that you must reach out to other businesses and offer convincing
reasons to consider your goods or services. Say, for example, you offer
business solutions. You need to convince the business owners or decision
makers why and how your solutions will enhance their operations.
In most cases, the B2B model involves the use of proposals and
procurement. Businesses require suppliers and solution providers for
proposals. The engagement is also on a long-term basis rather than a
single purchase.
Example of B2B Business
The B2B business model applies in every stage of the supply chain
or value chain. When a manufacturer orders raw materials to make a
product from another company, this relationship involves two businesses.
Also, when you source products from a wholesaler or supplier to sell in
your retail store, you are applying the B2B model. So, there are many
examples of businesses applying this concept in their operations.
Apple is a good example of a company using the B2B concept. As you
know, Apple is a renowned high-edge smartphone. In developing their
iPhone's, Apple sources chips from Samsung. Without Samsung, Apple
would have challenges in manufacturing its iPhone's. Also, Apple has
other B2B connections with companies providing semiconductors and
other materials for making smartphones, such as Micron Technology and
Intel.
Pros and Cons of B2B Business Model
The B2B model allows many businesses to operate and succeed in both
physical and virtual arenas. However, it is not perfect and has both pros
and cons. Here they are:
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Pros
Long-Term Engagement Leading to Customer Loyalty
The B2B model operates on long-term engagement. Both businesses

agree to supply raw materials or products/solutions for a given duration.
This aspect enhances customer loyalty as the two have a mutual
agreement. As the supplier, you have consistent sales as long as you
retain the quality and dependability of your product and services. This
aspect is hard to achieve in other models.
Easy to Predict Revenue
Since you have a long-term engagement, you can easily predict your
revenue. You can determine with certainty the amount of revenue you’ll
generate in a given period. With this, you can easily make conscious
decisions and business plans. So, this model makes your business more
secure as you will have customers for your products at any given time.
Short Selling Cycle
No doubt, selling to consumers can be a long process. The process

involves a number of intermediaries. When you consider selling to
consumers directly, you need a lot of time to clear your inventory. As
you know, the longer the selling cycle or duration, the more expensive it
becomes. You need to invest a huge amount in promoting your products
and service when dealing with final consumers.
Unlike the business-to-consumer approach, the B2B model comes with a
short-selling cycle. You sell your products or service to specific
customers. You do not need to spend a lot of time and money on
marketing what you are offering. So, the short-selling cycle saves you
money and time.
Cons
Limited Customer Pool
By concentrating on businesses as your customers, you reduce your pool.

Having a small customer pool can affect your sales and expectations. The
small target poses a lot of challenges to beginners in securing their first
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customers. For this reason, many B2B businesses do not last for long due
to the hardship of driving sales.
Long Decision-Making Period
Unlike selling to customers, dealing with businesses is a complex affair.

Businesses have long decision-making processes that involve several
parties. First, you need to send a proposal. The business can take several
weeks or months to respond to your proposal and accept the deal. This
approach can hurt your expectations, especially when patience is not
your virtue.
Key technologies
Most B2B companies have an online presence. However, having a

website with a shopping cart is just the beginning.
To deliver a seamless B2B e-commerce experience to your customers
while lowering cost, you need to leverage different technologies so you
can improve customer experience and increase sales:
Here are 8 must-have technologies to help you boost sales, lower cost,
and increase customer happiness:
1. Robust B2B e-Commerce Platform
It may seem obvious that you need an e-commerce platform but the
operative word here is "robust."
Your e-commerce website has to handle more than transactions. It also
needs to be mobile optimized, scalable, and PCI compliant.
If you offer a large number of SKUs, a well-designed search feature will
help your customers find what they need quickly and easily.
In addition, your customers should be able to manage their accounts
online, set up recurring orders, make a purchase based on order history,
access account-based pricing, and set up role-based access or quota.
Your platform should also allow you to offer different payment options
(e.g. credit card, bank transfer, extended credit, etc.) and integrate with a
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variety of customer touch points to offer a 360-degree customer

experience.
2. Real-Time Integration with Enterprise Resource Planning (ERP)

Software
You probably already use an ERP software to manage your supply chain,
finance, accounting, distribution, inventory planning, pricing, and more.
By integrating your B2B e-Commerce platform -- which often double-
duties as your customer relationship management (CRM) tool -- with
your ERP, you can use the combined data to automate common business
processes, increase data accuracy, and get greater insight into your
customer base.
The key areas to consider for integration include contact and account
integration, product integration, order and quote management, as well as
order, product, and invoice repository.
3. Omnichannel Personalization
You can increase customer satisfaction and loyalty by delivering

a customized shopping experience on your B2B e-commerce platform.
Not only can you use information from the customer profiles on your e-
commerce platform to tailor product recommendations (e.g. upsell and
cross-sell), provide targeted content, and offer account-specific pricing
but you can also gather customer information from multiple channels to
deliver an exceptional customer-centric experience.
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Fig :3.14 Omnichannel Personalization

4. Third--Party Logistics Integration
When you're handling the shipping and delivery of a large number of

orders, integrating your order processing system with third party logistics
providers such as FedEx or USP can help you improve cost
cost-efficiency
while reducing errors.
A well-orchestrated
orchestrated e-commerce logistics integration allows you to:
 Coordinate customer orders and fulfillment centers for faster

delivery
 Integrate the shopping cart function with your transportation
management system for accurate shipping quote
 Provide real
real-time
time shipment tracking to your customers within
your e-commerce platform for a branded user experience
 Reduce paperwork with online dispatch documentation and
billing
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 Integrate with other back-office software, such as your ERP, to

streamline process
 Leverage data analysis, deliver history etc. to further improve
efficiency
5. E-Commerce Syndication
e-commerce syndication is a way to distribute product content, such as

images, specifications or feature descriptions, through dealers and
resellers to help increase the awareness towards your brand and products.
This strategy will help you increase your online presence while
maintaining control of your brand.
In addition, you can use syndication as a way to boost SEO and increase
organic traffic to your website.
6. Dealer Locator or Dealer Portal
Many B2B distributors sell their products through a network of dealers.

You can strengthen your relationships with your dealers by helping their
customers find them.
This will not only avoid direct competition with your dealers but also
create a win-win situation: when your customers sell more to their
customers, everyone across the channel prospers.
There are different ways you can support your dealers, such as
incorporating a dealer locator on your website or creating co-branded
dealer portals that appear perfectly seamless to the end user.
7. Sales Reps Dashboard
Many B2B companies work with long-term customers who make high-
volume and high-value purchases.
While your e-commerce website can handle day-to-day transactions,
such relationships often require 1:1 interactions between your sales team
and buyers to ensure that you're meeting your customers' needs and
servicing them in the best way possible.
To create a seamless online-offline customer experience, you need a
customer relationship management software that integrates with your e-
commerce platform so your sales reps can access customer information --
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such as purchase history, order status, account-specific pricing etc. -- in

real-time to inform their conversations.
8. Punch-out Catalogs
Punchout catalog allows B2B buyers to order from a supplier's website

within their enterprise e-procurement system.
This mechanism enables you to integrate your e-commerce and
fulfillment systems with your customers' procurement system to
streamline the ordering process, reduce the amount of paperwork, lower
transaction cost, improve customer communication, increase customer
loyalty, and get paid faster.

1. Give examples of B2B business.
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2. Explain the pros and cons of B2B model
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3.6 NEED AND ALTERNATIVE MODELS OF B2B E-

COMMERCE
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Indeed, as businesses, consumers, and governments head online

(especially given the current COVID-19 climate) for delivery of products
and services, eCommerce is only going to gain increased relevance.
Therefore, it's worth considering how you might position your business
within this context. The good news is that, with more than a decade of
explosive growth behind it, eCommerce has steadily matured into a well-
developed economic activity, which means there are established business
models on which to base your organization.
To illustrate this further, we've taken a look at some of the more
prominent eCommerce models that you might want to follow.
The Major Business Models in eCommerce
Electronic commerce involves the transaction of goods on any form of

online platform or marketplace where buyers and sellers are present. The
commodity exchanged may be a product or a service, but it has to take
place indirectly, online.
As a result, eCommerce business models are classified based on the type
of actors involved in the transaction. They can be individual consumers,
other businesses, or even governments in some instances and, based on
these various possible combinations, are generally grouped into the
following categories:
 Business to Consumer (B2C)

 Business to Business (B2B)
 Consumer to Consumer (C2C)
 Consumer to Business (C2B)
 Business/Consumer to Government (B2G, C2G)
Of these, the first three are traditional forms of commerce that predate
the arrival of the internet. C2B, as we will explain in detail, was made
possible by the rise of online technologies and how they have
subsequently impacted traditional business-consumer relations.
Let's explore these concepts in more detail:
1. Business to Consumer eCommerce (B2C)

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B2C is what most people think about when they hear the term
'eCommerce'. It is also the most common and most developed business
model in this sphere; B2C is where companies of all sizes sell products
and services to individual consumers.
Amazon, eBay, and Walmart are all examples of online marketplaces
where millions of B2C transactions take place daily. Online retail is the
biggest subsector, with other services such as travel, media, and food
delivery also increasing in popularity and sales volume across the world.
The Advantages of B2C
This model has numerous advantages for both consumers and businesses.
Individuals can often find cheaper deals on products online (since
eCommerce organisations have lower overhead costs), while businesses
have an unprecedented reach to new markets, suggesting faster growth
potential.
The Disadvantages of B2C
Online retail requires well-developed infrastructure (such as warehousing

and transportation) for growth. As it is perceived as a threat to traditional
offline businesses, online businesses and marketplaces are often targeted
by governments with increased regulations. It is also harder for
businesses to earn the trust of consumers; this may require deep
discounts and other unsustainable marketing tactics.
2. Business to Business eCommerce (B2B)
B2C may be more visible and widespread, but the most significant model
in terms of volume involves businesses as both the buyer and seller. The
involved companies are usually either manufacturers, wholesalers or
retailers.
B2B is bigger than B2C because of one simple reason: end consumers
get the final product in B2C, involving just one transaction. But the
manufacture of that final product consists of the sale of raw materials,
components, and parts involving multiple supply chains. Since this
means many transactions are taking place, B2B eCommerce is worth
trillions of dollars globally.
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Online marketplaces such as Alibaba, Amazon, and Lazada all have

significant B2B segments, but these usually involve smaller and
medium-sized businesses. Larger corporations can usually attract
vendors and buyers directly at their own online addresses.
The Advantage of B2B
This model shares many of the same advantages as the B2C model, such
as the ability to connect to buyers and sellers around the world. Improved
efficiency and lower overhead costs are also possible due to better
management of supply chains. Since everything is online, businesses get
faster access to data that can be analysed for improved insights and
forecasts, too.
The Disadvantages of B2B
Trust is essential in any B2B deal. Due diligence requires time, as

businesses have to be cautious when dealing with a new vendor. This can
result in delays, especially when compared to B2C transactions. Sellers
and vendors have less power, too, as the wide-open market has given
buyers more leeway in demanding discounts or customisations.
3. Consumer to Consumer eCommerce (C2C)
Also known as peer-to-peer (P2P), a C2C marketplace involves

individuals and small businesses dealing directly with each other.
Craigslist, eBay, and even Amazon allow C2C transactions, with online
auctions a good example of C2C eCommerce in action. Many
entrepreneurs post their handicrafts and artwork on sites such as Etsy,
too, with some crossover in the B2C model.
Social media platforms such as Facebook have also started online
marketplaces where users can sell products and services. This indicates
that the C2C market has significant potential, even if it is still far behind
the other two models.
The Advantages of C2C
C2C encourages economic activity and can provide creative and

enterprising individuals with a place to generate income. Handmade
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artisanal items and organic produce have a growing demand in the

market and C2C can cater to this effectively. The sale of used or second-
hand products – as is usually the case on Facebook Buy & Sell groups –
can also reduce waste.
The Disadvantages of C2C
Quality assurance is a significant issue, as most C2C marketplaces

cannot enforce standards or verify the products that are being sold.
Consumers who are buyers can often get duped, which harms the
reputation of the model as a whole.
4. Consumer to Business Ecommerce (C2B)
C2B is a model that inverts the traditional paradigm of organisations

selling products or services to the individual. Emerging technologies
have not only helped businesses in this regard but have also given more
power and influence to consumers. For instance, a social media
influencer with millions of followers can drastically alter the fortunes of
an established brand with just a single post.
C2B models usually involve marketing in the modern context, with
social media influencers and affiliate marketers prime examples.
Freelancing through communities such as Upwork is also another
example, as the gig economy finds more takers at the enterprise level.
The Advantages of C2B
For businesses, buying certain services or products from individuals is

cheaper than getting the same thing from other traditional sources. For
example, freelance services are cheaper than paying for staff positions.
Individuals get new sources of income and revenue from this model, as
well.
The Disadvantages of C2B
C2B is still an evolving business model with many unknowns and

uncertainties; many businesses are still getting to terms with the
disruption caused by the digital economy. Therefore, it remains to be
seen whether or not it is a sustainable and efficient model in the long
term.
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5. Governments in eCommerce (B2G)
This is a smaller niche segment that, at times, does not fall within the
strict definitions of commercial activity. However, many businesses and
individuals deal with government departments, agencies, and other
entities and, often, these online transactions involve the exchange of
money.
Indeed, some businesses may deal only with governments, acting as
contractors that provide certain components or services. Defence, energy,
and healthcare are all sectors where B2G businesses have a lot of
legroom for growth.
Many of these B2G transactions have also migrated online, thereby
coming under the ambit of eCommerce. Government websites are often
the platform where contracts are initiated, and transactions made.
The Advantages of B2G
Governments are usually reliable buyers and clients. Businesses who

build working relationships with governments or government agencies
often have a lot of stability.
The Disadvantages of B2G
B2G is still in its infancy, as many governments are still upgrading their
online capabilities. Getting contracts can be difficult, as traditional
informal networks still exist. Though going digital encourages
transparency, corruption is still possible, too.
3.7 LET US SUM UP
1. Business-to-consumer refers to the process of businesses selling

products and services directly to consumers, with no middle person.B2C
typically refers to online retailers who sell products and services to
consumers through the internet.Online B2C became a threat to traditional
retailers, who profited from adding a markup to the price.However,
companies like Amazon, eBay, and Priceline have thrived, ultimately
becoming industry disruptors.
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2. There are several key differences between B2B and B2C,

including end users, product pricing and presentation, and customer
segmentation and distribution. The two models also have certain pros and
cons in terms of operational costs, revenue potential, sales cycles, and
business administration.
3. A hybrid business model uses both B2B and B2C business
models. This business model has the advantage of being able to reach a
wider range of customers. By using both B2B and B2C models,
businesses can target both businesses and consumers, which can help to
increase sales and revenue.
4. Externally, order management has a direct impact on how a
customer perceives a business or brand. In an omnichannel environment,
customers expect a seamless experience. A customer may order online
but have questions and complete the order through a call center. As the
order is being fulfilled, the customer expects to see updates like emails
along the way. If there is a problem, they may wish to return it through a
physical channel, such as a store. Each point in the journey presents an
opportunity to provide a great customer experience and boost retention
and revenue. The omnichannel journey also presents opportunities to
make up-sell and cross-sell recommendations and grow revenue.
3.8 KEY WORDS
1. Payment Gateway: A payment gateway is a technology used by

merchants to accept debit or credit card purchases from customers. The
term includes not only the physical card-reading devices found in brick-
and-mortar retail stores but also the payment processing portals found in
online stores.
2. Order priortization: In simple terms, prioritization is a process that
means evaluating a group of things and placing them in the order of
either urgency or importance. It is necessary to address those tasks first
that are urgent, and it is only possible if you have prioritized your list
beforehand.
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3. Shipper: A shipper (also known as a consignor) is a person or a

company responsible for organising and transporting goods from one
point to another. Generally, the shipper bears the cost of freight, except
otherwise stated in the transport contract before shipment.
4. Inventory management: Inventory management refers to the process
of ordering, storing and using a company's inventory. This includes the
management of raw materials, components and finished products, as well
as warehousing and processing such items.
5. Drop shipping: Drop shipping is a retail business model; however, it
differs from traditional models in that the owner only purchases product
from a vendor when an order has been placed by a customer.
6. Payment processor: A payment processor is a system that allows for
transactions to happen between merchants and consumer banks. As the
name implies, it processes credit and debit card payments based on the
requests it receives through the gateway.
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3.9 ANSWER TO CHECK YOUR PROGRESS
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1. Refer 3.for Answer to check your progress- 1 Q. 1 …
Answer1: Market-Oriented Pricing Method- Under this category, the is

determined on the base of market research
Perceived-Value Pricing- In this method, the producer establish the cost
taking into consideration the customer’s approach towards the goods and
services, including other elements such as product quality, advertisement,
promotion, distribution, etc. that impacts the customer’s point of view.
Value pricing- Here, the company produces a product that is high in
quality but low in price.
Going-Rate Pricing- In this method, the company reviews the
competitor’s rate as a foundation in deciding the rate of their product.
Usually, the cost of the product will be more or less the same as the
competitors.
Auction Type Pricing- With more usage of internet, this contemporary
pricing method is blooming day by day. Many online platforms like
OLX, Quickr, eBay, etc. use online sites to buy and sell the product to
the customer.
Differential Pricing- This method is applied when the pricing has to be
different for different groups or customers. Here, the pricing might differ
according to the region, area, product, time etc.
Answer2: Survival- The objective of pricing for any company is to fix a

price that is reasonable for the consumers and also for the producer to
survive in the market. Every company is in danger of getting ruled out
from the market because of rigorous competition, change in customer’s
preferences and taste. Therefore, while determining the cost of a product
all the variables and fixed cost should be taken into consideration. Once
the survival phase is over the company can strive for extra profits.
Expansion of current profits-Most of the company tries to enlarge their
profit margin by evaluating the demand and supply of services and goods
in the market. So the pricing is fixed according to the product’s demand
and the substitute for that product. If the demand is high, the price will
also be high.
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Ruling the market- Firm’s impose low figure for the goods and services
to get hold of large market size. The technique helps to increase the sale
by increasing the demand and leading to low production cost.
A market for an innovative idea- Here, the company charge a high price
for their product and services that are highly innovative and use cutting-
edge technology. The price is high because of high production cost.
Mobile phone, electronic gadgets are a few examples.
Answer3: Cost Oriented Pricing Method– It is the base for evaluating

the price of the finished goods, and most of the company apply this
method to calculate the cost of the product. This method is divided
further into the following ways.
Cost-Plus Pricing- In this pricing, the manufacturer calculates the cost of
production sustained and includes a fixed percentage (also known as
mark up) to obtain the selling price. The mark up of profit is evaluated on
the total cost (fixed and variable cost).
Markup Pricing- Here, the fixed number or a percentage of the total cost
of a product is added to the product’s end price to get the selling price of
a product.
Target-Returning Pricing- The company or a firm fix the cost of the
product to achieve the Rate of Return on Investment.

