A

Final Research Project

On

“TOPIC”

“A COMPARATIVE ANALYSIS ON E-BUSINESS IN ONLINE SHOPPING WITH SPECIAL

REFERANCE TO FLIPKART AND AMAZON”

Submitted for the final fulfillment for the award of

Master of Business Administration

Submitted by

NAME OF STUDENT-- POOJA JAISWAL

Roll No. -2200470700037

Under the able Supervision of

Ms. Arveen Kaur

(Assistant Professor)

Dr. Virendra Swarup Institute of Computer Studies

810 W-1, Juhi, Saket Nagar, Kanpur

I
 ACKNOWLEDGEMENT

I Would Like to express my deep sense of indebtedness and gratitude to Ms. Arveen

Kaur (Assistant Professor) for her encouragement, support, and guidance in carrying

out the project.

I am very much thankful to, my Project Guide Ms. Arveen Kaur (Assistant Professor) Faculty –

MBA Department for her interest, constructive criticism, persistent encouragement and untiring

guidance throughout the development of the project. It has been my great privilege to work under

her inspiring guidance.

I am also thankful to my parents and my friends for their indelible co- operation for

achieving the goals of this study.

II
 DECLARATION

I POOJA JAISWAL, student of M.B.A. at Dr. Virendra Swarup Institute of Computer Studies(VSICS),

Kanpur hereby declare that the Project Report entitled A COMPARATIVE ANALYSIS ON E-

BUSINESS IN ONLINE SHOPPING WITH SPECIAL REFERANCE TO FLIPKART AND

AMAZON done by me under the guidance of Ms. Arveen Kaur is submitted in partial fulfillment of the

requirements for the award of Master of Business Administration degree.

III
 DECLARATION

I POOJA JAISWAL, student of M.B.A. at Dr Virendra Swarup Institute of Computer Studies

(VSICS), Kanpur hereby declare that the Project Report entitled A STUDY ON INVESTOR’S

PERCEPTION ABOUT ONLINE TRADING IN INDIA STOCK MARKET done by me

under

the guidance of Ms. Isha Shukla is submitted in partial fulfillment of the

requirements for the award of Master of Business Administration degree.

V
 Preface

The research report entitled, A COMPARATIVE ANALYSIS ON E-BUSINESS IN ONLINE

SHOPPING WITH SPECIAL REFERANCE TO FLIPKART AND AMAZON was really a

great interest to do. We really enjoyed working on it. Also, the topic was so interesting that

it aroused my interest to do more and more work regarding it.

The first real insight of an organization for management studentcomes only during her preparation of

project work because student first interacts withreal practical work. This is first introduction to

industry and its working. This project work synthesize the theoretical concept learn in the class room

and its practical orientation in organization. Research reports are backbone of any management

education program. The tools that we learn in the class room, we apply these tools in project work. I

have seen the same problems which were taught by our respectful teachers .A management master

should frequently do research work during her entire course plan.

V
 EXECUTIVE SUMMARY OF E-BUSINESSES

In looking over the challenges identified above, one certainly could ask, “So what is really

different about e-business?” Overall, the answer that firms have faced most of the challenges

identified in the past, and that this simply represents the latest iteration of these challenges.

Organizations have faced the challenge of integrating autonomous businesses. AConsiderable

literature has grown up around all of the problem in managing projects.

Any technology-based firm must deal with developing people skills among theirTechnical

managers, be they engineers, financial analysts, or software developers. Managing across

generations is certainly not a new issue. And both the job churn and the ensuing talent

shortage are inherent in any technological revolution. Thus, again, what’s new? We argue

that two factors distinguish managing people in an e- business today from managing in a

brick and mortar business.

The first factor distinguishing e-business from traditional business is the complexity of the

problem. What seems different about managing E-businesses today stems from the Interaction of

facing all of these challenges simultaneously.

While organizations may have faced each of these challenges before, they have probably neverfaced so

many challenges at the same time. This creates a level of complexity seldom experienced before.

VI
 A second, more important set of factors was noted explicitly by the respondents. In fact, when

pressed on these issues, respondents agreed as to the distinctiveness of two of the challenges:

Uncertainty and speed. Virtually every person we interviewed first noted that the biggest change

in moving to e-business is the speed.Things happen so much more quickly, Requiring faster

organizational response than they had ever faced before. Second, while fewer noted it

specifically, the uncertainty challenge was at least implicit if not explicit. They noted the concern

with not knowing for sure how to manage in the present environment that was accentuated by

uncertainty regarding what might happen next. It seems that the combination of uncertainty

regarding the way in which certain factors will change in the future with the People in the E-

BusinessWP00-11increasing speed at which they will change presents the most formidable

management challenge unique to an e-business.

Thus, managing an e-business today requires dealing with an unusual amount of complexity,

uncertainty, and dynamicity. This certainly requires a new paradigm for organizing in terms of

how the structure, processes, and people of the firm are managed. However, before discussing

this new paradigm, we will first examine the different evolutionary paths taken by different e-

business.

VII
 TABLE OF CONTENT
Cover Page -----------------------------------------------------------------------------------------I

Acknowledgement ---------------------------------------------------------------------------------II

Student Declaration --------------------------------------------------------------------------------III

College Certificate -----------------------------------------------------------------------------------IV
Preface -------------------------------------------------------------------------------------------------V
Executive Summary -------------------------------------------------------------------------------VI-VII
1-Introduction
1.1 General Introduction about the sector --------------------------------------------------------1-6
1.2 Literature Review --------------------------------------------------------------------------------7-18
1.3 E–Business ---------------------------------------------------------------------------------------19-25

2-Introduction of the Industry

2.1 Amazon ----------------------------------------------------------------------------------------26-35
2.2 Flipkart -----------------------------------------------------------------------------------------36-46

3-Research Methodology
3.1 E-Business Model -----------------------------------------------------------------------------47-55
3.2 Statement of the Research Objectives & Strategies ---------------------------------------56-66
3.3 Research Design and Methodology ---------------------------------------------------------67-108
4-Analysis
4.1 Findings and Analysis of Data --------------------------------------------------------------109-119
5-Conclusion --------------------------------------------------------------------------------------120
6-Recommendation ------------------------------------------------------------------------------121
Appendix
Bibliography ---------------------------------------------------------------------------------------122

VIII
 INTRODUCTION OF E-BUSINESS

This turn towards Internet based technologies generated a new status quo in the business world.

E-business was defined by IBM back in 1997, as “the transformation of key business processes

through the use of Internet technologies”. According to Chaffey (2002), e-business is described

as “all the electronically mediated information exchanges, both within an organization and with

external stakeholders, supporting the range of business processes.”

E-Business enables an enterprise to spread its wings to the global customer. To extend the sales

platform to a futuristic dimension, business houses have incorporated software that can run on

platforms offered by the World Wide Web. E-business has now penetrated into consumer goods

and other production and service based industries. IPSR solutions' Web Application Division has

proven expertise in creating customized solutions that can manage web based Business Logistics

perfectly.

1
SHORT HISTORY OF E-BUSINESS

Despite the fact that e-business is a relatively new trend in the business sector, its brief history is

filled with controversial events. The rapid growth of the popularity of the Web from 1995 was

accompanied by a highly profitable period for e- business companies. Setting up a fully

functional e-Business website was very easy and cost efficient and at that time it was thought to

guarantee success and profits (O’Connor and Galvin, 1998; Janenko, 2003). The number of e-

businesses kept growing in an attempt for everybody to have a share from the profit pie. On the

turn of the century, their number reached its peak and their profit opportunities and potential

financial growth was capped. This led to the huge stock market collapse of many e-business

companies which is known as dot.com bust. After a five year period where companies had to

revaluated their strategic approach towards e- commerce, growth of e-businesses started to

increase again, reaching double digit level through the current period.

LIMITATIONS OF E-BUSINESS SYSTEM:-

The limitations of e-business can be classified as two factors which are as below-

1) Technological
2) Non-technological.

TECHNICAL LIMITATIONS OF E-COMMERCE:

 Not enough telecommunication bandwidth.

2
  Lack of sufficient system is standards, reliability, security and

communication protocols.