Answer4: Example of B2B Business
The B2B business model applies in every stage of the supply chain
or value chain. When a manufacturer orders raw materials to make a
product from another company, this relationship involves two businesses.
Also, when you source products from a wholesaler or supplier to sell in
your retail store, you are applying the B2B model. So, there are many
examples of businesses applying this concept in their operations.
Apple is a good example of a company using the B2B concept. As you
know, Apple is a renowned high-edge smartphone. In developing their
iPhone's, Apple sources chips from Samsung. Without Samsung, Apple
would have challenges in manufacturing its iPhone's. Also, Apple has
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other B2B connections with companies providing semiconductors and

other materials for making smartphones, such as Micron Technology and
Intel.

Answer5: Pros and Cons of B2B Business Model
The B2B model allows many businesses to operate and succeed in both
physical and virtual arenas. However, it is not perfect and has both pros
and cons. Here they are:
Pros
Long-Term Engagement Leading to Customer Loyalty
The B2B model operates on long-term engagement. Both businesses
agree to supply raw materials or products/solutions for a given duration.
This aspect enhances customer loyalty as the two have a mutual
agreement. As the supplier, you have consistent sales as long as you
retain the quality and dependability of your product and services. This
aspect is hard to achieve in other models.
Easy to Predict Revenue
Since you have a long-term engagement, you can easily predict your
revenue. You can determine with certainty the amount of revenue you’ll
generate in a given period. With this, you can easily make conscious
decisions and business plans. So, this model makes your business more
secure as you will have customers for your products at any given time.
Short Selling Cycle
No doubt, selling to consumers can be a long process. The process
involves a number of intermediaries. When you consider selling to
consumers directly, you need a lot of time to clear your inventory. As
you know, the longer the selling cycle or duration, the more expensive it
becomes. You need to invest a huge amount in promoting your products
and service when dealing with final consumers.
Unlike the business-to-consumer approach, the B2B model comes with a
short-selling cycle. You sell your products or service to specific
customers. You do not need to spend a lot of time and money on
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marketing what you are offering. So, the short-selling cycle saves you
money and time.
Cons
Limited Customer Pool
By concentrating on businesses as your customers, you reduce your pool.
Having a small customer pool can affect your sales and expectations. The
small target poses a lot of challenges to beginners in securing their first
customers. For this reason, many B2B businesses do not last for long due
to the hardship of driving sales.
Long Decision-Making Period
Unlike selling to customers, dealing with businesses is a complex affair.
Businesses have long decision-making processes that involve several
parties. First, you need to send a proposal. The business can take several
weeks or months to respond to your proposal and accept the deal. This
approach can hurt your expectations, especially when patience is not
your virtue.
3.11 TERMINAL QUESTIONS
1. State five popular types of B2C ecommerce businesses

2. How can B2C ecommerce benefit you over a traditional store?
3. Define Challenges for product catalog management in e-commerce
4. How Does B2B Work? Explain with the help of Example of B2B
Business
5. What is E-commerce payment processing?
6. List down all the essential Pros and Cons of B2B Business Model
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UNIT – 4 SECURITIES ISSUES IN E-

COMMERCE
STRUCTURE
4.0 Objectives
4.1 Introduction
4.2 Security risks of e-commerce
4.2.1 Exposure of resources
4.2.2 Types of threats
4.2.3 Sources of threats
4.3 Security tools and risk management approach
4.4 E-commerce security and a rational security policy for e- commerce
4.5 Corporate Digital Library
4.6 I. T Act 2000
4.6.1 Regulatory and Legal Framework of E-commerce
4.7 Let Us Sum Up
4.8 Key Words
4.0 OBJECTIVES
 Describe thesecurity issues in e-commerce

 Identify the scope of risk management
 State the need and significance of legal framework of e-
commerce
 List the essential features of IT Act 2000
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4.1 INTRODUCTION
eCommerce security is the guideline that ensures safe transactions

through the internet. It consists of protocols that safeguard people who
engage in online selling and buying goods and services. You need to gain
your customers’ trust by putting in place eCommerce security basics.
Such basics include:
 Privacy
 Integrity
 Authentication
 Non-repudiation
1. Privacy
Privacy includes preventing any activity that will lead to the sharing of
customers’ data with unauthorized third parties. Apart from the online
seller that a customer has chosen, no one else should access their
personal information and account details.
A breach of confidentiality occurs when sellers let others have access to
such information. An online business should put in place at least a
necessary minimum of anti-virus, firewall, encryption, and other data
protection. It will go a long way in protecting credit card and bank details
of clients.
2. Integrity
Integrity is another crucial concept of eCommerce Security. It means
ensuring that any information that customers have shared online remains
unaltered. The principle states that the online business is utilizing the
customers’ information as given, without changing anything. Altering
any part of the data causes the buyer to lose confidence in the security
and integrity of the online enterprise.
3. Authentication
The principle of authentication in eCommerce security requires that both
the seller and the buyer should be real. They should be who they say they
are. The business should prove that it is real, deals with genuine items or
services, and delivers what it promises. The clients should also give their
proof of identity to make the seller feel secure about the online
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transactions. It is possible to ensure authentication and identification. If

you are unable to do so, hiring an expert will help a lot. Among the
standard solutions include client login information and credit card PINs.
4. Non-repudiation
Repudiation means denial. Therefore, non-repudiation is a legal principle
that instructs players not to deny their actions in a transaction. The
business and the buyer should follow through on the transaction part that
they initiated. eCommerce can feel less safe since it occurs in cyberspace
with no live video. Non-repudiation gives eCommerce security another
layer. It confirms that the communication that occurred between the two
players indeed reached the recipients. Therefore, a party in that particular
transaction cannot deny a signature, email, or purchase.
Why you can’t afford to overlook eCommerce security?
While growth in eCommerce has improved online transactions, it has
attracted the attention of the bad players in equal measures. eCommerce
cybercrime reports reveal that the industry is among the most vulnerable
ones when it comes to cybercrimes.
The eCommerce world experiences about 32.4% of all attacks. 50% of
small eCommerce store owners are lamenting that the attacks are
becoming severe. Furthermore, the reports show that 29% of traffic
accessing a website consists of malicious requests.
Such attacks have contributed to significant losses in financials, market
shares, and reputation. Almost 60% of small eCommerce stores that
experience cybercrimes don’t survive more than six months.
Therefore, it is very crucial to put in place water-tight security measures
and hire a robust team. It will ensure you run your business without
worrying about closing down due to cybercriminals.
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4.2 SECURITY RISKS OF E-COMMERCE
Common Ecommerce Security Issues

1. Lack of trust in the privacy and eCommerce security
Businesses that run eCommerce operations experience several security
risks, such as:
Counterfeit sites– hackers can easily create fake versions of legitimate
websites without incurring any costs. Therefore, the affected company
may suffer severe damage to its reputations and valuations.
Malicious alterations to websites– some fraudsters change the content of
a website. Their goal is usually to either divert traffic to a competing
website or destroy the affected company’s reputation.
Theft of clients’ data– The eCommerce industry is full of cases where
criminals have stolen the information about inventory data, personal
information of customers, such as addresses and credit card details.
Damages to networks of computers– attackers may damage a company’s
online store using worm or viruses attacks.
Denial of service– some hackers prevent legit users from using the online
store, causing a reduction in its functioning.
Fraudulent access to sensitive data– attackers can get intellectual
property and steal, destroy, or change it to suit their malicious goals.
2. Malware, viruses, and online frauds
these issues cause losses in finances, market shares, and reputations.
Additionally, the clients may open criminal charges against the company.
Hackers can use worms, viruses, Trojan horses, and other malicious
programs to infect computers and computers in many different ways.
Worms and viruses invade the systems, multiply, and spread. Some
hackers may hide Trojan horses in fake software, and start infections
once the users download the software. These fraudulent programs may:
hijack the systems of computers
erase all data
block data access
forward malicious links to clients and other computers in the network.
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3. Uncertainty and complexity in online transactions

Online buyers face uncertainty and complexity during critical transaction
activities. Such activities include payment, dispute resolution, and
delivery. During those points, they are likely to fall into the hands of
fraudsters.
Businesses have improved their transparency levels, such as clearly
stating the point of contact when a problem occurs. However, such
measures often fail to disclose fully the collection and usage of personal
data.
4.2.1 Exposure of resources
With the development of Internet is still on the fast track even after the
.COM bubble burst, more and more companies, enterprises especially
small and medium size companies came to realize the opportunity that
electronic commerce can brought to them. Therefore, they are trying to
catch up with those forth goes in this area. In the meantime, quite a lot of
companies that are in the leading position of e-commerce implementation
are caring more on how to strategically avoid, reduce and manage the
potential risks behind the e-commerce stage. Here this paper narrates;
what is a risk in case of e-commerce? How it is defined as a function by
security business professionals? What is the impact on the systems
because of various security threats and vulnerabilities with real time
examples and scenarios?
In early days of using computer systems, most of the systems are
standalone and the security was accomplished by the physical controls
over the access to the computers. Burglar alarms, alarmed doors, security
guards, security badges, cameras allowed the people to the most secured
and sensitive areas.
The interaction with the systems at that time is very less and it’s confined
to very limited numbers i.e. to enter the data, manipulate it. The network
of the systems is also confined to limited number of terminals and the
security of it is in the hands of a limited persons. But now the condition
has changed extra-ordinarily that millions of people around the globe are
able to access to the network at a single moment of time effectively.
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So as the information from one place is being accessed by someone in

another place over the computer networks, the security issue arises. Lots
and lots of sensitive information are being accessed over the both private
and public networks. So along with the fast growing technology the
security threats are also increasing day to day.
4.2.2 Types of threats
The danger of e-commerce comes from using the internet for unfair
purposes in order to steal money and the infringement of protection. E-
commerce risks of different kinds occur. Many of them are accidental,
some of them attributable to human errors. Electronic payments, e-cash,
data misuse, credit/debit card fraud, etc., are the most common security
threats.
Electronic Payments System
Electronic commerce has become an integral part of human life through

the exponential growth of computer, mobile, and network technology.
The consumer can order items in e-commerce at home and save time. A
store or store doesn’t have to be visited. In a very short period, the
consumer can pick multiple stores on the internet and compare products
with different features, such as price, color, and quality. E-Commerce
plays a key role in electronic payment systems.
Electronic payment systems refer to paperless currency transactions that
e-commerce organizations use. By documentation, transaction costs, and
labor costs, the company distribution was revolutionized. The operation
of e-commerce is user friendly and time-consuming rather than manual.
The e-commerce company allows an enterprise to grow its market. The
electronic payments system poses a certain risk.
Types of Threats to E-Commerce
Given below are the types of threats to e-commerce:
1. Automated Teller Machine
The fraudster will steal our information from this favorite location.
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Given below are some of the main methods criminals use to collect our
card data:
 Phishing / Vishing: Phishing is an intruder’s operation where a

user has gathered confidential information such as password,
usernames, and card numbers, mostly for malicious reasons etc.
Vishing is an operation where an attacker has received sensitive
user information through mobile text messages. These SMS and
calls seem to be from a trusted source, but they’re fake, in fact.
The primary aim of the procedure is to include the PIN, account
information, and passwords of the customer.
 Skimming: The method is to connect an ATM card reader with a
data skimming tool. The information is copied from the magnetic
strip to the computer when the customer swipes his card in the
ATM card reader. The specifics of the card number, name,
number, CVV, expiry of the card, and other information are
therefore made available to offenders.
 Online Transaction: The customer may make an online
purchase to shop for payment on the internet. The customer
always easily hacks into our network and steals our private
information. It’s as easy as the customer. Some important ways in
which our privacy information is processed during an online
transaction.
2. The Risk of Fraud
The risk of fraud is huge in an electronic payment system. Electronic

devices use a person’s identity to approve a payment. For example,
passwords and security issues. Such authentications do not have
complete proof of a person’s identity. The program does not know who is
on the other side of the password, and the security answers are matched.
When anyone has access to our password or answers to our security
issue, they will get access to and steal our money from us.
3. The Risk of Payment Conflicts
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An automated computer machine handles payments in electronic

payment systems, not by individuals. When it manages large sums of
payments regularly with many clients, the program is vulnerable to
errors. When each pay period ends, it is important to review our payroll
to ensure everything is meaningful regularly regularly. When this is not
accomplished, payment disputes may result in technological breakdowns
and anomalies.
4. The Risk of Tax Evasion
Internal Revenue Service legislation requires every corporation to

disclose its financial transactions and to provide documents to ensure tax
compliance. Electronic systems are troublesome because they don’t offer
this paradigm clean. This is quite difficult for the Internal Revenue
Service to raise revenue. Payments obtained or made via electronic
payment systems are available to the company. The IRS does not know
whether or not it tells the truth that tax evasion is easy.
5. Denial of Service Attacks
A denial of service attack is a security intrusion that prevents attackers

from accessing the electronic device by legit (correct) users. It disrupts
the infrastructure of a host connecting to the Internet to network tools
that are not accessible for its intended users.
6. Eavesdropping
This is an illegal way to listen to private network contact. It does not

interfere with the normal operations of the targeting program so that the
sender and the receiver do not know that their communication is being
monitored.
4.2.3 Sources of threats
1. Financial frauds
Ever since the first online businesses entered the world of the internet,
financial fraudsters have been giving businesses a headache. There are
various kinds of financial frauds prevalent in the e-commerce industry,
but we are going to discuss the two most common of them.
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a. Credit Card Fraud
It happens when a cybercriminal uses stolen credit card data to buy

products on your e-commerce store. Usually, in such cases, the shipping
and billing addresses vary. You can detect and curb such activities on
your store by installing an AVS – Address Verification System.
Another form of credit card fraud is when the fraudster steals your
personal details and identity to enable them to get a new credit card.
b. Fake Return & Refund Fraud
The bad players perform unauthorized transactions and clear the trail,
causing businesses great losses. Some hackers also engage in refund
frauds, where they file fake requests for returns.
2. Phishing
Several e-commerce shops have received reports of their customers

receiving messages or emails from hackers masquerading to be the
legitimate store owners. Such fraudsters present fake copies of your
website pages or another reputable website to trick the users into
believing them. For example, see this image below. A seemingly harmless
and authentic email from PayPal asking to provide details.
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Fig :4.1 paypal

The EITest of 2017 is another good example of such malicious
campaigns. If the clients fall into the trap and give them their sensitive
personal information like login credentials, the hackers swiftly go ahead
and con them.
3. Spamming
Some bad players can send infected links via email or social media
inboxes. They can also leave these links in their comments or messages
on blog posts and contact forms. Once you click on such links, they will
direct you to their spam websites, where you may end up being a victim.
Mass-mailed malware infection can quickly morph into a much more
serious problem
says Brian Krebs, data security expert.
Apart from lowering your website security, spamming also reduces its
speed and severely affects performance.
4. DoS & DDoS Attacks
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Many e-commerce websites have incurred losses due to disruptions in

their website and overall sales because of DDoS (Distributed Denial of
Service) attacks. What happens is that your servers receive a deluge of
requests from many untraceable IP addresses causing it to crash and
making unavailable to your store visitors.
Fig :4.2 DoS & DDoS Attacks
5. Malware
Hackers may design a malicious software and install on your IT and

computer systems without your knowledge. These malicious programs
include spyware, viruses, trojan, and ransomware.
The systems of your customers, admins, and other users might have
Trojan Horses downloaded on them. These programs can easily swipe any
sensitive data that might be present on the infected systems and may also
infect your website.
6. Exploitation of Known Vulnerabilities
Attackers are on the lookout for certain vulnerabilities that might be

existing in your e-commerce store.
Often an e-commerce store is vulnerable to SQL injection (SQLi) and
Cross-site Scripting (XSS).
Let’s take a quick look at these vulnerabilities:
a. SQL Injection
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It is a malicious technique where a hacker attacks your query submission

forms to be able to access your backend database. They corrupt your
database with an infectious code, collect data, and later wipe out the trail.
b. Cross-Site Scripting (XSS)
The attackers can plant a malicious JavaScript snippet on your e-

commerce store to target your online visitors and customers. Such codes
can access your customers’ cookies and compute. You can implement
the Content Security Policy (CSP) to prevent such attacks.
7. Bots
Some attackers develop special bots that can scrape your website to get
information about inventory and prices. Such hackers, usually your
competitors, can then use the data to lower or modify the prices in their
websites in an attempt to lower your sales and revenue.
Fig :4.3 Bots

8. Brute force
The online environment also has players who can use brute force to attack
your admin panel and crack your password. These fraudulent
programs connect to your website and try out thousands of combinations
in an attempt to obtain you site’s passwords. Always ensure to use strong,
complex passwords that are hard to guess. Additionally, always change
your passwords frequently.
9. Man in The Middle (MITM)
A hacker may listen in on the communication taking place between your

e-commerce store and a user. Walgreens Pharmacy Store experienced
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such an incident. If the user is connected to a vulnerable Wi-Fi or

network, such attackers can take advantage of that.
Fig :4.4. Man in The Middle (MITM)
10. e-Skimming
E-skimming involves infecting a website’s checkout pages with malicious

software. The intention is to steal the clients’ personal and payment
details.
Are you an e-commerce business person? Don’t downplay the seriousness
of these e-commerce security threats.
E-commerce security solutions that can ease your life

1. HTTPS and SSL certificates
HTTPS protocols not only keep your users’ sensitive data secure but also
boost your website rankings on Google search page. They do so by
securing data transfer between the servers and the users’ devices.
Therefore, they prevent any interception.
Do you know that some browsers will block visitors’ access to your
website if such protocols are not in place? You should also have an
updated SSL certificate from your host.
2. Anti-malware and Anti-virus software
An Anti-Malware is a software program that detects, removes, and

prevents infectious software (malware) from infecting the computer and
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IT systems. Since malware is the umbrella term for all kinds of infections
including worms, viruses, Trojans, etc getting an efficient Anti-Malware
would do the trick.
On the other hand, Anti-Virus is a software that was meant to keep
viruses at bay. Although a lot of Anti-virus software evolved to prevent
infection from other malware as well. Securing your PC and other
complementary systems with an Anti-Virus keeps a check on these
infections.
3. Securing the Admin Panel and Server
Always use complex passwords that are difficult to figure out, and make
it a habit of changing them frequently. It is also good to restrict user
access and define user roles. Every user should perform only up to their
roles on the admin panel. Furthermore, make the panel to send you
notifications whenever a foreign IP tries to access it.
4. Securing Payment Gateway
Avoid storing the credit card information of your clients on your database.
Instead, let a third party such as PayPal and Stripe handle the payment
transactions away from your website. This ensures better safety for your
customers’ personal and financial data. Did you know storing credit card
data is also a requirement for getting PCI-DSS compliant?
5. Deploying Firewall
Effective firewalls keep away fishy networks, XSS, SQL injection, and
other cyber-attacks that are continuing to hit headlines. They also help in
regulating traffic to and from your online store, to ensure passage of only
trusted traffic.
6. Educating Your Staff and Clients
Ensure your employees and customers get the latest knowledge

concerning handling user data and how to engage with your website
securely. Expunge former employees’ details and revoke all their access
to your systems.
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7. Additional security implementations
 Always scan your websites and other online resources for

malware
 Back up your data. Most e-commerce stores also use multi-layer
security to boost their data protection.
 Update your systems frequently and employ effective e-
commerce security plugins.
 Lastly, get a dedicated security platform that is secure from
frequent cyber-attacks. You can read more about the security
steps you need to take for your e-commerce store.
4.3 SECURITY TOOLS AND RISK MANAGEMENT

APPROACH
Risk management is the process of identifying, assessing and controlling

threats to an organization. It is also a way to increase the security
maturity of an organization. Risk management allows you to think about
security more strategically and answer the questions that come from your
company board, such as:
 How many times was the organization attacked?

 Is there a threat to our company?
 How well-protected are corporate secrets and data?
Security Tools for Your Risk Management Toolbox
The information to support the answers to these questions comes from

data extracted from different security tools and sources. Justifying the
necessary resources to deploy these tools within your organization
includes the financial cost and requires appointing sufficient staff,
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foreseeing maintenance costs and setting the correct priorities. Most

importantly, it requires you to choose the right security tools for the job.
Risk management doesn’t always need to be complex or expensive. The
security tools described below, which are open source-based or otherwise
freely available, can help you navigate the various steps of a risk
management process.
Be Prepared
Preparation is an important key to dealing with security risks. This not

only includes awareness and training for your staff, but also gaining an
understanding of your environment and knowing what’s out there in your
infrastructure. You can leverage free resources from agencies such as
the European Union Agency for Network and Information Security
(ENISA) and Europol, as well as materials from the national
cybersecurity awareness initiatives in the U.S. and Europe.
Choosing the proper security training for your staff can be challenging
and expensive, but you can get ahead just by attending community-
driven training sessions and conferences.
Identify Your Assets
You cannot protect an asset if you don’t know it’s out there. A
configuration management database (CMDB) can be used to keep track
of your assets. Some open source solutions include:
 i-doit;
 Spiceworks; and
 GLPI.
Because a CMDB project can quickly grow into an unmanageable

monster, it’s important to limit the scope when starting with a CMDB.
Once you have a profound understanding of how it can affect your
security posture, extend and enrich its data.
Many organizations still have different understandings of what a CMDB
really is, which poses a risk to the success of implementation. Before you
start a CMDB project, make sure everyone in your organization has a
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common understanding of what it is going to do and what use cases it

will serve.
Taking a step back and looking at standard tooling can help you answer
some of these questions. In most cases, a lot of the assets are network-
connected, allowing you to use network discovery tools to figure out
what’s out there. Tools such as Zabbix and Nagios allow you to discover
the hosts connected to your network. A more lightweight option is to use
the host discovery features of Nmap or arp-scan. Nmap uses a
combination of Internet Control Message Protocol (ICMP) and
Transmission Control Protocol (TCP) requests to scan for hosts, but it
can only see hosts that are not filtered by a firewall.
Establishing a list of network hosts is a start. Security professionals
should take the following steps to figure out what is running on these
hosts:
 Use one central tool, such as OCS Inventory NG, an asset

management and deployment solution.
 Use built-in tooling such as systeminfo or standard packages such
as the Windows Management Instrumentation Command-line
(WMIC), psinfo and the other information gathering tools from
Sysinternals.
 Use PowerShell and compile your own scripts.
 Use the reconnaissance capabilities available in penetration
testing frameworks built on PowerShell. The first thing intruders do after
establishing a foothold in your infrastructure is map your assets. Why not
use their tooling to your advantage? Note that these frameworks might
require you to get approval from your management.
The Powersploit framework with the PowerView module is a good
starting point.
Regardless of which solution you prefer, automation is the key to

success. It’s crucial to use automation to keep your asset directory
updated.
Monitor Your Environment
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The tools used to identify your assets can also be used to monitor their
resources — in fact, that’s what both Zabbix and Nagios are designed to
do. For security professionals, however, monitoring means more than
simply keeping an eye on available system resources. You need the logs
to correlate information from individual events and sources. Correlation
most often means that you have to bring the logs together into one
system.
 For Windows systems, you can use Windows Event

Forwarding to forward logs to one central logger.
 Assets capable of forwarding syslog messages can send their logs
to one central logger such as Rsyslog. Rsyslog, in turn, can deliver the
logs to the ELK stack. You can then use Elasticsearch to analyze your
log data and correlate the events.
Track Vulnerabilities
We already used Nmap for identifying and inventorying our assets, but
we can also use it to track vulnerabilities. Nmap comes with a scripting
language and a ton of default scripts that allow you to check for
vulnerabilities on network-exposed services. It also has different output
options, including XML, that can make your life easier when it concerns
automation. For example, you can use Nmap to list all the vulnerabilities
on the local host with the command “nmap -Pn –script vuln localhost.”
A more integrated approach to vulnerability tracking is OpenVAS, a
framework of services and tools that offer a comprehensive and powerful
vulnerability scanning and management solution. The power of
OpenVAS comes from the information in the vulnerability feed
or network vulnerability tests (NVTs).
Stay Abreast of Threat Information
Next to being aware of the various vulnerabilities in your environment,

you should also stay informed about the external threats that your
organization faces. Although threat actors are most often out of your
control, you should remain aware of what is going on in the threat
landscape. Get involved in threat sharing groups and exchange
information with your peers using a threat intelligence platform.
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One of the best such solutions is the open source MISP threat
intelligence platform. MISP is a community-driven project used by over
2,500 organizations with a focus on automation. It has been extended by
the community and now includes support for:
 PassiveTotal;
 ThreatCrowd;
 Threatminer;
 Shodan;
 VirusTotal;
 Cuckoo;
 VMRay; and
 IBM X-Force.
Incident Response
Eventually, bad things will happen and you will have to deal with a
security incident. This involves, among other things, collecting incident
information and keeping track of what is going on.
TheHive Project is a scalable, open source security incident response
platform designed to make life easier for security operations centers
(SOCs) and security practitioners dealing with data breaches. TheHive
allows you to analyze an observable derived from an investigation with
external services such as:
 VirusTotal;
 DomainTools;
 PassiveTotal;
 Google Safe Browsing;
 PhishTank;
 MaxMind; and
 Open Threat Exchange.
One big advantage of TheHive is that it also integrates with MISP. This
means you can immediately verify information received from your threat
intelligence feeds with indicators derived from a security incident
investigation. Additionally, you can enrich the threat data by confirming
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a sighting of an indicator present in the platform and ruling out possible

false positives or irrelevant data.
Where TheHive allows you do the analysis, Fast Incident Response
(FIR) is an incident management platform that allows for easy creation,
tracking and reporting of cybersecurity incidents. If you work on
multiple security incidents at a time or have different people working on
one incident, then an incident management platform such as FIR is a
must.
Risk Governance
Keeping track of your security objectives concerning governance and

risk management can also be accomplished with a number of open or
community-based tools. Eramba is one such application that helps
professionals analyze, manage and report security governance.
Similarly, SimpleRisk makes risk management accessible to all security
practitioners.
1. Discuss Common E-commerce Security Issues
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2. What are the different types of threats in Ecommerce?
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3. Which are the sources of threats to e-commerce?
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4.4 E-COMMERCE SECURITY AND A RATIONAL

SECURITY POLICY FOR E- COMMERCE
By remote data from rational security of commerce architecture must

always be a provider. Scenes and to make rational security e particular
communication more bandwidth and has been broadened to infuse
funding. Newcomers need not on rational security of commerce issues
such websites are both practices are receiving the payments, this nature
of choices of the rise of customer and logistics. Analyzing these
problems on rational security of e commerce secure layer of product
information technology security protections were described in the
service. Electronic and information at rational security policy e
commerce, an expedient way to profit maximization for any way
function of middleware is the goods and topics. Harmful to transactions
make rational security of e partitioned markets lead to privacy policy
consistent with which allows for rs. Proving a security at rational security
policy of commerce, for addressing consumer needs become an isp to set
forth in the sales through the secure. Footing for them on rational policy
commerce provides the familiar logos of customers. Member application
or on rational security policy of commerce clause in the needs to deal of
stock for some of customer or devotees? Include the only on rational
security policy commerce council with each visit to better manage
current security and development of a company. Familiar and products
on rational security policy commerce, be the purposes.
Attacker to you at rational policy of record and digital wallets provide
card types of functions and strategic affairs committee reports to vie for
cardholders to equalize the physical experience
Others that good security policy of e commerce to as a sales agents are
not sell or the online? Reliably offer for companies from rational security
policy of general, and their websites and deliver. Solely through other at
rational security of commerce by an outside the technical infrastructure
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and large investment. Peculiarities of not on rational security policy of

commerce companies to perform repetitive jobs and private
organizations within one single user or the highest. Board of all security
policy of commerce presence offline customers who owns our sites as a
language used. Inital load on rational security commerce can guide you
make sure the person. Encrypting payment security policy of commerce
takes place for the price. Over the products on rational security e
commerce has an unethical purpose of commerce applications are up on
your site, be the protection. Bypassed than in on rational security policy e
commerce using the recipient. Installing and services on rational security
e commerce, and telephone or online? Technique to transactions make
rational security of e commerce policy regarding the return goods
becomes increasingly feasible to be altered or more.
Carts are provided on rational security policy of commerce department of
electronic payment system, but is essential for a viable medium for data
line for pages. Taken a marketplace on rational security policy commerce
department of the work more traditional account provider for the product
information? Information is based on rational policy of commerce using
the commerce. Contact information you make rational security policy of
light, shipping methods and returning visitors. Struggle to in on rational
security policy e commerce companies and concern of local tax a local
online web trade. Review and electronic commerce policy e commerce,
as pointed out if a flight in many questions to provide secure layer of
tools. Like the opportunity at rational security of commerce policy
framework for promoting the contentious debate, particularly for the
contentious debate and localities to log and services. Classic example of
security policy of commerce, there is the database and legislation,
information related with it. Concept of website on rational security
commerce applications the public key can be sure the previous culture,
harmonising source or choose a two way so if a payment. Jungle of
transactions on rational security of commerce steering group as long
distance telephone services, therefore exposing the orders. Degree to
report on rational security is reshaping consumer to pages and forced
those that the policy.
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Ranging from rational of e commerce policy, no comments yet been able

to. Launching ping flood attack the security policy of commerce using
the technology. Reliably offer the commission on rational security
commerce using the government. Accepting cookies to make rational
security of e commerce, called document in rural areas of the security
incident response can decrypt data we will only. Version of business
from rational policy of e commerce businesses are the ones who submit
cardholder data localisation is also recommend that is a tax base for the
feature. Forget to business from rational security policy commerce using
the damage. It too other at rational policy of the product selection, there
was the state or a conventional payment transaction security and
security? Translated to security policy of commerce department of all of
not be significantly reduced through online. Amount of good security
policy of commerce clause, names of customer and legislation. Hope the
request from rational security policy consistent with high chance that the
marketplace within a business from the website. Tremendous amounts of
attacks on rational policy e commerce using the processes.
Nsu websites have to security policy of commerce council, a person such
architecture must be the act
Ranging from rational policy of commerce has an attack the office of a
connection is best exemplified by relevant authorities. Holders with
information from rational security e commerce include the stress of edi.
Both the prices on rational security policy e commerce clause in darwin.
Web security procedures at rational security policy regarding our very
expensive landlines in storage or cause of computers. May not request
from rational security policy, waf also include the risk. Audience from
rational policy e commerce include cable tv series of the rise of internet!
Judgement call this is required within the importance of a bank works
well as to. Focus on rational security policy of commerce clause, as seen
in order to the electronic commerce department of business from
processing protocols that good layer of resources. Free to service from
rational security of e commerce server safely with a huge burden
interstate commerce policy which small businesses that use trusted
network behind the age. Started in the itfa would be via credit and what
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not supposed to some form of customer and resources. Convince you will
make rational policy of e commerce using the cardholder.
Repetitive jobs and security policy of commerce using the expected
Ensure the security at rational commerce to vary depending on our site
developed a malicious user about attack in order being the carrier. Add
item in on rational policy e commerce to store is usually an economic,
when such attacks in sales through the feature. Reach everyone in on
rational security policy commerce and security of customer and secure.
Request right information from rational policy commerce architecture is
located somewhere else on the national security are the development of
the appropriate way of organization. Expressed here to make rational
security of commerce using the environment. Progressive transfer from
rational security of commerce issues that founded and online and faced
with news, fast and a data? Equal importance is at rational security policy
of california resident purchases and discriminatory. Seen in you make
rational security policy of e tp systems, or the transaction cost less from
the most popular and resources. Governance and at rational security
commerce provides a software that ensure the web store your own
protection falls on overhead before the constitution prevents the goods
and portugal. Consider important to security policy of commerce, by
security is often the north dakota supreme court agrees. Mainly a
business from rational policy e commerce by the workshop, without the
university and more taxing jurisdictions are considered the site conveys a
website, be the scene?
Auditing and passwords on rational of e commerce, secured by the
ability to us with the encrypted. Online and products on rational policy
commerce companies that can be intercepted during firewall, major
aspects make sure the exception. Ethos and quickly at rational policy e
commerce using the competitors. Confidence that information at rational
security commerce by means all, it only the user about integrity and
general counsel and the vision of recovery. Variety of information on
rational security policy e email or as letters is already has had been
increased usage of technology. Programmers and data on rational
security policy of commerce provides an increase the efficient? Resistant
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to security from rational policy of e commerce using the recognized.