 The software development tools are still evolving and changing rapidly.

 Integrating the Internet and electronic commerce software with current databases and

applications difficultly.

 Additional cost to request special Web servers and other infrastructures, in addition to the

network servers.

 Possible problems of interoperability, that means some e-business software or applications does

not fit with some hardware, or is incompatible with some operating systems or other

components.

NON-TECHNICAL LIMITATIONS:

 Lack of feel and touch online

 Many complicated legal issues

 Rapidly changing and evolving e-business

 Lack of support services

 Insufficiently large enough number of sellers and buyers

 Break down of human relationships

 Inconvenient and expensive accessibility to the Internet

3
 OBJECTIVE OF E-BUSINESS:

 Improve service.

 Save time.

-Time taken by customers.

-Elapsed time for process

 Reduce process errors.

 Reduce the cost of core service provision.

 Free staff to provide value added services.

 Improve morale

-give people the tools and time they need.

ADVANTAGES:

The benefits of implementing E-Business tools is not so much in the use oftechnology, as in the

streamlining of business processes and the ease in finding new markets. Some of the advantages

include:

 Quicker and easier communications.

 Strengthened marketing capabilities and reach

 Increased hours of operation (a website provides 24 hours 7-day informationto existing and

4
 potential customers)

 Access to broader information through research

 reducing the cost of doing business by lowering transaction costs and increasing efficient

methods for payment, such as using online banking and reducing stationery and postage costs.


SCOPE AND FOCUS OF THE REPORT:

The scope of E-Business is as wide as an ocean & there by the implementation hurdles. When

one thinks of the Electronic Business even through final goalremains the same as that of the

traditional business, but the way in which they function in order to improve the performance is

different.

As information sharing is the major part of the corporate industries, networking has given boost

to E-Business. This change in view-point has opened door for new opportunities.

Nationalized and Private banks agrees that adopting e-business as a strategy is one of the

important steps the banks has taken in its development due to the tremendous benefits e-business

adoption provides. According to them their perceived benefits include convenience to customers,

speed and quality of service, reduction of queues in banking halls and reduction in the total

overhead cost such as reductionin employee recruitment and reduction in space for clients and

customers. These factors that pushed their drive to adopt e-business.

A) The research provides powerful, real time E-Business reporting to help E- Business
managers improve merchandising and increase sales.

5
B) The research is very much useful to get the lifetime value of your customers based
upon their acquisition source, and increase your expenditures on sources that generate

the best customers over lifetime.

C) It tracks the performance of all your online marketing initiatives, including Pay- per-
click keyword buys, doing transaction online, paying bills using net banking, banner

ads, e-mails and affiliate programs.

6
 LITERATURE REVIEW

INFORMATION IS POWER:

This is one of the most widely accepted statements and applies for every aspect of human

activity. Internet is an unlimited pool of information and benefits anyone who uses it properly.

According to Porter and Millar (1985) information gives competitive advantage to acompany in

three different ways:

a) By changing industry structure and changing the rules of competition.

b) By providing companies with new ways to outperform their competitors.

c) By creating new businesses, even from within a company’s existing operations.

The authors continue by discussing the strategic significance that Information Technology has

obtained for companies, by affecting the value chain, thus the technological and economic

activities that a company performs to do business. Not only it transforms the value chain, but

also transforms the product or the service that the company produces. Additionally, authors

suggest five ways for InformationTechnology to be successfully implemented in business

processes. This can be done by:

a) Assessing the intensity of information.

b) Determining the role that Information Technology will have in the industry structure.

7
c) Understanding the ways that it can create competitive advantage for their companies.

d) Investigating the possibilities of new businesses.

e) Developing a strategic plan to take advantage of Information Technology.

SUCCESS AND FAILURE FACTORS OF E-BUSINESS:

“E-business and E-service will move to the forefront of technology priorities. To take full

advantage of the E-service, you need to look at your organization from an alternative

perspective.

The question is how to deal with these changes, at what cost, and at what speed. This is not the

time to worry about "disintermediation". It is the time for cooperation, integration, and the

consideration of customer loyalty, profitability and competition advantage.

As we have seen, e-Business has noticed remarkable growth and success over the last years.

Despite the numerous examples of successful e-Businesses there are many examples where e-

Business failed to succeed.

By looking at those characteristic examples, this report tries to understand the factors that lead to

a successful e-Business but also to figure out the dangers that may lead to failure. These factors

would form a helpful guideline, which would help in making the IT employment website as

successful as possible.

8
HYPOTHESIS:

E-business offers buyers and sellers a new form of communication and provides an opportunity

to create new marketplaces.

Theoretical studies suggest in general that the development of e-business results in higher firm

performance as a result of lower search and head-to-head comparison costs.

However, there are a number of recent theoretical studies, which demonstrate that the growth of

e-commerce may lead to monopolistic pricing behavior so that firms engaging in e-commerce

need not perform better compared to more Traditional enterprises.

To date, there exists little empirical evidence on the impact of information technology on

economic performance. This paper is the first that uses a large representative data set of Belgian

firms to study empirically the impact of e- business on corporate performance.

9
 COLLECTION OF DATA (PRIMARY & SECONDARY DATA)

Data source

Secondary
Primary

Questionnaire

Survey
Internal
Observation

Experimental
External

Sales records

Marketing activities

Cost information
Internet Publisheddata feedback

printed Electronic

Newspaper

Books

Private studies

10
E-BUSINESS – TRANSACTION MEDIUM

Most e-commerce is done over the Internet. But EC can also be conducted on private networks,

such as value-added networks (VANs, networks that add communication services to existing

common carriers), on local area networks (LANs)or wide area networks (WANs).

11
 E-B USINESS – TRANSACTION TYPES

(E-commerce transactions can be done between various parties.)

• Business-to-business(B2B)

• Collaborative commerce(c-commerce)

• Business-to-consumers(B2C)

• Consumers-to-businesses(C2B)

• Consumer-to-consumer(C2C)

• Intra-business(intra-organizational) commerce

• Government-to-citizens(G2C)

• Mobile commerce(m-commerce)

12
HOW IS E-BUSINESS DIFFERENT

 Reduction in physical boundaries and distance.

 Serve larger customer base more efficiently.

 Target specific customer groups.

 The Internet is an interactive marketing medium.

 More detailed information on customer transactions.

 Improved transaction efficiency.

CONSUMERS TO CONSUMERS (C2C)

13
Abbreviation for consumer-to-consumer commerce; that is, commerce with no middle business people

The most notable examples are Web-based auction and classified as sites. Most large venues for such

models (for example, eBay and Classifieds2000) are quickly permeated by consumers who participate

so actively and regularly that they become small businesses for them.

C2C stands for consumer to consumer electronic commerce. The Internet has facilitated new

types of C2C although it is important to note that this kind of commerce -- in the form of barter,

yard sales, flea markets, swap meets, and the like -- has existed since time immemorial.

Notably, most of the highly successful C2C examples using the Internet actually use some type

of corporate intermediary and are thus not strictly "pure play" examples of C2C.

WHAT IS BUSINESS TO BUSINESS (B2B)

B2B stands for "business-to-business," as in businesses doing business with other businesses.

The term is most commonly used in connection with e-commerce and advertising, when you are

targeting businesses as opposed to consumers

14
On the Internet, B2B (business-to-business), is the exchange of products, services, or

information between businesses. B2B is e-commerce between businesses. B2B Communication

using XML over HTTP B2B - the basics

Business-to-business electronic commerce (B2B) typically takes the form of automated

processes between trading partners and is performed in much higher volumes than business-to-

consumer (B2C) applications.

WHAT IS BUSINESS TO CONSUMERS (B2C)

Refers to businesses selling products or services to end-user consumers.B2B stands for

transaction activities involving two business entities (business-to- business transaction). B2C

stands for transaction activities involving a business anda consumer (business-to-consumer

transaction).

15
Electronic commerce comprises commercial transactions, involving both organizations and

individuals. From the technical point of view e-commerce is the processing and transmission of

digitized data. E-commerce decreases the distance between producers and consumers.

Consumers can make their purchase without entering a traditional shop.