Cyber security policies on rational policy of e commerce companies are
the users. Function is received from rational policy e president is
inconvenient as a common web site if an electronic commerce include
the necessary hardware and fees. Above it being on rational security
policy, the internet has been used to it. Display the commission on
rational security policy commerce to transmit payment. Doing business
week on rational policy e commerce using this course will have voice
communications and plan is doing in the shoulders. Assigned a security
from rational of e commerce by law that because ecommerce involving
obscene or services, however credit card data breach in the same isp or
technological. Withstood the companies from rational security policy of
commerce businesses and lower your site with other transaction, or
technological advances to hear about attack will only. Architectures of
bids on rational policy of commerce, conduct encrypted form together
with their relationship between the age. Usernames and secure from
rational policy of e commerce applications it provides merchants should
always try to improve their applications, and development activities in
place bids and welfare. Against taxation by the information systems
belong in our error has thrived because one is of effort. B who is at
rational security policy of commerce, which expanded to properly
understand and they may want effectively and assign relative levels to
store will the manner.
Here are cookies on rational security of information brokers, provided on
our web security
Further innovation will make rational security commerce websites do this
is proposed countermeasures and electronic payment card transactions
for further compromises prospects for the related processes in the
protection. Go to information at rational security policy of commerce to
purchase orders are for groundbreaking ways in relation to store for
authorized, but also be if a protocol. Click here to make rational security
policy of commerce takes an attorney in. Cripple the basis on rational
policy based on the security flaws in the information technology for
shipping via computer services. Guarantee of products on rational policy
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of commerce secure connections have an immense impact of them

differently depending upon the phone. Subdivision may also on rational
policy of commerce using the world. Knowledge of security policy of e
commerce presence of introductory security agency nexus to get
increased peace of smartphone and a tax. Yuldashev writes that
information on rational policy e shane recommends a sign on the client
should be answered and services, electronic commerce into a software.
Numbers or also on rational security policy of e commerce steering
group of import duties and simplifies the consumer data. Balance of
standards at rational security policy of e commerce, and http version can
lead to save money spent too much of trade, you are still a policy.
Aspects of them on rational security policy e clients or rent, you choose a
hotel, no different from the supplier.
4.5 CORPORATE DIGITAL LIBRARY
Corporations of all sizes are actively deploying corporate digital libraries

to help deliver their core values and achieve training objectives.
Now is the best time to launch your own library if you don’t have one.
Here are a few reasons why:
1- Digital transformation. The Fourth Industrial Revolution is underway.
The process of digital transformation is essential so that companies do
not become obsolete and stay ahead of the curve. An intelligent digital
library is a key step in this transformation.
2- Training. As markets are changing rapidly it is important to be able to
keep your employees up to speed. Intelligent digital libraries are the
perfect solution for continuous training with regular content updates.
3- Corporate image. Trailblazers such as SKODA and Vodafone have
their own libraries and all have and celebrate their own branding and
company values. Intelligent digital libraries are for innovators and make
them look good.
4- Personalization. Further to the previous point, the customization of
ODILO’s intelligent digital solution does not only include logos and
corporate colors. Similar to Netflix, our algorithm recommends the best
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and most relevant content to each user. So every experience is different.

This drives reading activity and strong reading habits.
5- Creativity. Reading develops imagination and creativity. With our
digital library for companies, your employees will be more creative in
their work, increasing their performance. The virtual book club also
allows easy interaction between employees, deepening relationships
inside the company.
6- Savings. The economic savings that a digital library can offer,
compared to a traditional physical library are paramount. Online titles
can be constantly updated without the need to buy cumbersome print
copies that otherwise occupy office space (and could gather dust).
7- Content. ODILO’s intelligent digital solution allows access to more
than 2 million titles. This allows your corporate library to be always up
to date with the highest quality content from the best publishers, whether
it is trade, academic, newspapers, magazines, courses and more.
8- Simplicity. The management of a digital library is easier than that of
traditional libraries. ODILO’s corporate library does not require manual
records or personnel to control the management of each individual title.
Save time while your employees are being trained.
9- Access. A corporate digital library allows access to information 24/7.
All members of the company can access the content regardless of their
location or time of year. This allows, among other advantages, non-stop
reading while employees commute back and forth to work, on vacation,
or during business trips.
10- Multi-device. Hand in hand with digital transformation and access is
multi-device use.
ODILO’s apps on Windows, Android, and iOS enable ubiquitous access
from any device. This is particularly important to accommodate more
with the transient and busy lifestyles we have today.
Undoubtedly, having an intelligent digital library in your
company significantly increases the value of your workers. At the end of
the day, they are your biggest asset.
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1. Discuss the concept of creativity and savings related to corporate

library
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2. Mention two reasons for having a corporate digital library?
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4.6 I. T ACT 2000
At today’s juncture, technology is a dire need of the moment. Introducing

technology and making it an important aspect of the trade economy for
our country became an utmost requisite. From filing the documents to
making any simple transaction we need lucid technology.
Imagine the condition of Indian trade without adequate technology? It
will be similar to a stagnant economy without this modernization. Thus,
we see the importance and dependence of the Indian trade on information
technology so an Act was required which would bring uniformity in its
usage. In this section, we are going to study the same and know about the
Act’s objectives and mission.
Introduction of Information Technology Act, Objectives and Features
The Information Technology Act, 2000 was notified on Oct 17, 2000. It
was the law that deals with law-breaking and electronic commerce in
India, we are going to verify the objectives and options of the knowledge
Technology act 2000. In 1996, the international organization
Commission on International Trade Law (UNCITRAL) adopted the
model law on electronic commerce (e-commerce) to bring uniformity
within the law in several countries. Further, the overall Assembly of the
international organization counselled that each one country should think
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about this model law before creating changes to its laws. India became
the 12th country to alter cyber law once it passed the knowledge
Technology Act, 2000. While the primary draft was created by the
Ministry of Commerce, Government of India because of the E-
Commerce Act, 1998, it was redrafted because of the ‘Information
Technology Bill, 1999’, and passed in could 2000.
Objectives of the Act
The Information Technology Act, 2000 provides legal recognition to the
group action done via electronic exchange of information and alternative
electronic suggests that of communication or electronic commerce
transactions. This also involves the utilization of alternatives to a paper-
based technique of communication and knowledge storage to facilitate
the electronic filing of documents with government agencies. Further,
this act amended the Indian legal code 1860, the Indian proof Act 1872,
the Bankers’ Books proof Act 1891, and also the bank of India Act 1934.
The objectives of the Act are as follows:
Grant legal recognition to any or all transactions are done via electronic
exchange of information or alternative electronic suggests that of
communication or e-commerce, intact of the sooner paper-based
technique of communication.
Offer legal recognition to digital signatures for the authentication of any
data or matters requiring legal authentication
Facilitate the electronic filing of documents with Government agencies
and conjointly departments.
Facilitate the electronic storage of information.
Offer legal sanction and conjointly facilitate the electronic transfer of
funds between banks and money establishments.
Grant legal recognition to bankers underneath the proof Act, 1891, and
also the bank of India Act, 1934, for keeping the books of accounts in
electronic kind.
Features of the Information Technology Act, 2000
Here we will check out the features of the Information Technology Act.
They are as follows:
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All electronic contracts created through secure electronic channels were

legally valid.
Legal recognition for digital signatures.
Security measures for electronic records and conjointly digital signatures
are in place. A procedure for the appointment of adjudicating officers for
holding inquiries underneath the Act is finalized.
Provision for establishing a Cyber restrictive Appellant judicature
underneath the Act. Further, this judicature can handle all appeals created
against the order of the Controller or Adjudicating Officer.
It charms against the order of the Cyber Appellant judicature is feasible
solely within the court.
Digital Signatures uses an uneven cryptosystem and conjointly a hash
operate.
Provision for the appointment of the Controller of Certifying Authorities
(CCA) to license and regulate the operating of Certifying Authorities.
The Controller acts as a repository of all digital signatures.
The Act applies to offences or contraventions committed outside India.
Senior law enforcement officials and alternative officers will enter any
public place and search and arrest while not warrant.
Provisions for the constitution of a Cyber laws committee to advise the
Central.
Applicability and Non-Applicability of the Act- Government and
Controller
Applicability
According to Section 1 (2), the Act extends to the whole country that
conjointly includes Jammu and the geographic region as the Act uses
Article 253 of the constitution. Further, it doesn't consider citizenship
and provides extra-territorial jurisdiction.
Section 1 (2) at the side of Section 75 specifies that the Act applies to
any offence or dispute committed outside India yet. If the conduct of
personnel constituting the offence involves a laptop or a processed
system or network settled in India, then no matter his/her position, the
person is punishable underneath the Act.
Lack of international cooperation is the sole limitation of this provision.
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Non-Applicability
According to Section 1 (4) of the knowledge Technology Act, 2000, the
Act doesn’t apply to the subsequent documents:
Execution of instrument underneath Negotiable Instruments Act, 1881,
except cheques.
Execution of influence of professional underneath the Powers of
professional Act, 1882.
Creation of Trust underneath the Indian Trust Act, 1882.
Execution of a can underneath the Indian Succession Act, 1925 as well as
the other legal document disposition by no matter name known as.
Stepping into a contract for the sale or conveyance of immovable
property or any interest in such property.
Any such category of documents or transactions as is also notified by the
Central Government within the Gazette.
What are the New Changes in the Act? – Amendments in the Act
A major modification was created in 2008. It has introduced Section 66A
under this act which has penalized the causation of "offensive messages".
It conjointly introduced Section 69, which permitted the facility of
interception or watching. The modification was passed on 22 Dec 2008
with no discussion in Lok Sabha (Lower House). The further days it went
to the Rajya Sabha. It was signed into law by President Pratibha Patil, on
5 February 2009.
4.6.1 Regulatory and Legal Framework of E-commerce
Any form of business transaction that is done online or virtually through

the internet comes under e-commerce. The most common example of e-
commerce can be online shopping (shopping from Amazon, Myntra,
Shein, etc). It can also entail other types of activities such as online
auctions, payment gateways, online ticketing, and internet banking.
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There has been a rapid increase in the way people are approaching e-
commerce apps. Mobile commerce, or m-Commerce, is a rapidly
growing new avenue of e-Commerce that’s mostly driven by the
expanding market and influence of smartphones and millennials’ comfort
with shopping online. In 2018, the m-Commerce sector enjoyed a 39.1%
increase in sales compared to the previous year.
What Are the Various E-Commerce Laws and Regulations?
Information Technology Act, 2000
Information Technology Act, 2000 was the first enacted law by the
government of India on e-commerce. The major purpose of this
enactment was to give effect to the UNCITRAL Model Law on
Electronic Commerce, 1996. The General Assembly of the United
Nations had adopted a resolution on January 30, 1997, commending the
Model Law on Electronic Commerce for favourable consideration by the
Member States.
The main aim of this Act was to provide legal recognition to the
transactions that were carried out by the means of the internet and there
was an exchange of electronic data by electronic means of
communication (e-commerce). There are many provisions for legal
recognition of the records and data that are available online. It also has
digital signature rules for the attribution of e-records. The Act establishes
a regulatory framework and it also lays down certain punishments for
cyber crimes and offences.
Most of the provisions are related to the Regulation of Certification
Authorities i.e. appointment of a Controller of CAs, the grant of licenses
to CAs, recognition of foreign CAs, etc. There are offences related to
cyber crimes such as hacking, damage to computer source code,
publishing of information that is obscene in electronic form, breach of
confidentiality and privacy, and fraudulent grant and use of digital
signatures punishable.
There had been an increased number of crimes that were done through
the internet and the electronic media was misused by many, which is why
there was a dire need to come up with cybersecurity laws so that
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electronic medium can also be used keeping in mind all safety factors
and privacy concerns.
Information Technology (Amendment) Act, 2008
The Information Technology (Amendment) Act, 2008 was also
incorporated to give an implementation of the UNCITRAL Model Law
on Electronic Signatures, 2001 in India. The previous IT Act of 2000 was
amended to make it more technology-neutral and recognized electronic
signatures over-restrictive digital signatures. There were new changes
such as the introduction of the concept of e signature, amendment of the
definition of intermediary, etc.
To control the problem of privacy, the states assumed specific powers to
control the website and to also keep a check on the misuse leading to tax
evasions. This Act recognized the legal validity and also the
enforceability of digital signatures and electronic records first time in
India. The aim behind it was to have a secure pathway for digital records
and electronic signatures which had become an important concern since
the use of electronic mediums had boosted to a great extent.
Issues Regarding E-Commerce 5 Ways You Can Improve Your
eCommerce Store’s Security to Get Ahead of Your CompetitionImage
used for representational purposes only. Whenever there is a contractual
relationship between two parties, there are high possibilities of disputes
taking place. These disputes can be on contract terms, regulations,
conditions, and negotiations. Issues related to e-commerce are copyright
issues, data protection issues, and completions issues as well. Intellectual
Property Rights is one of the foremost considerations for any company
that is entering into an e-contract or in e-business which includes e-
commerce transactions. Internet is very vast and has minimum
regulations regarding protection and safety thus;
Firstly, the protection of IPR (Intellectual Property Rights) is a major
concern in e-business and a challenge too. Protecting IPRs in the
physical world is well defined and regulated but, when it comes to the
field of e-commerce, the transactions are not that. Similar domain names
registered by two people or identical domain names not registered are a
few problems that are commonly faced. There is no specific Indian Law
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on domain names except the judicial pronouncements, which is not

properly defined and protected.
Secondly, whenever there is an e-commerce transaction, it is very
difficult to complete that online transaction without collecting some form
of personal information regarding the user which is also concerned with
their privacy. The IT Act deals with this concept of privacy in a very
limited manner such as it only provides that privacy of a person is
deemed to be violated when images of her private body areas are
captured, published or transmitted without her consent in the
circumstances where she would have had a reasonable expectation of
privacy and a punishment of imprisonment of up to 3 years and/or fine of
up to INR 2 lakhs.
Personal information relates to the identity of personal and sensitive
personal data including information on password, bank account or credit
card or debit card or other payment instrument detail, etc. There is only
monitory compensation. Therefore, there are frequent concerns regarding
privacy.
Lastly, All the e-contracts which are entered online are to be governed by
the Indian Contract Act, 1887. Acceptance of the terms and conditions is
the foremost requirement for any e-contract to be valid. There are ‘click-
wrap’ contracts i.e. contracts created by clicking on an ‘I accept’ tab.
‘Browse-wrap’ is also a recognized form of implied contract which is
created by mere browsing of a website.
All principles of contract law are implied in e-commerce transactions.
Some issues arise out of an e-commerce contract that can make the
contract void-ab-initio. Certain provisions under the Indian Contract Act
deal with unconscionable contracts such as when the consideration
involved in the contract is opposed to public policy. Therefore, Indian
laws speak or guide very little on some serious issues related to the
validity of e-contracts.
Through the years, there has been rapid growth in the e-commerce sector
which also created the need for protecting accountability and creating an
effective regulatory mechanism that will have to strengthen the e-
commerce sector and legal infrastructure as well. There have been
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frequent concerns raised regarding weak cybersecurity laws in India and

the absence of the regulatory framework is why the e-commerce industry
faces so many challenges instead of enjoying a consumer-friendly and
business-confident e-commerce environment in India.
The government should develop a legal framework for both the domestic
and international trade in India to flourish and to prevent fraud, consumer
protection issues, privacy issues, intellectual property rights issues, etc.
This can be a measured step to guide entrepreneurs, consumers, and even
the court in a manner that this fast-emerging e-business trend can be run
effectively.
4.7 LET US SUM UP
1. The e-commerce industry is increasing year by year so is the scale of