E-B USINESS CATEGORY

E-Banks

E-Trade

E-consulting

E-engineer

E-learning

E-mail

E-marketing

E-Transactions

16
HOW SAFE ARE E-BUSINESS FINANCIAL TRANSACTIONS

New security technology like 128-bit SSL encryption ensures the safety and privacy of both you

and your customers, and is built into the latest e-Business software tools. Your security and

privacy is a top priority with all e-Business providers.

17
CAN MY BUSINESS BENEFIT FROM E-BUSINESS?

 Reduce administrative and operating costs.

 Reduce inventory costs.

 Reduce the cost of procurement.

 Improve customer service and satisfaction.

 Streamline procurement procedures.

 Increase communication efficiency and interaction with Employees,

vendors, customers and strategic partner.

 Increase revenues and profit margins.

18
E-COMMERCE, E-BUSINESS, WHO E-CARE

Some analysts and on-line business people have decided that e-business is infinitely superior as a

moniker to e-commerce. That’s misleading and distracts us from the business goals at hand. The

effort to separate the E-commerce and E-business concepts appears to have been driven by

marketing motives and is dreadfully thinin substance.

AN E-DISTINCTION

For the purpose of clarity, the distinction between e-commerce and e-business in this book is

based on the respective terms commerce and business.Commerce is defined as embracing the

concept of trade, ‘exchange of merchandise on a large scale between different countries. By

association, e-commerce can be seento include the electronic medium for this exchange. Thus

electronic commerce can be broadly defined as the exchange of merchandise (whether tangible

or intangible)on a large scale between different countries using an electronic medium – namely

the Internet.The implications of this are that e-commerce incorporate saw hole socio-economic,

telecommunications technology and commercial infrastructure at the macro- environmental

level.

All these elements interact together to provide the fundamentals of e-commerce.Business, on the other

hand, is defined as ‘a commercial enterprise as a going concern’.12 E-business can broadly be defined

as the processes or areas involved in the running and operation of an organization that are electronic or

digital in nature.These include direct business activities such as marketing, sales and human resource

management but also indirect activities such as business process re- engineering and change

management, which impact on the improvement in efficiency and integration of business processes and

activities,

19
20
WHAT ARE THE KEY DRIVERS:

It is important to identify the key drivers of e-commerce to allow a comparison between

different countries. It is often claimed that e-commerce is more advancedin the USA than in

Europe. These key drivers can be measured by a number of criteria that can highlight thestages

of advancement of e-commerce in each of the respective countries.

The criteria that can determine the level of advancement of e-commerce.

1-TECHNOLOGICAL FACTORS– The degree of advancement of the telecommunications

infrastructure which provides access to the new technology for business and consumers.

2-POLITICAL FACTORS– including the role of government in creating government legislation,

initiatives and funding to support the use and development of e-commerce and information

technology.

3-SOCIAL FACTORS– incorporating the level and advancement in IT education and training

which will enable both potential buyers and the workforce to understand and use the new

technology.

4-ECONOMIC FACTORS– including the general wealth and commercial health ofthe nation

and the elements that contribute to it. Since a distinction has been made in this book between e-

commerce and e-business for consistency.

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KEY DRIVERS OF E-BUSINESS:

ORGANISATIONALCULTURE– attitudes to research hand development (R&D); itswillingness to

innovate and use technology to achieve objectives.

COMMERCIAL BENEFITS– in terms of cost savings and improved efficiency that impact on the

financial performance of the firm.

SKILLEDANDCOMMITTEDWORKFORCE–That understands, is willing and able toimplement new

technologies and processes.

REQUIREMENTSOF CUSTOMERSANDSUPPLIERS–In terms of product andservice

demand and supply.

COMPETITION–ensuring the organization stays ahead of or at least keeps up withcompetitors and

industry leaders.

22
 DEMAND FOR PEOPLE WITH SKILLS IN E-BUSINESS

INTRODUCTION

This chapter introduces an “e-Business Skills Triangle” framework, reflecting the importance to

e-Business of three main types of skill – business, creative and technical.

It argues that e-Business predominantly needs people with a mix of types of skill, aproportion of

them with a fairly even balance between two or all three types of skill. It goes onto look in more

detail at the skills and work content associated with the main types of skill.

Based on the analysis, four main e-Business occupations are identified, and the demand for new

people and re skilling of existing members of the workforce is explored for each one.

Key findings are that:

• Business Studies programmed should have a significant Information Technology content.

• Business Studies programmed should have an e-Business orientation that

permeates all subjects studied.

• There is a need for Business Schools to have a proportion of Information Systems

programmed. with a fairly equal mix of business and information technology content.

23
• There is a requirement for the existing population of managers and management advisors

to understand the business implications of e-Business.

• Every business with a website will need a webmaster.

• E-Business has boosted demand for people with technical IT skills.

• There is a need to update the skills of technical people using dated technology.

• There is a major increase in demand for designers to work on web design, and for

people with a strong mix of design and technical skills.

• Many of those already working in print design need to acquire web design skills,

• As available band width increases, the requirement for people to produce live action and

animated content will increase.

• Everyone entering employment should have IT skills.

• Third level graduates should ideally have an understanding of the business uses ofInformation

technology.

24
 INTRODUCTION OF AMAZON

Ever since internet has been introduced to the world, it has made a huge impact on impact

people; business is one of such example where internet has made the difference. In July

1995 Amazon.com started selling books online and the response they received was

unexpected as in short timespan books sold online in all 50 states of USA and 45 countries.

Amazon presently offers music, movies, toys, electronics and home equipment, there are

seven different international websites of Amazon with distributed customer service centers

in seven countries and over 17,000 people work in Amazon worldwide. Today there are

over 100 popular e-commerce websites are providing online services worldwide. An e-

commerce opens the global market to the customer, it helps the customer by providing

huge options while buying a product or a service, the online searching and comparing

facilities enables customer to select right product or service, another major advantage of e-

commerce is that it is 24x7 available to the customer the customer can shop almost

anything within his/her comfort zone just by sitting at home, office, during travel or almost

from any place at any time. E-commerce is trading of services and products with the help of

internet. E-commerce introduced in the end of 70s and became popular during the 90s in

western countries like USA and UK. E-commerce introduced new possibilities in trading

and attracted attention of many traders.

25
Industry Background

Amazon.com started out to be the World’s Biggest Bookstore. It has become that and much,

much more. It can now be classified as a broad sector retail business, providing items in the

areas of books, music, movies, clothing, jewelry, home and garden, tools and automotive as

well as other items . Amazon is a special type ofretail business, which is completely online.

They have no brick and mortar retail stores nor any outlets or centers. Yahoo Finance lists

Amazon under the “Catalog and Mail Order” sector of retail.

Amazon was created to take advantage of the increasing use and popularity of theInternet as a

retail medium. Amazon chose books as its first commodity for manyreasons, one being that

online booksellers would have virtually unlimited shelf space to “store” their wares.U.S.

booksellers were relying on large superstores to do most of their selling but even then, they

were limited in what they could carry at any one time. Amazon realized that it could offer a

much larger selection of books, infact all of the books in print, and not have to worry about

over-stocking or any storage issues. With agreements with other booksellers, Amazon could

offer the books and then get them from third-party resellers to ship to their customers. The

cutting down of storage and purchasing costs could allow Amazon to provide lower costs to

their customers.

Another lower cost would be in advertising. The traditional advertising avenues, print and visual

media, would still be available but Amazon, being online, couldhave website advertising with

links directly to their website or the products themselves. Amazon would get its name out there

in the world of bookselling aswell as have a place for others to sell their books. Amazon also

saw an opportunity and offered their basic website structure and processes to private individuals

and other booksellers, such as Borders. Borders customers could arrive at a website for

26
Borders, see that it is run by Amazon and then have another avenue for purchasing

books. Amazon would then be paid either as a web space provider or as a bookseller.

Amazon also has an advantage over brick-and-mortar book sellers is that they can offer its extensive

product lineup at the time its convenient to the customer.

Amazon’s website is open 24 hours a day, 7 days a week. No one needs to go to a store to look

for books and order them if not in stock. The customer can easily look for andorder a book at 10

am or at 3 am, as the need or desire strikes them.

With the ease of ordering comes the ease of payment. Amazon takes credit cards, checks, money orders

and even purchase orders from companies and institutions. Once you setup an account, most books and

other products are but a mouse-click away.

Unlike other Mail Order or Catalog retail companies, Amazon can take advantage of the Internet

and use email as a form of communication, both to confirm orders and purchases as well as to

contact customers with delivery information. Being an online retailer, Amazon has taken

advantage of the ease of use of the Internet in its business dealings. Instead of relying on the

mail service to send outcatalogs, Amazon can let customers arrive at its home through word of

mouth and can also contact former customers via email to entice them back to purchasing. The

Internet is certainly the way for catalog selling to move, because

it has many advantages and can still maintain its character of ease and convenience. In creating a

database for Amazon, we need to keep this ease and convenience in mindas we design and create

a flexible, easy to use, adaptable database.

27
Competitive Forces Model Industry Analysis

One of the major methods of analyzing a business’ strength within its industry is to use what is

known as the 5 Competitive Forces Model, created by Michael Porterin 1979.It looks at forces

that affect a business and the business' ability to withstand those challenges. This type of

analysis is an outside-in look at the company and is necessary in gauging what the competitive

environment is like within an industry such as Amazon’s. In applying this method we must first

identifythe five principal competitive forces which include; competitive rivalry within the

industry; the threat of new entrants in the industry; firms offering substitute products; the

bargaining power of suppliers; and the bargaining power of buyers. Our next task will include

pinpointing these forces and determining how strong each force is, weak being very minimal in

exerting pressure on the organization and fierce illustrating a great amount of pressure from

players in the market. Analyzing the information gathered by this model may serve to pinpoint

whether opportunities exist within an industry and furthermore what powers command it .While

Amazon must deal with all of these forces it has thus far been able to withstand them

successfully and profitably.

Rivalry. Rivalry among competing sellers is strong. There are some major competitors in the

online retail business, especially in the area of book, audio CD, and video/DVD movie sales.

Amazon must compete with Barnes & Noble for books, Columbia House for music and videos

and E Bay for the other products that Amazon might provide. These three top competitors create

a challenge for Amazon in attracting customers to its online site to get sales. In addition, many

brick-and- mortars have followed Amazon’s lead and taken their businesses online in hopes of

similar success and increased market share. While rivalry in this

28
industry is strong, Amazon to a large degree has built up such a “collection” of books that many

small-scale booksellers cannot compete given the required economies of scale. Overall, Amazon

has set out to offer access to all books that arein print and has succeeded in doing just that. This

ability to sell most books certainly rivals Barnes and Noble’s efforts to provide books while

Amazon’saffiliate program has brought would-be competitors such as Borders onboard to share

in a strategy which has proved effective in competing within the industry. Amazon, by starting in

the 90’s to sell online, has created a large supply chain, which has earned a strong space in the

book retail market, a strong brand name, and a loyal customer base.

New Entrants. The threat of new entrants is strong due to low barriers to entry. It is important to

note however that while many individuals and small businesses can conduct sales online with

very little start-up costs they cannot expect to compete with a large player such as Amazon.

Companies who do pose a threat to Amazon are candidates who have resources, which allow

them to adequately compete if they chose to take the business online. In such cases, low

barriers to entry maycause concerns when industry members are looking to expand their market

but taking approaches, which have allowed Amazon.com success in this particular industry.

Substitutes. The threat of substitute products offered by firms in other industries is fierce. Convenient

and desirable substitute products exist and offer customers many incentives if chosen in lieu of online

shopping. Buying products through online marketplaces warrants acceptance by customers while

traditional practices are readily available and more widely accepted. In addition, many good substitutes

offer attractively priced items and immediate gratification for buyers who may not

29
wish to wait for an order to arrive. Amazon has combated this threat by maintaining its focus on

its brand name while strengthening its image by meeting customer expectations. While online

shopping is continually gaining acceptance worldwide, the threat of substitutes will continue to

exert pressures on the organization to provide better incentives, faster turnarounds, and overall

customer satisfaction.

Suppliers. Competitive pressures from supplier bargaining and supplier-seller collaboration are

relatively weak. While in many cases suppliers can create a challenge for a company by forcing

them to accept higher costs for materials, Amazon began small and built up its supply chain to

work with multiple suppliers. With multiple suppliers, each supplier’s strength weakens against

that of Amazon’s. For example, if one book supplier wants to get a 5-cent charge on each book

ordered but Amazon can get most of the same books from supplier #2 for only 3 cents per book,

supplier #1 won’t get a contract with Amazon. Amazon has created a broad supply chain to keep

its suppliers from acquiring too much strength and forcing prices too high. Therefore, Amazon

has been able to pass those saving on to the customer, creating a bargaining chip against industry

rivals and creating a hedge against supplier dependency.

Buyers. Buyer power is relatively strong within this industry. Given that switching costs

between competing brands or substitutes is generally low, consumers may, without incurring

any loss, choose one service over another if desired. Additionally, buyers may postpone

purchases from online sellers such as Amazon if they do not agree with the prices available at

the present time. Such pressures require Amazon to discover new ways of passing on savings to

their customers without decreasing the profits necessary to maintaining their current

30
Economic standing and market position. Therefore, while the power of buyers in this industry is

strong Amazon has found effective methods to retain attractive pricesfor consumers.

A visual model of Porter’s5 Forces Model

E-commerce offers products and services through websites, a customer simply has to visit an e-

commerce website and browse various offering through browser catalog, a customer can select

multiple offerings and can add them to the shopping cart, once the shopping is done the

customer can check out and proceed to payment section where various online payment options

are available like internet banking, credit card, debit card etc. Once the payment is done the

customer is notified about the order and order is shipped on the postal address provided by the

customer.

33
REVIEW OF LITERATURE

The first approach on how to support query operations on encrypted data with bucketization,

after the data is encrypted, the cipher text is concatenated to a bucket number, which is

assigned to a specific range that includes the data. When a userrequests a query operation, the

server uses the bucket numbers to execute the query operation. For example, if a client

program wants to » Abhijit Mitra. (2013), “E-Commerce in India-A Review”, International

Journal of Marketing, Financial Services & Management Research. Concluded that The E-

Commerce has brokenthe geographical limitations and it is a revolution-commerce will

improve tremendously in next five years in India. » D.K.Gangeshwar. (2013),” E-Commerce

or Internet Marketing: A Business Review from Indian Context”, International Journal of u-and

e-Service, Science and Technology. Concluded that the E- commerce has a very bright future in

India although security, privacy and dependency on technology are some of the drawbacks of

E-commerce but still there is a bright future to E-commerce. » Martin Dodge. (1999),”Finding

the source of Amazon.com: examining the hype of the earth’s biggest book store”, Center for

Advanced Spatial Analysis. Concluded that Amazon.com has been one of the most promising

E-commerce companies and has grown rapidly by providing quality service.

34
E-COMMERCE IN INDIA

Thee-commerce introduced to India in mid-1990s, many of them were either

matrimonial or job portals, the major reason behind the slow response to e-commerce

in India was,

1) Limited availability of internet

2) Weak online payment system

3) Lack of awareness in customers

Due to the above reasons the e-commerce progressed very slowly in Indian market. In mid-

2000 the e-commerce industry in India grown rapidly offering online services like travelling,

many airline companies started providing the travelservices online to customers, even today

online travel booking holds a major share of e-commerce space. Today almost everything is

sold online in India.

35
 INTRODUCTION OF FLIPKART

Flipkart was founded in 2007, by Sachin and Binni Bansal, students of IIT Delhi who were the

ex-employees of Amazon.com. Flipkart is an e-commerce companybased in Singapore, it

operates in India. According to alexia internet, Flipkart is one of the most popular website

visited in India. Flipkart sells goods in India through a company called WS retail. The other

third-party traders or companies can also sell goods through the platform of Flipkart. Initially

in2008 Flipkart sold books but soon it established itself wide and started selling products like

consumer electronics, clothing, home decoration products, appliances, beauty and fashion

products etc. Due to the powerful network all over India and effective customer relationship

management, Flipkart has earned a topmost position in India. Flipkartallows payment methods

such as cash on delivery, net banking, debit or credit card transactions, e-gift voucher and card

swipe on delivery The founders of Flipkart Sachin and Binny Bansal, now has taken the

combined net worth in excess of $1 billion, reaching closer to that of Narayana Murthy and

Nandan Nilekani of Infosys.