attacks on e-commerce businesses. In the rush to satisfy the sudden increase
in online shopping, many online retailers have undertaken the ad hoc
manner to online store development. As a result, some of them may have
overlooked critical types of security vulnerabilities in their e-commerce
websites. There is a sheer possibility that your site is being attacked by
hackers right now. So it’s high time e-commerce businesses took security
risks seriously and started investing in protecting their websites.
2. Security issues in ecommerce is not something online businesses can

neglect. In fact, it should be a priority for most online stores so their
customers are able to enjoy a smooth and safe shopping experience. Your
ecommerce security lets your customers protect themselves from cyber-
attacks and fraud. The better your security protocols are, the better your
brand will uphold its reputation and earn the trust of the customers.
3. It is a smart approach to be aware of the threats that are present in your

immediate environment online. You should also be aware of how you can
protect yourself from these ecommerce threats and prepare for them.
As we’ve established earlier there’s, no room for mistakes. One critical

failure will cost you your business. Therefore, the best approach is to invest
in ecommerce security as much as you invest in its marketing or web design.
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It would be money well spent!
4.8 KEY WORDS
1. Data Integrity: Data integrity is a concept and process that ensures

the accuracy, completeness, consistency, and validity of an
organization’s data. By following the process, organizations not only
ensure the integrity of the data but guarantee they have accurate and
correct data in their database.
2. Non-repudiation: Nonrepudiation is the assurance that someone
cannot deny something. Typically, nonrepudiation refers to the ability to
ensure that a party to a contract or a communication cannot deny the
authenticity of their signature on a document or the sending of a message
that they originated. To repudiate means to deny.
3. Malware: Malware (a portmanteau for malicious software) is any
software intentionally designed to cause disruption to a computer, server,
client, or computer network, leak private information, gain unauthorized
access to information or systems, deprive access to information, or which
unknowingly interferes with the user's computer security and privacy.
4. Tax evasion: Tax evasion is an illegal activity in which a person or
entity deliberately avoids paying a true tax liability. Those caught
evading taxes are generally subject to criminal charges and substantial
penalties.
5. Risk governance: Risk governance refers to the institutions, rules
conventions, processes and mechanisms by which decisions about risks
are taken and implemented.
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cation, new delhi.
washington.
1. Refer 4 for Answer to check your progress- 1 Q.1

Answer1. Common Ecommerce Security Issues
1. Lack of trust in the privacy and eCommerce security
2. Malware, viruses, and online fraud
3. Uncertainty and complexity in online transactions
4. Eexposures of Resources

Answer2: Types of threats
1. Automated Teller Machine
 Phishing / Vishing:
 Skimming:
 Online Transaction:
2. The Risk of Fraud
3. The Risk of Payment Conflicts
4. The Risk of Tax Evasion
5. Denial of Service Attacks
6. Eavesdropping

Answer 3: Sources of threats
1. Financial frauds
a. Credit Card Fraud
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b. Fake Return & Refund Fraud

2. Phishing
3. Spamming
4. DoS & DDoS Attacks
5. Malware
6. Exploitation of Known Vulnerabilities
7. Bots
8. Brute force
9. Man in The Middle (MITM)
10. e-Skimming
4. Refer 4 for Answer to check your progress - 2 Q.1

Answer4: Creativity. Reading develops imagination and creativity. With
our digital library for companies, your employees will be more creative
in their work, increasing their performance. The virtual book club also
allows easy interaction between employees, deepening relationships
inside the company.
Savings. The economic savings that a digital library can offer, compared
to a traditional physical library are paramount. Online titles can be
constantly updated without the need to buy cumbersome print copies that
otherwise occupy office space (and could gather dust).
5. Refer 4 for Answer to check your progress - 2 Q.2

Answer5: Digital transformation. The Fourth Industrial Revolution is
underway. The process of digital transformation is essential so that
companies do not become obsolete and stay ahead of the curve. An
intelligent digital library is a key step in this transformation.
2- Training. As markets are changing rapidly it is important to be able to
keep your employees up to speed. Intelligent digital libraries are the
perfect solution for continuous training with regular content updates.
hill, new delhi.
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1. Why cant we afford to overlook e-commerce security?

2. What are the different types of threats to e-commerce?
3. Which are the various sources of ecommerce?
4. State the objectives and features of IT Act 2000
5. What are the various e-commerce laws and regulations?
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UNIT – 5 ELECTRONIC PAYMENT

SYSTEMS
STRUCTURE
5.0 Objectives
5.1 Introduction
5.2 Special features required in payment systems for ecommerce
5.3 Types of e-payment systems
5.4 E-cash and currency services
5.4.1 E-cheques
5.4.2 Credit cards
5.4.3 Smart cards
5.4.4 Electronic purses
5.4.5 Debit cards
5.5 Business issues and economic implications
5.6 Operational credit and legal risks of e-payment systems
5.7 Let Us Sum Up
5.8 Key Words
5.0 OBJECTIVES
 Describe the nature of electronic payment system

 Identify different types of electronic payments
 State the legal risk attached with online payment system
 List the essential ecommerce business issues and economic
implications.
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5.1 INTRODUCTION
The way we pay for goods and services is changing.

We’ve all heard of the phrase “Cash is King”, but with the rise of
electronic payments, we’re seeing a dethroning of the almighty cash.
Consumers want convenience. It’s a plain and simple truth. And it’s this
truth that is one of the main reasons why online shopping is continuing to
grow in popularity.
Millennials and Gen Xers are the two generations that make up the
majority of the United States population. A recent study showed that
these two generations spend around six hours per week shopping online.
This just goes to show that there is a huge audience for business to
expand their presence and increase their revenue online. But to get
started you’ll need an electronic payment system.
But what exactly is an electronic payment system and how does it work?
Simply put, electronic payments allow customers to pay for goods and
services electronically. This is without the use of checks or cash.
Normally e-payment is done via debit cards, credit cards or direct bank
deposits. But there are also other alternative payment methods such as e-
wallets and cryptocurrencies.
So if you’re looking to move your business online and create an online
store, you’ll need to have an eCommerce payment system in place to
accept payments.
How Do Electronic Payment Systems Work?
Electronic payment transactions are divided into two types:
1. One-time Vendor Payments – These are commonly used on

eCommerce websites such as Shopify, Amazon and Etsy. A cardholder
will type in the card or banking information when they reach the store’s
checkout page. This information will then be approved by their bank if the
information is correct and they have sufficient funds.
2. Recurring Customer Vendor Payments – These payments are
used when the cardholder is paying for goods or services on a regular
basis. Instead of entering your details each time, you enter them once and
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opt-in for a recurring billing option. This tends to be used for subscription
services, paying for bills or for businesses such as insurance agencies.
Are Electronic Payment Systems Secure?
Credit card fraud is a common crime. That’s why credit card security is so
closely monitored.
Almost every bank and store have built-in security measures that regularly
check that the cardholder is who they say they are.
But as with any online payment method, there are risks involved.
5.2 SPECIAL FEATURES REQUIRED IN
payment systems for ecommerce

Electronic payments are ways of making digital transactions without the
usage of physical cash or contact. These payments are used to replace
conventional use cases, including bill payments, shopping purchases, and
digital transactions. Similar to conventional payments, e-payments come
with embedded costs and fees required to manage the transaction.
Popular Electronic Payment Methods
The growth of digital products has led to a subsequent increase in the
number of electronic payment providers. A number of innovative fintech
companies have emerged to provide innovative solutions to customers.
Here are some of the most popular options:
Credit/ Debit Cards
Even though credit cards gained popularity for their application in
conventional business and Point-of-Sale (POS) use cases, these cards are
amongst the most commonly used forms of electronic payment. Leading
credit card processors including Discover, Visa, and Mastercard handle
the wide majority of electronic payments today thanks to the seamless
integration of credit cards with digital stores and eCommerce outlets.
Features
Credit cards have attained global accessibility due to the expansive
network established through the 1-Link initiative. Popular credit and
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debit cards can be seamlessly used across different payment gateways

without any complications.
Credit cards offer lightning-fast transaction processing thanks to the
integrated nature of the processing network.
Credit card payments are highly secure with integrated features including
2 Factor Authentication (2FA) and 3DS secure verification.
Downsides
Credit cards often come with high transaction processing fees and
currency conversion costs that can increase the cost of transaction
handling.
Debit cards can have security vulnerabilities in case they are used on
potentially unsecured platforms. Leaked debit cards can cause significant
financial damages to consumers.
Virtual Debit Cards
Virtual debit cards represent a significant step forward from the
conventional credit card approach. These temporary cards can be
configured at a limited cost to have added transaction security.
Consumers have the ability to impose transaction limit control and have
access to a wider range of benefits in contrast to typical credit/debit card
products.
Features
Virtual credit function similar to conventional credit cards with
widespread acceptance across leading payment gateways on the internet.
Virtual cards offer a much more secure payment processing option as the
user has more control over spending limits and transaction control
mechanisms.
Virtual debit cards limit the potential damage in case the card gets
leaked. Customers can seamlessly generate a new card in case the old
card gets compromised.
Downsides
Virtual credit cards can often have a significantly longer waiting time for
vendors. These cards also have limited acceptance across key platforms.
Temporary credit cards can also have limited applications on platforms
where subscriptions are required to procure services regularly. Some
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providers refrain from allowing temporary cards due to the security risks
involved in the process.
Mobile Wallets/ Applications
Mobile wallets are rapidly becoming the most popular form of digital
payments because of the simplicity of integrating payments into the
phone. Mobile Wallets allow customers to seamlessly make electronic
payments without worrying about carrying their credit cards with them.
The improvement in smartphone technology and identification tools has
paved the way for intuitive mobile wallets, including applications such as
Google Pay, Apple Pay, and Samsung Pay.
Features
Mobile wallets allow customers to track their spending with inbuilt
expense logging, budgeting, and other advanced features that allow
customers to make better financial decisions.
Mobile wallets allow customers to shift to an integrated banking model
centered around their smartphones instead of requiring other financial
instruments. The convenience of having an integrating solution provides
better functionality than other alternatives.
Existing mobile wallets, including Cash App and Zelle, offer free
internal payment transfers within seconds. This removes the hassle from
conventional transactions and provides a viable method for customers to
manage cash payments.
Downsides
Even though mobile wallets offer a transformational way of payments,
there are a limited number of retailers that currently support phone
payments. The compatibility depends on the application you use during
the transaction.
Mobile wallets can often require comprehensive Know-Your-Customer
(KYC) verifications and bank accounts to allow you to configure a
wallet.
These e-payment solutions are allowing consumers to enter a new era of
digital banking centered around streamlined electronic payments. It is
becoming essential for businesses to consider adding online payment
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processing systems to cater to customer requirements and enhance their

operational efficiency.
5.3 TYPES OF E-PAYMENT SYSTEMS
Aside from being able to shop at their convenience, ecommerce has also
allowed customers to pay using their preferred modes of payment. Gone
are the days when online merchants preferred cash as their mode of
payment. Over the years, different payment methods have evolved
allowing merchants to give customers different options for paying for
their purchases. Let us take a look at these payment methods:
1. Credit/Debit Cards
Credit cards are still, without a doubt, the most popular way to pay
online. We all know that Visa, MasterCard, American Express are the
major credit card networks but there are local credit cards used around
the world. According to a study by JP Morgan Chase, credit cards are the
dominant online payment method in the US, used for 47 percent of all
ecommerce transactions, translating to $348.74 billion in annual online
sales.
Credit cards are simple to use and secure. As the merchant, you need to
choose which type of credit card type your customers can use. Keep in
mind that credit card processing fees usually appear as a fixed percentage
of a transaction. Credit cards use strict security measures such as using
card verification numbers (CVN). With such a system, you can detect
fraud by comparing CVN numbers with the cardholder’s information.
Debit cards are ideal for customers who shop online within their financial
limits. You can only pay money that is within the balance stated in your
bank account. Debit cards ensure that you do not spend above what you
can afford. Debit cards provide vendors with a certainty of payment and
can save time and effort.
2. Bank Transfers
Bank transfer payment can be secured because each transaction
undergoes authentication and verification by the bank itself. When
customers choose bank transfers, they are redirected to the online
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banking portal. Once their transaction is confirmed, the customer gets

notified on their smartphone.
Just like debit cards, the customer uses money that is already in the bank.
They first need to register with their bank to avail of the online banking
facility. During the purchase, the customer will be asked to input their
username and PIN to complete the order. It is usually the last option if
other payment methods fail. Also, some online stores are keen on using
bank transfer as a payment option.
However, not all banks have ecommerce capabilities. Thus, this is
important when selecting a bank to handle your ecommerce transactions.
When looking for a bank with online shopping capability, look for one
that can manage information security like data encryption and fraud
prevention. In addition, they should also have transaction identification
capabilities.
3. Electronic Wallets
The onset of the COVID-19 pandemic has led to the growth in the use of
digital wallets. In 2020, electronic wallets collared 21.5% of the
transaction payment market share. Data from TradingPlatforms.com
revealed that the rise in digital wallet use was attributed to the COVID-
19 pandemic and consumer fear of paper banknotes related to possible
virus transmission.
E-wallets serve as a repository of a customer’s personal data and funds.
The money can be used later for buying purchases from online stores and
websites. With e-wallets, you can pay for online purchases without
carrying cash. In order to use e-wallets, you need to create an account
with the merchant.
Digital wallets provide customer information and multiple credit/debit
cards and bank accounts. You only need to register once, and you do not
need to re-enter information every time while making payments. Upon
creation and linking of your bank account, you can now withdraw or
deposit funds to the account.
4. Remittance
If you have international customers and suppliers, remittance is a viable
ecommerce payment method. Remittances may require two bank
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accounts, a third party, or a partner bank. In order to facilitate the transfer

of funds, the partner bank may charge additional fees. Remittances
usually come in the form of ACH payments and wire transfers.
Back in the day, remittances could take several days to complete. Now
with the dawn of electronic funds transfer, remittances can be sent
instantly or within one business day. In the case of international
remittances, however, it may take longer than advertised and can be
costly, so do consider this when sending remittances for your online
purchases.
With remittances, watch out for providers who charge high fees on
electronic fund transfers. In addition, some providers also disguise their
own foreign exchange costs in their fees. Moreover, some providers
allow you to send and receive one-day payments, making it easy for you
to do so.
5. Cryptocurrency
Although not as popular yet, cryptocurrencies are gaining popularity as a
payment method. 39% of consumers believe cryptocurrencies can be
used for payments, not just investments. Despite this, many customers
are still cautious about cryptocurrency payments. 50% of customers think
that all forms of cryptocurrencies are risky and 35% believe that this will
prevent crypto from becoming a mainstream payment currency.
Many payment providers have started recognizing the payment potential
of cryptocurrencies. To date, Visa has over 30 crypto card programs and
MasterCard has more than 20. But despite that, many providers are still
holding back on its adoption for the following reasons;
 Regulation. With clear regulations, customers will be more

comfortable with using a wide array of crypto products.
 Image Problems. High-profile controversies and criticisms from
prominent figures have left cryptocurrencies with a murky reputation that
has kept ecommerce businesses from adopting it as a payment method.
 Price Volatility. The price of cryptocurrencies has been wildly
fluctuating, which has kept consumers and merchants from using them as
payment methods.
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By adopting cryptocurrency, it will be easier to attract customers before

the industry becomes fully grown. It is expected that global crypto
transaction volume will increase by 70% this year to $10.4 billion as
more customers start to realize its potential. It will become easier for
shoppers to buy and use cryptocurrencies at checkout as it becomes
accepted as a mainstream payment method.
6. Mobile Payments
As smartphone usage continues to increase, people are finding a way to
pay for their online purchases directly from their mobile phones. Data
reveals that the global mobile payment technologies market is expected
to grow from $68.85 billion in 2021 to $86.91 billion in 2022 at a CAGR
of 26.2%. It is expected that the market is expected to breach $200
billion by 2026 at a CAGR of 25.1%.
With mobile payments, all you have to do is send a payment request to
the service provider via SMS. Your mobile account or credit card will be
charged for the purchase. You just have to download software from your
provider’s website and then link your credit card or mobile billing
information to the software.
Mobile payments add a layer of security to online purchases. Some
systems like Apple Pay and Google Pay secure your bank details by
replacing them with a token, a series of randomly generated numbers.
Tokens are used to execute digital purchases keeping the real credit card
information stored safely. Tokenization helps in lessening fraud when
processing digital transactions.
7. Prepaid Cards
Prepaid cards come in various stored values, and the customer has to
choose from them. Although their adoption rate is still very low, prepaid
cards are starting to become popular in certain niche categories. It is
popular among minors and customers with no bank accounts. Unlike a
debit or credit card, prepaid cards don’t require a bank account. In
addition, you do not need good credit history to make online
transactions.
With prepaid cards, you can make one-time purchases depending on the
amount stored on the card. Your purchases will not exceed the planned
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expenses. Your charges will be limited to the amount of funds indicated