36
The value of Bansal’s combined stake has crossed over Rs.6000 due to the fresh

$1billionfund raise. The Murthy family has a net worth of near Rs. 8,700 crore being India’s

second largest I T services company, while the Nilekani family's net worth holds at Rs.

6,500crore. Infosys took about four decade to reach market cap of about $30 billion while

Flipkart raised the valuation of $7 in just seven years, and according the Flipkart officials the

company has a set future goal of becoming

$100-billione-commerceCompany.

BUSINESSSTRUCTURE

In a report dated November 25, 2014, a leading media outlet reported that Flipkart were

operating through a complex business structure which included nine firms, some registered in

Singapore and some in India. In 2012 Flipkart co-founders sold WS Retail to a consortium of

investors.

ACQUISITIONS

 2010:WeRead,a social book discovery tool.

 2011: Mime360, a digital content platform company.

 2011: Chakpak.com, a Bollywood news site that offers updates, news, photos and videos.

Flipkart acquired the rights to Chakpak's digital catalogue which includes 40,000

filmographies, 10,000 movies and close to 50,000 ratings.Flipkart has categorically said that

it will not be involved with the original site and will not use the brand name.

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 2012: Letsbuy.com, an Indian e-retailer in electronics. Flipkart has bought the company for

an estimated US$25 million. Letsbuy.com was closed down and all traffic to Lets buy has

been diverted to Flipkart.

 2014:Acquired Myntra.com in an estimated ₹20billion(2,000 crore, about US$319 million)

deal.

2015: Flipkart acquired a mobile marketing start-up Appiterate as to strengthen its mobile

platform.

INVESTMENTS

In 2015, Flipkart bought a minority stake in a Navigation and route optimization startup

Map my India to help improve its delivery using Map my India assets.

FINANCE

Initially, they had spent ₹400,000 only for making website to set up the business. Flipkart has

later raised funding from venture capital funds Accel India(US$1million in 2009)and Tiger

Global(US$10 million in 2010 andUS$20 million in June2011). On 24 August 2012, Flipkart

announced the completion of its 4th round of $150 million funding from MIH (part of Naspers

Group) and ICONIQ Capital. Thecompany announced, on 10 July 2013, that it has raised an

additional$200millionfromexistinginvestorsincludingTigerGlobal,Naspers, AccelPartners and

Iconic Capital.

Flipkart's reported sales were 40 million in FY2008–2009, 200million inFY2009–

2010and750millionfor FY2010–2011InFY2011–2012,Flipkart is set to cross the 5 billion

38
(US$100 million) mark as Internet usage in the country increases and people get accustomed to

making purchases online. Flipkart projects its sales to reach10 billion by year 2014. On average,

Flipkart sells nearly 10 products per minute and is aiming at generating a revenue of 50 billion

(US$0.81 billion) by 2015.

On November 2012, Flipkart became one of the companies being probed for alleged violations

of FDI regulations of the Foreign Exchange Management Act, 1999

Flipkart reported a loss of 281 crore for the FY 2012-13. In July 2013, Flipkart raised USD 160

million from private equity investors.

In October 2013, it was reported that Flipkart hadraisedanadditional$160 million from new

investors Dragoneer Investment Group, Morgan Stanley Wealth Management, Sofina SA and

Vulcan Inc. with participation from existing investor Tiger Global.

On 26 May 2014, Flipkart announced that it has raised $210 million from YuriMilner’s DST

Global and its existing investors Tiger Global, Naspers and Iconiq Capital.

InearlyJuly2014, it was also highly speculated that Flipkart was in negotiations to raise at least

$500 million, for a likely listing in the US for 2016.

On 29 July 2014, Flipkart announced that it raised $1 billion from Tiger Global Management

LLC, Accel Partners, and Morgan Stanley Investment Management and a new investor

Singapore sovereign-wealth fund GIC.

39
On 6 October 2014, Flipkart sold products worth INR 650 Crore in 10 hours in a special one-day

event - "The Big Billion Day", claiming they had created e-commerce history, but their hard-won

reputation for good customer service suffered because of technical problems, and angry

reactions on social media from buyers disappointed with the pricing and availability of products.

It claimed to sella whopping 5 lakh mobile handsets, five-lakh clothes and shoes and 25,000

television sets within hours of opening its discounted sale at 8 AM. In December 2014, After it

received $700 million from another funding, Flipkart had a market cap of$11 billion or Rs.66000

crore. InMay2015 Flipkart has raised $550 million from some of its existing investors, in a deal

that raises the valuation of the privately held Indian startup to about $15 billion or Rs. 90,000

crore On20 December2014, Flipkart announced filing application with Singapore-based

companies' regulator ACRA to become a public company after raising USD 700 million for long

term strategic investments in India following which its number of investors exceeded 50. The

USD 700 million fund raised by Flipkart added new investors - Baillie Gifford, Greenoaks

Capital, Steadview Capital, T. Rowe Price Associates and Qatar Investment Authority - on

company's board. Its existing investors DST Global, GIC, ICONIQ Capital and Tiger Global also

participated in this latest financing round. ByAugust2015, after raising$700 million, Flipkart had

already raised a total of $3billion, over 12 rounds and16 investors.

REGULATORY ACTION AND LAW SUITS

The Government of India informed the parliament in 2012, that it had asked the Enforcement

Directorate to investigate Flipkart Online Services.

40
In August 2014, the Enforcement Directorate claimed that it had found Flipkart to be in

violation of the Foreign Exchange Management Act.

On November 30, 2012, Flipkart’s offices were raided by the Enforcement Directorate.

Documents and computer hard drives were seized by the regulatory agency.

Delhi High Court observed violation of foreign investment regulations by E- Commerce firms

including Flipkart. In January 2016, a public interest litigation came up for hearing which alleges

Flipkart of contravention of foreign investment norms. The court asked The Reserve Bank of

India to provide the latest circular on foreign investment policy.

In January, 2016, the Department of Industrial Policy and Promotion (DIPP) clarified that it does

not recognize the marketplace model of online retail.

In February2016, Health Minister, J P Nadda, informed that the Maharashtra FDA had taken

action against Flipkart, among others, for selling drugs without valid license.

FLYTE DIGITAL MUSIC STORE

In October and November 2011, Flipkart acquired the websites Mime360.com and

Chakpak.com.

Later, in February 2012, the company revealed its new Flyte Digital Music Store. Flyte, a legal

music download service in the vein of iTunes and Amazon.com, offered DRM-free MP3

downloads.

41
But it was shut down on 17 June 2013 as paid song downloads did not get popular in India due

to the advent of free music streaming sites.

EXCLUSIVEPRODUCTLAUNCHES

Motorola Mobility, previously owned by Google but then sold to Lenovo, in an exclusive tie up

with Flipkart launched its budget smartphone Moto G in India on 5 February 2014; more than

20,000 units were sold within hours of launch onFlipkart. After this Flipkart was looking for a

long term tie up with Motorola Mobility, They also launched their Android smartphone, the

Moto X, on 19 march 2014.Flipkart later sold the Moto E, cheaper than Moto G, from 13 May

2014.

The sale of high-end smartphone Xiaomi Mi. 3 produced by XiaomiTech was launchedin India

on an exclusive tie-up with Flipkart. The first batch was sold out within 39 minutes on 22 July

2014, the second in 5 seconds on 29 July 2014. The sale was proceeded on pre-registration mode

where more than 150,000 buyers booked for the 5 August 2014 sale. This got sold off in less

than 2 seconds. Following this Xiaomi Tech sold 20,000 units in the next sale on 12 August

2014. On2 September2014 Flipkart held a flash sale of the Xiaomi Redmi1Sbudget Android

smartphone which was launched in India in July 2014. 40, 000 units priced at Rs 5999 each were

sold within seconds. A further 40,000 units were sold within 4.5 seconds on Sept 9, 2014.The

third Redmi 1S sale on Sept 16, 2014 sold 40,000 units in3.4seconds. In the 4th round of sale of

Redmi 1 S, 60,000 unitssold in 5.2 seconds on Sept 23,2014. On 30 September 2014 60,000 units

sold in 13.9 seconds. Redmi Note in India exclusively through Flipkart; 50,000 units sold in 6

seconds on 2 December 2014.

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IN-HOUSE PRODUCTS

 In July 2014 Flipkart launched its own set of tablet, mobile phones & Phablet.The first

among these series of tablet phones was Digi flip Pro XT 712 Tablet.

 In July 2014 Flipkart launched its first networking router, under its own brandname named

Digi Flip WR001 300 Mbit/s Wireless N Router.

 In September 2014 Flipkart launched its in-house home appliances and personal healthcare

brand Citron. The label includes a wide range of cooking utilities and grooming products.

CRITICISM

On 13 September 2014, a Flipkart delivery boy molested a house maid in Hyderabad. The house

maid's employer has been fighting against Flipkart for justice on this issue, and also for making

offline delivery services safe.

On6 October 2014 Flipkart launched a promotion called 'Big Billion Day' with the intention to

increase the popularity of their website by targeting a billion sales in 1 day.

This, even though Flipkart achieved the target, led to public outcry and wide spread criticism

among consumers, competitors and partners, heavily damaging its reputation. Many users could

not place orders because of high server load and errors which led to frustration among customers.

Many users who placed orders received emails stating that their orders were cancelled.

43
Most of the products were sold for less than cost price, and Flipkart was accused of killing

competition. Major competitors filed complaints against Flipkart to the commerce ministry,

claiming that selling products lesser than cost prices is against the commerce policy of the

country. The Ministry said that they would formulate new trade rules for electronic retail after

this incident.

Flipkart received mass criticism on the subject of net neutrality after their announced partnership

with Airtel to use the Airtel Zero platform which would have made the Flipkart app free for

Airtel Users. On 14 April 2015 Flipkart retracted its decision to use Airtel Zero platform.

AWARDS AND RECOGNITION

 In September 2015, Sachin Bansal and Binny Bansal entered Forbes India RichList debuting

at the 86th position with a net worth of $1.3 billion each.

 Co-Founder of Flipkart, Sachin Bansal, got Entrepreneur of the Year Award 2012- 2013

from Economic Times, leading Indian Economic Daily.

 Flipkart.com was awarded Young Turk of the Year at CNBC TV 18's India Business Leader

Awards 2012' (IBLA).

 Flipkart.com-got Nominated for India MART Leaders of Tomorrow Awards 2011.

44
COMPARATIVE STUDY OF FLIPKART.COM WITH AMAZON.COM

The war between e-commerce companies in India is in peak, Flipkart is facing strong

competition from Amazon India, e bay, Junglee.com, Jabong.com, Snapdeal.com and

Myntra.com like companies. Among the above companies Amazon.com is the strongest

competitor of Flipkart. Recently Flipkart has won aneconomical battle against Amazon.com by

purchasing one of its rivals myntra.com.

Flipkart has acquired online fashion retailer Myntra.com in approx. Rs. 2,000crore deal, this

deal is considered to be the big milestone in the success of Flipkart.

Flipkart mainly faces strong competition from Amazon.com as Amazon has declared that it will

invest $2 billion in its Indian. Following are data comparison between Amazon.com and

Flipkart.com collected during 21-Oct-2014 to 18-Nov- 2014. a) Stock Keeping Units: When the

Stock Keeping Units (SKU) of both Flipkart and Amazon compared for four popular electronic

products mobile, laptop, tablet, camera. Following results were obtained from the data.

45
Flipkart holds total 1706 SKU under the above four categories while Amazon holds only 1535

SKU for the same products. 2. Flipkart has 4172 offers for the 1706 SKU while Amazon has

2244 offers for the 1535 SKU b) Online Product Categories and Sub-Categories: Presently

Amazon.com offers 16 main categories of products online while these 16 main categories can

be further divided into186 sub-categories. On the other hand, flipkart.com offers 86 main

categories of offerings which are expanded into a huge 422 subcategories much more than

amazon.com providing a wide range of products which are quite easy to accessthrough website

.c) Comparison of Manpower Management and Work Satisfaction

: Considering the gender wise distribution of employees in both Amazon.in and Flipkart.com, following

information is obtained

Companies / Sex Ratio Male Female Flipkart.com 80% 20% Amazon India 87%13% Sr. No.

Description Flipkart.com Amazon India 1 Job Work /Life Balance 3.5 3.52 Salary Benefits 343 Job

Security 3.534 Management 3.535 Job Culture 4 Total 17.517.5 *Data Showing Work satisfaction.

46
 E-BUSINESS MODEL

The e-Business model, like any business model, describes how a company functions; how it

provides a product or service, how it generates revenue, and how it will create and adapt to new

markets and technologies. It has four traditional components as shown in the figure, The e-

Business Model. These are the e-business concept, value proposition, sources of revenue, and the

required activities, resources, and capabilities. In a successful business, all of its business model

components work together in a cooperative and supportive fashion.

47
E-BUSINESS CONCEPT:

The E-BUSINESS CONCEPT describes the rationale of the business, its goals and vision, and

products or offerings from which it will earn revenue. A successful concept is based on a market

analysis that identifies customers likely to purchase the product and how much they are willing

to pay for it

GOALS AND OBJECTIVES:

The e-Business concept should be based, in part, on goals such as "become a major car seller,

bank, or other commercial enterprise", and "to become a competitor to some of the well-known

firms in each of these industries. "Objectives are more specific and measurable, such as "capture

10%ofthe market", or "have $100 millionin revenues in five years." Whether these goals and

objectives are realistic or not, and whether the company is prepared to achieve these goals is

addressed in the business plan process for startup firms and in the implementation plan for an

existing firm that is considering a significant change. In looking at the business model it is

sufficient to know what the goals and objectives are, and whether they are being pursued.

CORPORATE STRATEGIES:

Embedded in the e-Business concept are strategies that describe how the business concept will be

implemented. These are known as CORPORATE STRATEGIES because they establish how the

business is intended to function.

46
 These strategies can be modified to improve the performance of the business. Environmental

strategies, discussed in a following section, describe how the ccompany will address external

environmental factors, over which it has no control.

E-BUSINESS CONCEPT AND MARKET SEARCH:

The selection and refinement of the business concept should be integrally tied into knowledge of

the market it serves. In performing market research care must be taken to account for the global

reach of the Internet for both customers andcompetitors. It is also important to remember that

markets shift, and can shift rapidly under certain conditions. But most important is to truly

understand what the market is, who comprises it, and what do they want.

E-BUSINESS CONCEPT:

47
PRICE:

With the purchase of the product or service. In addition to price, the buyer may also be interested

in how the product Pricing is an important part of the e-business concept and should be

established on the basis of market research. Price is often set with an eye on the competition and

can have a direct effect on market share. In traditional commerce in the U.S., the seller sets the

price. Online pricing, on the other hand, may include negotiation or auction pricing, where the

interaction of sellers and buyers can affect the price. Knowledge of competing prices is also

readily available online, and will keep downward pressure on prices.

When is it OK to increase prices? It depends on the business. If a company has high fixed to

variable costs, prices should be changed cautiously. If customers are "locked-in", and the product

or service is less sensitive to price, then prices may be changed, to a degree, with less risk. But

all changes should be checked beforehand with market research and financial analysis.

A potential problem for some products is that the market may change faster thanthe seller can

change the product or service. One way to survive in this environment is to sell at the minimum

price that allows a profit, avoid price changes and continuously upgrade the product. This

approach is often used in computer hardware and software sales. At the same time the seller

should invest in finding how to shorten the development cycle, and put in place a market

research program that will quickly identify trends and changes.

48
The steady development of a product has other advantages. It evens out the revenue stream

rather than having the "boom or bust" cycle of a single product.

It also shows that the company is steadily developing and upgrading products for the customers

who should begin to buy into the company's vision. And customers, analysts, and investors will

develop confidence that the company is going to be around for the long-term. The price must

also provide real value to the customer, that is the customer must be please can be of assistance

to his company. In this case, comparisons of price and ROI maybe used to show that the offering

adds more value than a competitor's. The price can also be a basis for building long-term

customer relations, which can lead to multiple sales.