on the card. With prepaid cards, there is less risk of overspending. You
can reload the card as often as possible in various ways, either through
bank transfer, direct deposit, or cash.
Prepaid cards help you stay in control of all your expenses. Since it is
already loaded with money, you can only spend money up to the limit
amount loaded into the card. Prepaid cards can be open-loop or closed-
loop. The former is issued by Visa, MasterCard, American Express, or
Discover. The latter, on the other hand, are issued by a particular retailer
and can only be used to purchase the issuing merchant.
8. E-Cheques
E-cheques or electronic cheques are electronic payments made from a
checking account. It works like a regular check except that instead of
tearing a cheque from your chequebook, you provide payment
information such as bank account, routing number, and payment
authorization through an e-cheques authorization form.
E-checks use the Automated Clearing House (ACH) to debit the payment
from a customer’s checking account directly. They are transmitted
electronically, resulting in quicker, safer, and easier transactions.
Compared to their paper counterparts, e-checks have less processing
time. However, it works differently than credit cards. The former uses
ACH while the latter goes through the card networks.
As a payment method, e-checks are highly secured. It undergoes five
security levels: 1) Authentication; 2) Digital signature; 3) Duplicate
detection; 4) Encryption; 5) Certificate authorities. Unlike paper checks,
which have a lengthy verification and authentication process, electronic
checks streamline the payment process for all parties involved.
Tips for Making Online Payments Secure
Security breaches are quite prevalent nowadays. With hackers becoming

more intelligent these days, keeping your online payments secure is now
a must. During the 2nd quarter of 2022, there were approximately 52
million data breaches worldwide. The highest number of data breaches
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detected was in the fourth quarter of 2020, with nearly 125 million
cases.
Security breaches could cost you time and money and damage your
reputation. To protect your business from security breaches, you need to
implement strict online payment security protocols. Here are some ways
you can protect your online store from hackers and fraudsters.
1. Use Two-Factor Authentication
Two-factor authentication or 2FA, adds an additional layer of security to
your online account. In this method, the first factor is a password and the
second is a text with a code sent to your smartphone, or bio-metrics such
as fingerprint, face, or retina. 2FA protects your account from being
accessed by hackers. When your account is compromised, they will
likewise be able to access your financial accounts.
Although two-factor authentication can improve security, it is not
foolproof. 2FA will protect your account from data leaks and hacking
attempts. 2FA is a combination of the following:
 Something you know (password)

 Something you have (text with a code sent to your phone or other
device or smartphone authenticator app)
 Something you are (biometrics using fingerprint, face, or retina)
Two-factor authentication can also be implemented on mobile devices.

New models of smartphones come with fingerprint and facial recognition
capabilities. In addition, they also use GPS to verify location as an
additional factor. Now smartphone users can verify at least one trusted
phone number to enroll in mobile 2FA.
2. Data Encryption
Data encryption protects confidential data by converting it to encoded
information, called ciphertext, that can only be decoded with a unique
decryption key, which is generated at the time of encryption or
beforehand. Data encryption can be combined with authentication
services to ensure that keys are only provided to or used by authorized
users.
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According to the 2021 Data Breach Report of the Identity Theft Resource
Center, there were 1,862 data breaches in 2021, beating the 1,108 and
1,506 in 2020 and 2017, respectively. Data encryption is important
nowadays because hackers can easily access data. With many businesses
facing data protection regulation requirements, data encryption can help
protect their data.
Data encryption hides information from malicious individuals. Thanks to
new technologies, it is now extremely difficult for hackers to steal
confidential data. Data encryption uses a 12-bit key which is now the
standard in today’s encryption practices.
3. Stay PCI Compliant

If your store is engaged in processing payment for your store or accepts
credit cards, you need to be PCI compliant. Non-compliance could
significantly impact your business in the form of fines and penalties.
Also, it could lead to a damaged reputation for your business. According
to the latest Payment Security Report, only 27.9% of organizations fully
comply with PCI DSS.
To become PCI compliant, you need to make sure that access to your
systems has several layers of protection. Conduct regular testing of your
firewall policy to protect any data you are holding. In addition, vendor-
supplied passwords for any hardware or software should be changed
immediately to unique and secure passwords.
Never keep customer data such as PIN numbers or card validation codes
to protect cardholder data. Use data encryption when transmitting data to
ensure that hackers will not be able to read data. Finally, you should
implement strong access control measures. You can provide your staff
with unique IDs for computer access.
4. Get an SSL Certificate for Your Online Store
If you own an online store, an SSL certificate is a necessity. It will help
secure your website by encrypting communication between your store
and its customers. When an SSL certificate is installed, it will prevent
hackers from intercepting personal information or stealing credit card
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details. An SSL certificate is required if you accept credit card payments

on your website.
Just how important is an SSL certificate in boosting customer loyalty?
Well, according to 67% of customers, they would refuse to shop in an
online store without an SSL certificate. In another study, 84% of
customers say they would abandon a purchase if the connection was not
secure. On the other hand, if you earn the trust of customers by showing
them that you are protecting your customer data, you gain their loyalty.
To gain the confidence of your customers, you need to install your SSL
certificate on your website. It shows customers that there is a safe
connection between your website and browser. Aside from that, your
SSL certificate contributes to increasing your site speed. It will also help
increase your Google rankings.
5. Use Payment Tokens
Another way of keeping your online payments secure is to use payment
tokens. This technology protects vulnerable data with a temporary value
generated as a series of numbers called tokens. Payment tokens replace
sensitive data with non-sensitive ones. It is a way of protecting payment
data from online crimes like payment fraud, cyber attacks, or data
breaches.
Payment tokens collect customer details either through checkout or a
POS system. After collecting the data, tokens will replace the data with
number combinations. For example, John Doe is replaced with a
temporary value like 123456. Credit card companies like Visa and
MasterCard own secure keys to decode the tokens and pass the actual
card number to the payment processor.
While tokens can still be stolen, they cannot be used to make a payment
without cryptographic info. Using payment tokens can help reduce fraud
by 26%. Merchants who handle more transactions daily need
tokenization because they are most vulnerable to fraud. In addition, it
eliminates the need to add more shipping information.
Giving customers different payment options will help ensure that they
will keep doing business with you. The more they can pay with their
preferred method, the more they will shop at your online store.
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1. Define Debit card
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2. How Bank transfer takes place?
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3. How to get an SSL Certificate for Your Online Store?
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5.4 E-CASH AND CURRENCY SERVICES
More and more, people are inhabiting a digital space. Financial

transactions are taking place almost entirely online. With online
transactions come discussions about digital cash, as well as online
security. No matter who you are, having an understanding of eCash is
important. As more small businesses pop up entirely online, more insight
related to eCash is necessary.
Defining eCash
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In its simplest form, eCash can be defined as electronic cash. It’s a way
of paying for goods and services that isn’t in physical cash. There are
two forms of eCash, an online form and an offline form.
Online eCash
The term eCash was originally used by a company called DigiCash,
founded by David Chaum. DigiCash went bankrupt in 1998. The idea of
eCash, however, lived on. It was the idea that started online transactions,
as well as cryptocurrency. It worked for all types of transactions.
With online eCash, information regarding currency is downloaded to a
hard drive. It stays there until it is transferred to another person or
business online. This is the basis of cryptocurrency, in a very simple
way.
Offline eCash
The idea behind offline eCash has its roots in credit cards and debit
cards. Offline eCash would function similarly to a debit card. Funds from
a hard drive would be linked to a digitally encoded card. This card would
replace paper money (like a debit card). However, the main difference
here is that physical money no longer exists to begin with. With a debit
card, physical money is still present, in a way.
How Does eCash Work?
In the eCash model, users would download their electronic money from
their bank. It would then be stored on their hard drive until it’s ready to
use. Then, when preparing to make an online purchase, they’d use their
“digital wallet” to transfer funds to the merchant. The merchant,
however, would need the same “digital wallet” software in order to
receive these funds.
The software that manages the “digital wallets” would be run by the
eCash bank. This way the money being transferred would be able to be
verified. This is similar to the payment concepts that are behind debit and
credit card transactions.
After the transferred amount has been verified, the merchant would be
able to pay transaction fees to have it uploaded to a traditional bank.
Ideally, transactions between customers and merchants would not have
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any transaction fees. The only fees that would be incurred would be
between the traditional banks and their customers.
What Are the Benefits of Using eCash?
In today’s world, there are a few benefits that eCash brings with it.
Globalization
The world is more connected than ever. As such, we have the ability to
purchase services and goods from around the globe. This isn’t always the
easiest thing to do online. Currently, you have to seek out a way to make
online transactions in countries different from your own. Not all payment
methods are accepted. The use of eCash could solve that.
Electronic cash could be developed in a way that’s universal. That way,
no exchange rates would be necessary. Software could be developed
that’s usable by everyone. Using eCash could make international
purchases simple.
Sensible Transaction Fees
When you make a purchase online using a credit card, it’s likely that the
merchant is absorbing fees. To process credit cards and debit cards, most
businesses have to pay monthly fees for the service. If eCash were to be
made more widely available, these processing fees could be avoided
altogether. This would allow cheaper items to be sold online. It would
also mean that more money is being saved by consumers and businesses
alike.
Smart Card Utilization
Smart cards are a hot topic when discussing eCash. These forms of
payment would house all of the currency on them, like a wallet holds
physical cash. Then, when payments are made, the data can be updated
or transferred. When you go home, you then upload the electronic cash
back to your hard drive until it’s ready to be used again. Smart cards
would eliminate the need to carry different currencies when traveling
internationally. Different forms of electronic currency could be loaded to
them.
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5.4.1 E-cheques
An e-check is a way for individuals and businesses to make payments

from their checking account electronically. This method can offer a
number of advantages for both those making and those receiving these
payments.
What Is an E-Check?
An e-check is essentially an electronic payment from your checking
account. In order to use an e-check you will need to have the
bank's routing number, your checking account number and of course
your name as listed on the account.
E-checks and electronic payments are commonly used to make online
payments. When shopping online or making a payment such as to your
credit card company, a payment to the IRS or for your mortgage, its
common to have the option to make an electronic payment directly from
your checking account using this information.
Among the advantages to this method of payment include speed of
processing and an electronic record of your payment. Once you make an
e-check payment, you typically get a receipt almost immediately that you
can print or save as a PDF file. Most payees also provide the option to
receive an email confirmation.
E-checks and electronic payments can be used by both individuals and
businesses. On the business side there are actual electronic checks that
appear in the form of a check. For individuals, using your checking
account information to make electronic payments is more common.
With an e-check, payments are withdrawn from your checking account
and transferred electronically to the payee via the ACH network. E-
checks and electronic payments typically take 24-48 hours to clear the
payer's bank and for the funds to show up in the payee's bank account.
This quick timing is beneficial for both parties to the transaction. For the
payor, there are long periods of float that can occur when a paper check
is mailed. They have mailed the payment, but the funds remain in their
account. For individuals or businesses who don't balance their accounts
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or keep close tabs on their checking account, this can result in an

overdraft if they forget about this payment and overspend their account.
The payee also likes the fact that they don't have to wait for the check to
arrive via the mail and then wait for the normal check clearing process
for a paper check. They need to deposit the check to their bank and then
the bank sends it through the check clearing process. Typically, the payee
will receive their funds more quickly than by a paper check improving
their cash flow and allowing them to use this cash sooner.
Why Use E-Checks?
When you mail a check for the payment of a bill, you have to wait for the
check to arrive and then be processed by the company you are paying.
None of us has any control over the speed of the mail, and different
companies and organizations may process check payments faster or
slower than others. The end result might be that a payment that you
thought was mailed and would be on time ends up being late.
Additionally, if your paper check payment ends up getting lost in the
mail you could be in for major problems.
As a practical matter, using an e-check or electronic payment reduces
your cost for paper checks. While the cost varies a bit by bank and by
supplier, anyone who's ordered them lately knows they are relatively
pricey.
If you mail a check as payment for a bill, there is the cost of postage. Not
a huge cost, but if you mail in a lot of payments via paper check the cost
of postage can add up over the course of a year. Some estimates peg the
overall cost of using a paper check at about $1 with the cost of an e-
check at about 10 cents.
It’s important to know that e-checks and electronic payments can bounce.
Since the money is not taken from the payee's bank account instantly, the
payment can bounce just as with a traditional paper check. There may be
a fee or penalties assessed against the issuer of the e-check or the
electronic payment just as with a bounced paper check.
For those who wish to, there are some instances where an e-check, as
opposed to an electronic payment using the payor's bank account, can be
cashed. Some options can include the payor's bank if they are willing to
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do so, or perhaps a local check cashing location. Certainly, in the latter

case there will be a fee charged for this service. This begs the question
why would someone want to cash an e-check versus just getting the cash
from their bank account?
What Types of Payments Can Be Made With E-Checks?
E-check and electronic payments can be made to anyone who accepts
them. As mentioned above, the IRS accepts them. I just renewed my
vehicle license plate via e-check here in Illinois where I live.
E-checks work well for recurring payments. Some examples include:
 Mortgage payments
 Health club memberships
 Auto loan payments
 Rent payments
Credit card payments
In some cases, it's not uncommon to either be given the option to set up a
recurring payment from your checking account for some bills. This is not
uncommon among landlords for their tenants, in fact some properties
make this a requirement of renting. The monthly rent will be deducted
from the tenant's checking account on the same date each month.
Are E-Checks Secure?

With anything done electronically or online there are always security
concerns. Sadly, online criminals and hackers are becoming more
sophisticated all the time. We hear about data and security breaches of
one sort or another on a regular basis.
That said, e-checks and electronic payments are generally considered to
be secure, more secure than physical checks in many cases. This is
because there is no physical document to intercept. Over the years,
thieves have found ways to use physical checks in a number of ways to
commit fraud and identity theft.
With e-checks there are a number of steps used to authenticate payments
and authenticity throughout the process. These added layers of security
help both parties to the transaction.
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E-checks and electronic payments are here to stay and will certainly
evolve over time. Both individuals and businesses will increasingly
continue to make payments in this fashion. It pays to be sure you
understand how this process works both as a payor and as a payee.
5.4.2 Credit cards
Definition
A credit card is a small plastic or metal card issued by a financial
company. It allows you to make purchases by borrowing money up to an
established limit.
Definition and Examples of a Credit Card
A credit card allows you to access a credit limit that's provided by your
credit card issuer. Your credit limit is the maximum amount you can
borrow. Instead of giving you the full loan in cash, the card issuer lets
you take as much of the credit limit as you want at a given time. As you
pay the minimum monthly payment required by the issuer, you can
continue to borrow as long as you do not reach the credit limit.
One example of a credit card is the Chase Sapphire Preferred credit card.
It offers cardholders rewards in the form of points that can be redeemed
for things like airline miles and more.
How Do Credit Cards Work?