For example, as retail customers become more comfortable shopping on a site, it should be

easier to get them to migrate to higher margin products.

VALUE PROPOSITION:

The VALUE PROPOSITION describes the value that the company will provide to its customers

and, sometimes, to others as well. With a value proposition the company attempts to offer better

value than competitors so that the buyer will benefit most with this product.

 Reduced price

 Improved service or convenience such as the "1 click checkout”

 Speed of delivery and assistance

 Products that lead to increase deficiency and productivity

Access to a large and available inventory that presents options for the buyer.
49
Providing value in an e-business uses the same approach as providing value in any business, although it may

require different capabilities. But common to both are the customers who seek out value in a business

transaction. The value proposition helps focus the business on the well-being of the customer, where it

remains in successful companies.

INTEGRATION OF ORGANIZATION OR ENTERPRISE OPERATIONS:

The integration of systems inside and outside the organization can provide value for both

customers and the organization. One of the requirements for e-business is to link front-end with

back-end systems in order automate the online operations of the organization.

Front-end activities deal directly with the customer while back-end systems include all of the
internal support activities that do not deal directly with the customer. Some enterprises have
different geographic locations for front-end and back-end office activities and rely on the
integration of the associated computer and network systems for successful corporate operations.

FRONT-END & BACK-ENDOPERATIONS:

50
Examples of activities that require integrated systems are:

 Order placement through point-of-sales systems

 Customization of products based on user requirements

 Production tracking

 Customer order fulfillment

EXTERNAL INTEGRATION: THE SUPPLY CHAIN:

Operations on the Web can also extend to cooperating firms such as partners in a supply chain,

also known as a "Value Web". The Value Web may include a wide range of participants as well

as the possible use of a digital exchange to procure or sell products. Many firms have

participated in a supply chain for years using Electronic Data Interchange (EDI)technology to

buy and sell components and products.

Successful supply chains are vital for manufacturing operations since the timeliness, cost and

success of the final product may depend on a component part made by a single supplier. The

competence of suppliers may now be demonstrated through the ISO 9000 qualification process,

which is critical when using suppliers from foreign countries or when the final products are

exported.

51
SUPPLY CHAIN INTEGRATION:

When the supply chain transactions of the partners can be automated and integrated over the

Web into the back-end systems of each other, then the resources of all the chain partners can be

planned and managed for an efficient operation. An emerging approach to automate transactions

with partners is to link systems through the corporate portal, which greatly reduces the

integration requirements. Portal software now has potential connections, or hooks, where the

systems of different enterprises can be linked to securely transfer data.

In addition to good technology, it takes a strategy, time, resources and, most importantly, trust

between partners, for the supply chain to function successfully.

52
STRUCTURAL CONCEPTS TO DELIVERY VALUE

The effective delivery of value to a customer, requires that a company organize its structure and

functions according to the type of product or offering delivered. The VALUE CHAIN, as

popularized by Michael Porter 1, describes a linear set of steps,which could be activities or

business processes such as design, production and sales, whereby a manufacturing company

delivers value. This value chain delivery model strives for overall efficiency and cost reduction

by increasing the efficiency and reducing the cost of each business process. Each step is

independentand separable, and can be OUTSOURCED, or contracted out to another company.

The value chain becomes a supply chain when a company uses the inputs and activities of other

companies in its manufacturing process.

However, the value chain doesn't appear to describe how many service-oriented businesses

operate. Stabell and Fjeldstad, Timmers, and Afuah and Tucci, have developed additional

concepts of "value shop" and "value network", following the work of Thompson to address other

types of businesses.

The VALUE SHOP describes a service operation, such as a consulting, law or accounting firm,

that focuses on customer needs rather than on the production process of the value chain. It may

also describe a department, such as customer service, within a larger organization. For example,

a manufacturing company, a value chain operation, could have within it a department that

operates as a value shop.

53
Thee-business setup as a value shop works directly with the customer to provide a necessary, often

unique, solution.

The value shop is geared to solve specific client problems rather than to make a common

solution more efficient. Some value shops, such as large consulting companies, will attempt to

duplicate solutions among clients by introducing jargon to describe steps in an approach, and by

attempting to fit the client's problem to the approach, rather than focusing on the client's

problem.

The VALUE NETWORK is a type of e-business where networked users negotiatea transaction

on a web site. The value network hosts online auctions, brokering, market making,

intermediation, or other types of transactions.

The value network depends on growth in order to attract more users. When the number of users

on a value network increases, the network becomes more valuable to each participant since it

increasingly becomes the site where desirable transactions will take place. Ultimately the

strategy of network dominance results in large companies like eBay, since in theory it drives all

of the users to be on one network.However, for various reasons described in a following section,

this limit is never reached, and competitors do emerge, even for a company like eBay.

54
SOURCES OF REVENUE:

Depending on the business model, several revenue sources may be available to an e-business.
Many online businesses will have a three or four of these sources. A mix of revenue sources is
often referred to as a revenue model but may be mistakenly called a business model. Some of
these sources of revenue are:

 Advertising
 Affiliation
 Agent commissions
 Licensing
 Sales commissions
 Sales profits
 Sponsorship
 Subscription
 Syndication
 Use Fees

For large public-private or government projects revenue sources might also include:

 Bonds, usually for large capital expenditures

 Taxes, primarily income, property and sales taxes
 Use fees and tolls

With small fast-growing companies such as e-Business startups, investors often track expected

revenues and revenue growth and may make changes to increase revenue. However, after the

Dot-Com boom ended, more traditional measures such as cash flow and earnings have come

back into favor as means of evaluation.

55
 ACTIVITIES, RESOURCES AND CAPABILITIES

The activities, resources and capabilities of a business are sometimes known as its requirements.

In order to perform the activities required to carry out the mission of the business, certain

resources are needed; for example, employees with certain skills, or capabilities, are needed to

perform activities correctly and efficiently. Also, inventions, processes and other intellectual

property may add to the individual knowledge of an employee to develop a competence in the

performance of the required activities.

ACTIVITIES:

Activities are specific business processes or groups of processes such as design,production

and sales that implement the business concept. The operational business model identifies the

costs and outputs of each activity.

Activities drive the need for resources. Existing activities should be carefully scrutinized in order

to conserve resources and reduce costs. Activities left over from previous initiatives, but not

currently necessary should be curtailed. This may sound elementary but businesses start many

activities over time, especially if its business concept changes. But one doesn't often hear of a

large business curtailing its activities in order to focus on its current mission.

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E-BUSINESS PROCESSES:

Some fundamental e-business activities may infringe on patents. Business processes, or the

"method of doing business" may be patented, so that a business model may unwittingly include

the development or use of intellectual property owned by another party. Patents have been freely

awarded for even the most straight forward business processes.

 Amazon.com has a patent for "one click "purchasing technology and its
"Affiliates" program.

 Cyber Gold has a patent for pay-per-view ads where the customer enjoys an incentive
for clicking on them

 Net incentives has a patent for online incentives programs, possibly in conflict with
Cyber Gold's

 Net word LLC has a patent for a Web navigation based on keywords rather
than URLs

 Open Market has a patent on electronic shopping carts, on paying with credit cards using
the secure socket layer encryption and on secure credit card transactions. However, there
are now several types of shopping carts.


 Priceline.com was issued a patent for its reverse auction method, that is, "name your
price" auction.

 Sightsound.com has a patent for selling digital content (e.g. downloading films) on the
Web. 

 CI Software has a patent for EDI on the Internet.

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  One of the most widely renowned patent infringement cases was Amazon.com patent for

" one click " technology for purchasing items, which was at the center of its dispute with

Barnes and Noble. One-click shopping allows the prospective buyer to bypass the use of

a "shopping cart", which is cumbersome for many users.

 Amazon.com also has a patent for its "Affiliates" program, which allows the company to

market the products of other companies in return for a commission. This business process

has been used freely by traditional businesses since the beginning of recorded history and

the fact that this process has been patented is very controversial. Also controversial is

Priceline.com patent for a reverse auction method, which it uses to sell airline tickets.