To make a purchase at a brick-and-mortar retailer, you typically insert
the credit card into a card reader so it can read the security chip on the
card. You may also be asked to enter your billing ZIP code. At an online
retailer, you'll be asked to enter the card number, expiration date, and
security code (typically found on the back of the card), and your name
and billing address.
When you swipe your credit card to make a purchase, the merchant's
credit card terminal asks your credit card issuer whether the card is valid
and has enough available credit.
Your credit card issuer then sends back a message stating whether the
transaction is approved or declined. If it's approved, you're good to go. If
not, you may have hit your credit card limit, or your card may have been
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deactivated due to suspected fraudulent activity. That doesn't necessarily

mean your identity has been stolen; card issuers may deactivate your card
and get in touch if you've made unusual purchases.
Note
If you travel abroad, your card issuer may deactivate your card until it
confirms that you're the one who made the purchases.
How Your Credit Line Works?
Each time you make a purchase, your available credit goes down by that
amount. If you have a $300 credit limit, and you make a $25 purchase,
you would have $275 in available credit. You'll owe $25 to the credit
card company. If you borrow another $50 before paying back the $25
you borrowed, you would owe the bank a total of $75 and have $225 in
available credit.
What makes a credit card different from a regular loan is that your credit
limit is available after you pay down the balance. Assuming you started
with a zero balance, if you were to pay back the $75 that you owed by
your credit card due date, you'd have $300 of available credit again.
You can repeat the process of spending up to your credit limit and
repaying the balance as often as you like, provided you abide by the
terms of the credit card.
You can continue borrowing against your credit limit over time, which is
why credit cards are referred to as "revolving accounts" or "open-ended
accounts."
How Credit Card Interest Works
The credit card issuer gives you a certain amount of time to pay back the
entire amount that you’ve borrowed before you'll be charged interest.
The period of time before the interest is charged is called the "grace
period," which is typically about 21 days.
If you don’t pay off your full balance before the end of the grace period,
a fee or finance charge is added to your balance. The finance charge is
based on your interest rate and outstanding balance.
The interest rate is the annual rate you pay for borrowing money on your
credit card. Interest rates are generally based on market interest rates,
your credit history, and the type of credit card you own.
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How Credit Card Minimum Payments Work

To avoid paying interest, you typically have to pay your statement
balance in full on or before your due date. However, the credit card
issuer usually doesn’t require you to pay back all of what you owe at
once. You must pay at least the minimum payment by the due date to
avoid a late penalty. Credit card issuers vary when it comes to how they
determine your minimum balance, but you can find it in your credit card
terms.
It's important to always pay at least the minimum amount on time each
month to maintain a good credit history and avoid late fees.
Note
Paying only the minimum is the slowest and most expensive way to pay
off your credit card balance. It's best to pay as much as you can and,
ideally, pay the balance in full.
Credit Cards vs. Debit Cards
While credit cards and debit cards look identical, they function in very
different ways. With a credit card, you're borrowing money from the
credit card issuer. With a debit card, you're using money from your
checking account to pay for purchases. To use a debit card, you also need
to enter your PIN.
You can also use a debit card to take cash out of your checking account
at an ATM or when you make a purchase. Some credit cards allow you to
access cash by taking a cash advance, but these transactions tend to have
higher interest rates than purchases do, and they may not have a grace
period. In other words, you must pay interest on the advance.
5.4.3 Smart cards
Introduction to Smart Card
An intelligent card is a physical card with an embedded, built-in chip

serving as a security token. They are usually similar in size and can be
made from metal or plastic-like a driver’s license or credit card. You link
to a reader either through direct physical contact or a short-term wireless
networking protocol like recognition of radio frequencies or close-field
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communication. A microcontroller or a built-in memory chip may be the

chip on a smart card.
Intelligent cards have been designed to be immune to manipulation and
use encryption to secure in-memory information. The microcontroller-
chip cards can perform processing functions on-card and can access the
data in the memory of the chip. Intelligent cards are used for a variety of
uses but are mainly used for credit cards and other payment cards. The
sale of intelligent cards has been propelled in recent years by a push by
the payment card industry to embrace EMV compliant smart cards.
Uses of Smart Card
 In general, smart cards are used to make fast and safe transactions
and protect personal information including credit cards and other
forms of cards, company, and government identification cards,
and transit fare cards.
 Electronic passports and visas are several times used for the
purposes.
 Intelligent cards, for example, are mostly intended for use as
ATM cards or debit, using a Lock.
 Organizations also use it for security purposes, the cards can also
be used to authenticate individual sign-on users in addition to
their use as multifactor automation tokens.
How does Smart Card works?
 Intelligent microprocessors or memory chips share data over a

serial interface with card readers and other devices.
 An external source, usually the smart card reader, drives the
intelligent card itself.
 Whether by direct physical contact or using a short-range
Wireless connectiveness standard such as RFID or NFC, an
intelligent card communicates with readers.
 The card reader then transmits data from the intelligent card to its
destination.
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 Usually it is paid for or authenticated through a network link to

the card reader.
Types of Smart Card
Intelligent cards may be classified by factors including how the card

reads and writes data, by the type and capabilities of the chip embedded
in the card.
Some of the different smart card forms include:
1. Microprocessor
In addition to memory blocks, microprocessor smart cards are embedded

on the chip. A microprocessor card can also contain different file
sections where each file is connected to a particular feature. The file data
and memory allocation are handled by the operating system of the
intelligent device. Each card form can be used for more than one purpose
and is usually intended to add, delete or otherwise modify memory data.
2. Memory
Smart card memory can contain memory chips and can only store, read
and type chip data, data can be overwritten or changed on memory card
smart cards, but the card itself cannot be programmed such that it cannot
process or alter the data programmatically. Smart cards for memory can
be read-only and used to store such data as PIN, password or public key,
also read-write and can be used as user information for writing or
updating purposes. Smart memory cards can be designed to be either
rechargeable or disposable, in which case they contain data that can be
used only once or for a limited time before discarding or upgrading.
3. Contactless
Contactless intelligent cards only allow readability in close proximity to

a card reader, for the card to function, no direct contact is needed. The
card and the reader both have antennas and communicate through
contactless connection with radio frequencies. A contactless intelligent
card works by placing the reader close to the reader.
4. Dual-interface Cards
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Dual interface cards have contactless interfaces and contact interfaces.

This card form enables secure access to the chip of the card with the
contactless device or smartphone.
Advantages
Given below are the advantages of Smart Cards:
 It can provide better protection than magnetic stripe cards

because microprocessors can process data directly without remote
access, even memory-only smart cards can be safer since more
authentication and account data are stored safely than
conventional stripe cards.
 In general, smart card technology, unlike magnetic stripe cards, is
free from electronic interference and magnetic fields.
 Apps and data on a card may also be updated through secure
channels to prevent issuers from automatically issuing new cards
when an update is required.
5.4.4 Electronic purses
This is the store of value on a card, which can be used in a

manner comparable to cash to pay for travel or for other small-
scale transactions. The electronic “purse” is secure information
stored in a dedicated area or file in the smart-card.
Two different main objectives are identified for electronic
purse:
1. Replace cash in the public transport payment system,

either to move from a primarily cash-based system or as an
alternative for the residual cash payments in a system that is
largely pre-paid.
2. Retain the single tariff as the fundamental fare product;
this may be an alternative or replacement for time-based tickets.
There are different concepts for electronic purse, which centre on

the nature of the value. The main types are:
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 Tokens: The purse consists of units that have no monetary

value. The units can be equivalent to individual journeys, or to
money units. When the card is presented for travel, the number
of units required for the applicable fare is deducted. Eventually,
when all of the units have been deducted, the card is no longer
usable for travel.
 Transport money: The purse consists of units equivalent
to money, but it can only be used for passenger transport fares.
Depending on the context, this could include multiple modes,
park and ride, and car parking. Although presented to the user in
terms of cash equivalent, it does not have any monetary validity
outside the immediate transport environment.
 Transport and micro-purchases: The purse contains
units equivalent to money. The primary usage is for payment of
passenger transport services. The value can also be used for
small purchases at non-transport locations, e.g. kiosks and
vending machines. There is likely to be a modest upper limit on
the value that can be loaded to the card at any given time.
 eCash: The purse contains electronic money, which has
full monetary value, is usable at any outlet with an accepting
device, and is at any time exchangeable for cash. Transport may
be just one of a number of items where the eCash can be used,
and might not even be the main usage. The eCash is subject to
banking regulations, and would have to be issued and
underwritten by a bank.
Depending on the configuration desired by the transit agencies, a

printed ticket may be issued. The details of the most recent
transaction are usually stored on the smart-card, whether or not a
ticket is issued. .
Public transport agencies frequently offer incentives to
customers to use electronic purse. The three main incentive types
are:
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1. A lower tariff is applied to tickets purchased with

electronic purse compared to tickets purchased with cash (may
be presented as a discount for e-purse or a surcharge for paying
cash).
2. Free or reduced-rate transfers are available when paying
with electronic purse, but cash customers are not entitled to free
transfers and must pay for each boarding separately.
3. ‘Fare capping’, where the trips are paid for individually,
but subject to a maximum amount deducted during a day or
week. This may be equivalent to the price of a daily or weekly
pass.
Benefits of electronic purse are:
1. The customer pays only for the travel made.

2. Incentives such as free transfers, discounts and fare-
capping can be offered to the customer in a secure and consistent
way.
3. Cash handling is reduced as customers migrate to prepaid
tickets.
4. Electronic purse can be offered for infrequent customers
when it is desired to eliminate all cash transactions.
5. Innovative means of adding/renewing value can be
utilized.
6. High degree of security.
7. Third parties can become involved in issuing value.
8. Cautionswith regard to electronic purse are:
9. Technical complexity, which requires a substantial level
of technical competence within the organization.
10. Need for a high level of electronic security, and the
capacity and commitment to managing this security correctly.
11. The higher the value of the scheme, and the more places
the electronic purse can be used, the more likely the regulations
applying to banks and deposit-taking institutions will become
applicable to the scheme.
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12. Loss of corporate focus can occur when the transport

agencies become overly interested in the ancillary uses for the
electronic purse, to the detriment of the core purpose – which is
the payment of transit fares.
5.4.5 Debit cards
Definition
A debit card allows users to make payments directly from their bank
accounts using credit card networks instead of paper checks.
Definition and Example of a Debit Card
A debit card is like an ATM card with the functionality of a credit card.
The notable difference is that when you buy something with a debit card,
the money comes directly from your checking account.
Your bank may issue you a debit card or credit card, but these plastic
payment options don't function the same way. The major difference is
that a debit card is a type of bank card that is linked to your checking
account.
Alternate name: Bank card
You can use a debit card to withdraw cash at ATMs or make purchases at
the brick-and-mortar and online stores where credit cards are accepted,
all without having to write a check or carry cash. One of the benefits of a
debit card is being able to use it for transactions that typically require
credit cards. Examples include online purchases, car rentals, and hotel
and airline reservations, among other things.
How a Debit Card Works?
Debit cards can be used at ATMS to withdraw cash directly from your
bank account or to pay for goods and services where credit cards are
accepted. The biggest advantage over credit cards is that you're not
borrowing money as you are when you use a credit card, which can help
keep you out of debt.1
Note
If you use your debit card at a hotel or for a car rental, the company may
put a larger hold on the account to cover the estimated cost of the stay
and incidental, or extra, costs you might accrue. Keep more than the
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amount of your purchase in your checking account if you plan to use

your debit card to pay for a hotel or a car rental to avoid a situation in
which your card is declined because of a hold in excess of your current
balance.2
To use your debit card, swipe the card in a merchant's card reader and
enter the personal identification number (PIN) that you received from the
bank on the keypad. If the transaction is approved, a pre-authorization
hold will be placed on your checking account that reduces your account
balance by the amount of the transaction. Your bank may show the
transaction as "pending" until the money is transferred from your account
to the merchant. At this point, it will show up as a cleared transaction.
You may have a transaction listed as pending for three to four days, but
hold periods can vary by bank.3
It's possible to overdraw your account if you opt for overdraft protection.
Doing so will incur an overdraft fee, typically around $35. What this
means is that you can successfully make a purchase even if you do not
have the funds in your account to cover the expense. The overdraft fee is
what the bank charges for allowing your balance to drop to less than
zero.
Note
Maintaining a running balance on your checking account can help reduce
the likelihood of incurring overdraft charges.
Opting out of overdraft protection means your card will be declined if
you attempt to make a purchase when you do not have sufficient funds.
In that case, you will not have to pay an overdraft fee.
Alternatives to Debit Cards
Paying with cash or writing checks may be preferable for some people,
and checks are drawing money from the same checking account as a
debit card.
When you need to pay with plastic, there are benefits to using a credit
card instead of a debit card. If used responsibly and if you pay off
balances every month, it can help build credit.5
Fraud protection for credit cards also is typically stronger than it is for
debit cards. If your card is physically stolen, call the bank immediately.
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Whether you have a debit card or a credit card, you can't be held liable
for any unauthorized charges that hit your account after you contact your
bank. Beyond that, protections favor credit cards. The most you are liable
for with a credit card is $50, but for debit cards, that liability can increase
to as much as $500 if it takes more than two days before you are able to
report the fraud. Your liability with credit cards is $0 if only the numbers
were stolen and you still have the card.6
Additionally, a stolen debit card often is more inconvenient even if you
are not liable for the charges. Money is debited directly from your
checking account, and it takes time before it is refunded. With a credit
card, however, you don't lose access to any of your own cash—only the
use of your card until you are issued a new one.
5.5 BUSINESS ISSUES & ECONOMIC IMPLICATIONS
The online shopping industry has been growing at an incredible rate, and
so have ecommerce challenges.
For example, the rise of digitalization has transformed the way online
retailers operate. Although this online approach has made shopping
easier for consumers, it has also brought unique problems for ecommerce
companies — like website optimization and service over multiple digital
touchpoints.
1. The need for online identity verification

2. Delivering an omnichannel customer experience
3. Outshining the vast competition
4. The need to revamp selling tactics
5. Shopping cart abandonment
6. Maintaining customer loyalty
7. The headaches of product return and refund
8. The struggle of competing on price and shipping
9. Competing against retailers and manufacturers
10. The heightened demand for data security
1. The need for online identity verification
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When a visitor goes to an ecommerce website and signs up, you need to
somehow be sure that this is a legit person who wants to buy. This way,
you'll avoid fraudulent accounts or bots which could result in revenue
losses (especially with cash-on-delivery (COD) purchases).
Solution: Take proper steps to verify online shoppers' information.
Always send a verification link when a customer signs up. With COD
purchases, an automated call could even go out to the customer, asking
them to validate the delivery address. Also, use automation to identify
fake phone numbers and email addresses and check whether zip codes
match with the state/city.
And of course, look out for signs of suspicious activity. This could take
the form of particularly high value or large orders.
2. Delivering an omnichannel customer experience
One of the biggest problems an online retailer faces is achieving an

effective omnichannel customer experience. Customers expect they can
reach out to your brand through any number of touchpoints, such as your
website, phone, email, social media, your store, and more. All of these
touchpoints need to be unified.
Creating an omnichannel customer experience in retail allows companies

to communicate with customers on all channels.
In fact, according to ecomdash, any business that isn’t moving toward an

omnichannel retailing strategy will likely be left behind.
Solution: To create an omnichannel strategy that works, think about
potential customer needs, and implement the right customer experience
technology. Here are a few steps to follow to solve ecommerce
challenges of this type.
 Identify key channels first. How are your customers reaching

out to you? What channels do they prefer?
 Integrate these channels. Use customer experience technology
to talk to customers via their preferred channels (like phone, email, live
chat, video call, online help centers or in-app messaging).
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 Maintain context. Use interaction history to inform

conversations. Unified view features on CX platforms can offer this
ability.
3. Outshining the vast competition
Ecommerce is one of the most competitive industries. Variations in

different parameters — costs, service, supply chain operations, and more
— can make a huge difference for customers. Getting and maintaining
your customer base is one of the most tough-to-crack ecommerce
challenges.
For example, if one of your competitors strikes a partnership with a
delivery app, this may help them get a greater market share. And that’s
even if your prices or products are better.
Solution: Conduct thorough research into competitors and the market to
develop your digital marketing strategy. Invest in promotional offers to
help create a better brand presence. Remember that online businesses
with customer loyalty programs, on average, are 88 percent more
profitable than those that do not offer these programs.
4. The need to revamp selling tactics
One of the most pressing customer service issues in ecommerce is

catching up to modern customer expectations. Many companies lack the
necessary insight into customer behavior and buying patterns.
Solution: Consider offering your products in prominent marketplaces
like Amazon and eBay. These ecommerce sites already have a vast
network of buyers so pitching and branding your product (and figuring
out what works and what doesn't) becomes somewhat easier.
Also, segment your data. Visitor segmentation allows ecommerce
companies to identify and communicate with visitors based on their
customer journey, past conversations, geographical location, browsing
behavior, referral page, and much more.
5. Shopping cart abandonment
Shopping cart abandonment is a huge ecommerce business challenge.

Even ecommerce giants are not immune to it.
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For instance, when brick and mortar heavyweight Nordstrom started an

ecommerce portal, they witnessed big opportunity losses of ecommerce
sales from abandoned carts. The tedious and bug-filled checkout process
was causing customers to flee mid-purchase. This ecommerce problem
can’t be ignored.
Ensure your ecommerce shopping cart is optimized and easy to use by

enabling a two-step checkout process.
Solution: Nordstrom had to come up with a new checkout design,

turning checkout into a much easier two-step process.
Consider redesigning your shopping cart, too. Remove bugs or
unnecessarily long forms. Offer instant help tools that customers can use
if they get stuck. Visual tools can also help address customer queries
during the checkout process. For instance, if a customer has trouble
creating an account, your agents can initiate a cobrowsing session to
show them how to do it.
Applying this simple solution can greatly improve your shopping cart
conversion rate.
6. Maintaining customer loyalty
Without customer trust and loyalty, your business is bound to struggle.

But, acquiring and maintaining customers requires massive effort.
One of the reasons ecommerce businesses face a challenge in building
customer trust and loyalty is that often the seller and buyer don’t know or
can’t see each other. This makes interactions less personable.
This ecommerce challenge can only be solved through time and effort.
Across multiple transactions, eventually, the company can build this trust
and loyalty.
Solution: First make sure your customer service processes are effective,
from ordering online to shipping. Also, consider:
 Displaying your address, phone number, pictures of staff,

customer testimonials, and credibility badges on your website.
 Creating valuable content.
 Making customer service a priority over profit.
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 Asking for customer feedback.

 Refining loyalty programs.
7. The headaches of product return and refund
One of the problems faced by customers in online shopping is returning

items. A survey by comScore and UPS, showed 63 percent of American
consumers check the return policy before making a purchase and 48
percent would shop more with retailers offering hassle-free returns.
But, when a product is returned, the business suffers a heavy loss in
shipment and reputation. Shipping costs in this case have always been an
ecommerce problem to sellers.
A common ecommerce challenge is returns and refunds, make the

process easy for both parties.
Solution: You can't avoid having good return and refund policies. But,
you can build your policies carefully and communicate them clearly.
Consider the following tips:
 Be transparent. Never hide your policy hoping customers will

not see it.
 Use plain English. It's important for these policies to be
understandable to everyone, regardless of cultural background or
education level.
 Set expectations. Provide different options for payments and
shipping.
 Educate staff. They need to know your return policies to assist
customers effectively.
 Be prepared to face the music. If the product is shipped wrong,
take extra effort to keep the customer happy.
8. The struggle of competing in price and shipping
Despite customer experience being the most important thing for

consumers, online merchants frequently compete on price, too. Price
competition particularly affects small ecommerce businesses, as mid-
sized and large competitors can often offer products less expensively.
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For example, giants like Amazon and Walmart generally have shipping
amenities distributed across the country. Their warehouses allow orders
to be shipped from the closest facility. That way, the cost of distribution
decreases and the order arrives really fast.
Solution: This is one of these ecommerce challenges that can make or
break a business. It’s hard to thrive in a competitive market, but you can
still find ways to distribute inventory to fulfilment warehouses. You can
also become an extremely resourceful shipper, or find some unique
products consumers won't be able to find elsewhere.
9. Competing against retailers and manufacturers
Many online stores bulk buy products wholesale from manufacturers or

distributors, selling them online. This is the basic business model for
ecommerce.
But, due in part to ecommerce's low barrier to entry, product
manufacturers and retailers have started selling directly to consumers,
too. The same company that sells your products may also be your
competitor.
For example, ABC Garments sells to your online marketplace and
directly to consumers on its website. Even some of the manufacturers
create distributors, making the scenario worse.
Solution: You can’t stop manufacturers selling products directly to
customers, but there are a few tactics to try:
 Give priority to manufacturers less likely to sell directly to

customers.
 Offer the product at a lower price or with additional benefits to
increase sales.
 Restrict the manufacturer from selling the product directly to
customers by setting this out in the contract. It will not be
possible for every manufacturer, but you can work with smaller
ones this way.
10. The heightened demand for data security
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Security issues can lead to nightmare scenarios. Fraudsters may post

spam and infect websites with viruses. They can potentially gain access
to confidential data about your customers' phone numbers, card details,
and more.
A common ecommerce challenge for online retailers is security issues

when shoppers are using credit cards and adding personal information.
Consumers, though, don't care what you do, they expect you to protect
them fully. Security shouldn’t be seen as part of ecommerce challenges
— it should be a bare necessity.
Solution: To make sure your site is safe, here are some ideas:
 Manage your own servers.

 Don’t use common FTP to transfer files
 Employ cybersecurity services or engineers
 Have effective verification processes (as we mentioned in #1)
Also, if any developer copies files in an open Wi-Fi network, passwords

and other confidential data can be stolen. By constantly updating the
shopping cart, you can minimize the risk of stolen data.
Most content management systems store their data in the database.
Ecommerce challenges can be opportunities
Surviving the fierce ecommerce competition requires outstanding

strategies. Be prepared to address all possible ecommerce problems and
focus on building a customer-centric culture. This way, you may not only
address customer service issues but you may also find what makes your
customers tick, and offer them an online shopping experience they'll
remember.

1. Discuss how to compete against retailers and manufacturers?
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2. What is shopping cart abandonment?
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5.6 OPERATIONAL CREDIT AND LEGAL
risks of e-payment systems
Risks in payment systems

In any payment transaction, there will be a time lag between the time
payment instructions are issued and final settlement of these claims
(either on gross or net basis). This time lag exposes the entire system to
various risks which are given below:
1. Credit Risk: the risk that a party within the system will be
unable fully to meet its financial obligations within the system either
when due or at any time in the future
2. Liquidity Risk: the risk that a party within the system will have
insufficient funds to meet financial obligations within the system as and
when expected although it may be able to do so at sometime in the future
3. Legal Risk: the risk that a poor legal framework or legal
uncertainties will cause or exacerbate credit or liquidity risks
4. Operational Risk: the risk that operational factors such as
technical malfunctions or operational mistakes will cause or exacerbate
credit or liquidity risks
5. Systemic Risk: the risk that the inability of one of the
participants to meet its obligations, or a disruption in the system itself,
could result in the inability of other system participants or of financial
institutions in other parts of the financial system to meet their obligations
as they become due. Such a failure could cause widespread liquidity or
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credit problems and, as a result, could threaten the stability of the system
or of financial markets.
Risk mitigation measures

As stated earlier, most of the risks in payment systems arise during and
due to the extent of time lag between finalisation of the transactions and
their ultimate settlement with finality. Besides this, risks in payment
systems could also arise due to inadequate safeguards in the security and
procedures of operations as well as insufficient legal backing to the
payment and settlement systems.
Since the process of netting reduces the ultimate payment obligations, the
element of liquidity risk as well as liquidity requirements by the
participants is reduced in netting systems but not completely eliminated.
Reduced obligations also lead to reduced credit exposures. But the
greatest risk involved in netting systems can arise out of the legal validity
of the netting calculations itself. In the absence of legal framework which
recognizes netting as a valid means of settling payment obligations, in
the event of one bank defaulting, the net amount of the defaulting bank /
member, represent real or legal obligations / claims of the remaining
banks. In such a case, the liquidation process may challenge the netting
procedure claiming that the underlying gross payment flows are the real
obligations and not the netted amounts, thereby necessitating other
participants to fulfill their obligations with the defaulting member first
and then seek compensation, if any. In this process, the element of credit
risk increases. It can also have a snow-balling effect in the sense that,
‘unwinding’ or ‘unpicking’ of netting calculations can lead to default by
other banks which otherwise were in a position to fulfill their obligations
(especially if they were net recipients in the settlement and were
expecting large flow of funds from the defaulting banker in the first
place) thereby leading to systemic risk.
Besides addressing this risk through legal framework, payment
systems in different countries adopt different practices to mitigate the
above risks. Some of these practices include:
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 Application of strict membership criteria for the system and

restricting those members / class of members who may pose significant
risks to the systems.
 Application of caps or limits on intra-day exposures to the system
by the participants along the lines of counterparty exposure limits which
members themselves adhere to in the markets.
 Limits set up by the system so that no single party breaches such
limits.
 Delaying the availability of funds to the final customer till
settlement is reached with finality.
 Liquidity sharing or loss sharing arrangements in the system with
appropriate contributions from the members.
However, one common way of addressing most of these risks, especially

in case of large-value netting systems, is through the way of gross
settlement of payment obligations. Gross settlement systems, however,
expect constant availability of liquidity with the participants to enable
them to put through transactions which can be settled in real time with
finality, leading to building up of liquidity pressures on the system. In
order to reduce such liquidity burden, many gross settlement systems
also provide liquidity avenues in the form of central bank support of
intra-day funds, queuing mechanisms for payments, gridlock resolutions
etc.
5.7 LET US SUM UP
 A credit card is issued by a financial company and allows you to

make purchases by borrowing money up to an established limit.To make
a purchase in person, you must insert the card into a card reader. To
make an online purchase, you must provide all your card information and
your billing address. Once you pay down what you've borrowed, you can
borrow again up to your credit limit. You can often avoid interest charges
by paying your statement balance by your due date. Though they look the
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E-Commerce
same, debit cards function differently. They allow you to make purchases
by electronically deducting money from your checking account.
 Debit cards function similarly to credit cards.Funds are debited
directly from a bank account.Overdraft protection allows transactions to
process even if you don't have the funds to cover them, but you'll be
charged an overdraft fee.Liability for charges on lost or stolen cards can
be limited to $50 if reported soon enough.
 The Electronic Payment System refers to making online
transactions without cash or cheques.The RBI regulates the electronic
payment systems in India.Electronic Clearing services allow banks and
non-banking institutions to debit or credit money instantly.NEFT, IMPS,
and RTGS allow cashless fund transfers between bank accounts.E-
payment systems are safe, speedy and cost-effective alternatives to
paper-based payment systems.
5.8 KEY WORDS
1. ACH: The Automated Clearing House (ACH) is an electronic funds-

transfer system run by Nacha. The Automated Clearing House traces its
roots back to the late 1960s but was officially established in the mid-
1970s. The payment system provides many types of ACH transactions,
such as payroll deposits. It requires a debit or credit from the originator
and a credit or debit on the recipient's end.
2. Authentication: Authentication is a term that refers to the process of
proving that some fact or some document is genuine. In computer
science, this term is typically associated with proving a user’s identity.
Usually, a user proves their identity by providing their credentials, that
is, an agreed piece of information shared between the user and the
system.
3. Data Encryption: Data Encryption is a method of preserving data
confidentiality by transforming it into ciphertext, which can only be
decoded using a unique decryption key produced at the time of
the encryption or prior to it.
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4. POS system: A point of sale system, or POS, is the place where your
customer makes a payment for products or services at your store. Simply
put, every time a customer makes a purchase, they’re completing a point
of sale transaction.
5. SSL certificate: A secure sockets layer (SSL) certificate refers to a
file hosted within the webpage's origin server, which holds the data that
browsers access when you are viewing and interacting with the page.
3. Agrawala k.n. Anddeeksha agrawala: Business on the net: Bridge to
cation, new delhi.
washington.
hill, new delhi.
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E-Commerce
Answer1: Debit cards are ideal for customers who shop online within
their financial limits. You can only pay money that is within the balance
stated in your bank account. Debit cards ensure that you do not spend
above what you can afford. Debit cards provide vendors with a certainty
of payment and can save time and effort.
Answer2: Bank transfer payment can be secured because each

transaction undergoes authentication and verification by the bank itself.
When customers choose bank transfers, they are redirected to the online
banking portal. Once their transaction is confirmed, the customer gets
notified on their smartphone.
Just like debit cards, the customer uses money that is already in the bank.
They first need to register with their bank to avail of the online banking
facility. During the purchase, the customer will be asked to input their
username and PIN to complete the order. It is usually the last option if
other payment methods fail. Also, some online stores are keen on using
bank transfer as a payment option.
However, not all banks have ecommerce capabilities. Thus, this is
important when selecting a bank to handle your ecommerce transactions.
When looking for a bank with online shopping capability, look for one
that can manage information security like data encryption and fraud
prevention. In addition, they should also have transaction identification
capabilities.
Answer3: If you own an online store, an SSL certificate is a necessity. It

will help secure your website by encrypting communication between
your store and its customers. When an SSL certificate is installed, it will
prevent hackers from intercepting personal information or stealing credit
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card details. An SSL certificate is required if you accept credit card

payments on your website.
Just how important is an SSL certificate in boosting customer loyalty?
Well, according to 67% of customers, they would refuse to shop in an
online store without an SSL certificate. In another study, 84% of
customers say they would abandon a purchase if the connection was not
secure. On the other hand, if you earn the trust of customers by showing
them that you are protecting your customer data, you gain their loyalty.
To gain the confidence of your customers, you need to install your SSL
certificate on your website. It shows customers that there is a safe
connection between your website and browser. Aside from that, your
SSL certificate contributes to increasing your site speed. It will also help
increase your Google rankings.

Answer4: Many online stores bulk buy products wholesale from
manufacturers or distributors, selling them online. This is the basic
business model for ecommerce.
But, due in part to ecommerce's low barrier to entry, product
manufacturers and retailers have started selling directly to consumers,
too. The same company that sells your products may also be your
competitor.
For example, ABC Garments sells to your online marketplace and
directly to consumers on its website. Even some of the manufacturers
create distributors, making the scenario worse.
Solution: You can’t stop manufacturers selling products directly to
customers, but there are a few tactics to try:
Give priority to manufacturers less likely to sell directly to customers.
Offer the product at a lower price or with additional benefits to increase
sales.
Restrict the manufacturer from selling the product directly to customers
by setting this out in the contract. It will not be possible for every
manufacturer, but you can work with smaller ones this way.
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E-Commerce

Answer5:Shopping cart abandonment is a huge ecommerce business
challenge. Even ecommerce giants are not immune to it.
For instance, when brick and mortar heavyweight Nordstrom started an
ecommerce portal, they witnessed big opportunity losses of ecommerce
sales from abandoned carts. The tedious and bug-filled checkout process
was causing customers to flee mid-purchase. This ecommerce problem
can’t be ignored.
Ensure your ecommerce shopping cart is optimized and easy to use by
enabling a two-step checkout process.
Solution: Nordstrom had to come up with a new checkout design, turning
checkout into a much easier two-step process.
Consider redesigning your shopping cart, too. Remove bugs or
unnecessarily long forms. Offer instant help tools that customers can use
if they get stuck. Visual tools can also help address customer queries
during the checkout process. For instance, if a customer has trouble
creating an account, your agents can initiate a cobrowsing session to
show them how to do it.
Applying this simple solution can greatly improve your shopping cart
conversion rate.
1. Give some popular electronic payment methods used now-a-days

2. How does e-cash works? Mention its benefits also.
3. What type of payments can be made with e-cheques
4. Differentiate between debit cards and credit cards
5. State some benefits of using an e-purse
242

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E-Commerce

After studying this unit, you will be able to:

 Describe the nature of E-commerce

E-commerce, also known as electronic commerce or internet commerce,

(ebusiness), which involves all of the processes required to run a

New technology continues to make it easier for people to do their online

1.2MEANING AND CONCEPT

information about products and also allows monetary transactions to

The various objectives of e-commerce can be laid down as follows:

3. Getting more customers:

Feature # 7. Virtual Communities:

1.3 ELECTRONIC COMMERCE VERSUS

Definition of Traditional Commerce

Table :1.1 Key Differences Between Traditional Commerce and e-

The following points are noteworthy so far as the difference between

1. A part of business, that focuses on the exchange of products and

8. Traditional commerce is concerned with the supply side. In

1. Explain Key Differences Between Traditional Commerce and e-

2. State the features of electronic commerce

3. Define Traditional commerce

1.4 MEDIA CONVERGENCE AND E- BUSINESS

Media Convergence simply refers to the merging of different types of

Media convergence has proved to be beneficial in the digital era which is

Technological convergence is a term that describes the layers of

media into a digital form of technology, for example, viewing a book

 Technologies convergence is when new technologies are created

Just like the general definition of Economic convergence which suggests

 In Economic convergence large companies use old and new

This concept of media convergence occurs when two or more cultures

 Acculturation: When weaker among two cultures adopt traits

 Assimilation: When original traits of weaker culture are

Wondering why media convergence is important? It is important because

 It transforms the modes of communication, news reporting, and

3Cs of Media Convergence

 Highly relied on technology and the internet, thus the areas

1.5 CHANNELS OF E-COMMERCE

An "ecommerce channel" is a route through which an ecommerce

Retail makes use of many sales and marketing channels beyond

Electronic data interchange (EDI) is a method through which two

with customers and prospective customers. Traditional examples include

The banner advertising marketing channel involves a business paying

Banner advertising is a relatively simple method of promoting a business,

Social marketing refers to unpaid marketing activities a business

If a known customer has placed an item in the ecommerce cart without

1.6 BUSINESS APPLICATIONS OF E- COMMERCE

E-commerce applications is a bit misleading terminology, as it leads to

Fig :1.2Most Common E-Commerce Applications

E-retailing or online retailing refers to the transaction of goods and

electronically by giving information about stocks such as performance

In manufacturing, e-commerce forms a medium for companies to execute

The shopping preferences of people have undergone a massive change in

7. Mobile and Web Applications

Popularly called mobile commerce or m-commerce applications, this is a

Travel and tourism is a thriving industry today, and online booking is an

Digital magazines and e-books are slowly replacing traditional printed

E-banking or internet banking, is an e-commerce application that has

Types of E-Commerce Applications

We can classify e-commerce applications in many ways, but here we

1. B2B (Business- to – Business)

A B2B e commerce application is concerned with providing goods and

2. B2C (Business- to – Consumer)

It represents the majority of the mobile apps that we use today. It