 In effect, a few companies have patented Internet business models, which are being used

by many other companies. If these patents can be easily licensed at reasonable rates, then

there won't be a problem in the future development of e-business. But if not, the resulting

chaos will inhibit the growth of the online business world.

E-BUSINESS ENVIRONMENT AND STRATEGIES

The rate of change in e-business presents an enormous challenge to managers. Business on the

Internet is just beginning, and is evolving through a process of trial and error. Management

flexibility is a key for survival and success in e-business.

The environment of any organization consists of all of the factors that are beyond its control, but

influence it in one way or another.

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Examples of these factors are shown in the figure, E-Business Environment and Strategies. To

counter the potential adverse effects of these factors, the e-business can respond with strategies.

An external strategy is an approach to deal with factors in the external business environment

such as competitors, markets, and technological developments, that are beyond the company's

direct control. This is different from a corporate strategy,which had dresses factors under the

company's control such as the approach to marketing, sales, and pricing. Other components of

the business model such as the value proposition and sources of revenue may also include

strategies.

The steady development of a product has other advantages. It evens out the revenue stream rather

than having the "boom or bust" cycle of a single product. It also shows that the company is

steadily developing and upgrading products for the customers who should begin to buy into the

company's vision. And customers, analysts, and investors will develop confidence that the

company is going to be around for the long-term.

The price must also provide real value to the customer, that is the customer must be pleased with

the purchase of the product or service. In addition to price, the buyer may also be interested in

how the product can be of assistance to his company. In this case, comparisons of price and ROI

maybe used to show that the offering adds more value than a competitor's. The price can also be

a basis for building long-term customer relations, which can lead to multiple sales. For example,

as retail customers become more comfortable shopping on a site, it should be easier to get them

to migrate to higher margin products.

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THE E-BUSINESS ENVIRONMENT AND STRATEGIES:

External strategies may be driven by components of the business model, such as finding workers

with certain capabilities to staff activities. If the required work force is not available locally, the

business concept may have to change, and workers brought in, or the work outsourced. Even

though strategies may be implicit in the business model, such as hire workers at the industry

wage, it is important to recognize them explicitly because they may have to change as the

business environment changes.

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THE COMPETITIVE ENVIRONMENT AND STRATEGIES:

The competitive environment, sometimes known as the industry environment,results from

relationships with other firms. These relationships are with suppliers, customers, producers of

substitute products, potential new entrants, competitors, "complementary", and strategic

partners, which are described by Porter.

When suppliers are limited, they may keep prices high and reduce the profit of a firm that buys

from them. A strategy for the buyer is to find new suppliers, or producers of substitute products.

On the other hand, if there are only a few buyers, they can keep prices low, but a strategy for the

seller is to find more customers to compete for products in order to raise prices, or to find a more

profitable of their industrial capacity. Therefore the Internet serves to increase the knowledge of

prices, find producers of substitute inputs, and subsequently cause downward pressure on prices.

Potential new entrants to a market may also disrupt prices. Either they enter the market with low

prices to gain market share, or they cause the existing firm to lower its prices in order to create a

entry barrier to the new firm. Competitors may also cause prices to drop through price wars, but

can also contribute to stability in the marketplace. Finally, complementary, firms that make

products that need the firm's product to add value (e.g. software developers for particular PC

operating systems), as well as strategic partners can create demand for the firm's products. In

each case the Internet may be used to the advantage or disadvantage of the e- business. The point

is that an e-business must have an Internet strategy to be successful.

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MAINTAIN AND IMPROVE COMPETENCIES:

One obvious strategy is to develop the capabilities, and to build and maintain competencies in

order to keep an advantage over other firms. To do this, one must understand market conditions

and the firm's strengths and weaknesses.

Other strategies to maintain competencies include:

 Block: The "block" strategy makes it difficult for other companies to copy business

processes and intellectual property. Blocks can be achieved by limiting knowledge

transfer about critical features or by reducing or indicating a reduction in prices.

 Run: The "run" strategy means the business innovates faster than potential

competitors. To pull it off the company needs competencies in critical areas.

 Strategic Alliance: The e-business works with other firms that are not usually direct

competitors. For small e-businesses, alliances may be essential since every facet of

growth can be facilitated through association with a well-known and capable partner.

Strategic alliances can solve immediate problems of developing capabilities in

distribution, shipping, and billing, andwill allow the company to be "up and running"

very quickly. However, the small company should be concerned about losing its

autonomy and intellectual property to its larger partner.

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
THE TECHNOLOGY ENVIRONMENT AND STRATEGIES

Technology plays an important role in e-business and must be tracked closely. It can shift

very quickly and greatly disrupt an unprepared company.

DISRUPTIVE TECHNOLOGIES:

When a new technology creates a different approach to performing a task that is less costly, more

efficient, or otherwise relatively advantageous and displaces existing technology, it is known as

a DISRUPTIVE TECHNOLOGY. These technical disruptions can cause businesses to fail,

particularly in those organizations unprepared to change their business model.

Examples of disruptive technologies are:

 Alternative Energy Generation at low cost.

 Artificial Intelligence including Autonomous Systems.
 Emergent Computing: Biocomputing, DNA Computing, Optical Computing, Molecular
or Chemical Computing, and Quantum Computing.
 Global e-Commerce with the Electronic Product Code (EPC) and RFID.
 Grid Computing, including Bioinformatics Grids and EconomicDevelopment Grids.
 Human-Machine Interaction: Intelligent Collaboration, Intelligent Design, and Intelligent
Training Systems.
 Nanotechnology.
 Open Course ware.
 Open Design & Problem Solving.
 Parallel Computing.
 Knowledge Representation and the Semantic Web.
 Superconductivity.
 Voice, Sight and Haptic (i.e. touch) Response Systems
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TECHNOLOGY STRATEGIES:

Every e-business concept based on a technology break-through runs the risk of being replaced by

a company with a newer technology. Therefore, a strategy to maintain technological leadership,

or to have access to the leading applicable technologies, is essential for the long-term survival of

a technology-based e- business.

A technical innovation strategy can be as simple as outsourcing the technical side of an e-

business rather than trying to maintain the competency in-house. If it is large enough, a firm can

develop new technologies. But for most firms, an R&D program is too expensive. One option is

to partner with an organization known for developing new technologies, so that they become

available as they are developed. Co-developing and licensing technologies are also options. The

use of a strategic alliance can serve as a technology strategy, as well as a competitive strategy.

To avoid falling victim to a new technology, a firm must try to keep abreast of technological

developments that may affect its industry. Any company that is technology-dependent must have

someone in-house who is knowledgeable about the latest technical developments. But more

importantly, the company must be willing to take action when it appears that a major advance in

technology poses a threat.

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THE GENERAL ENVIRONMENT AND STRATEGIES

The general environment contains those factors that face most businesses: laws and regulations,

the economic climate, and worker availability.

LAWS AND REGULATIONS:

New laws and regulations may have un expected effects on e-business, especially in the areas of

privacy, patents and other intellectual property. E-Business leaders should understand regulations and

the rational for local taxes, including how tax revenues are spent. Unfair tax breaks should not be

expected by an e-business; neither should businesses expect to compete unfairly with other businesses.

ECONOMIC CLIMATE:

Sound financial strategies will help maintain cash flow and solvency during an economic downturn.

Many small businesses simply run out of money before products begin to generate revenues. E-

business should use the conservative accounting practices preferred by most investors.

WORKER AVAILABILITY:

The availability of qualified employees is one of the biggest problems for an e- business attempting to

grow from a startup into a small or medium sized enterprise. Although technical workers became

available in the economic downturn after the Dot-Com crash, the availability of foreign workers

decreased significantly after the terrorist attack of September 11, 2001. Larger technical companies,

who had augmented their work force through hires of foreign workers prior to "9/11" now feel that
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must outsource large numbers of jobs abroad in order to find the talent needed to stay competitive.

Whether outsourcing will be proven as a successful strategy over time remains to be seen.

Certainly it will work in some situations , but it is unlikely to work in all situations.

Strategies for the local work force include obtaining and keeping qualified employees with

programs such as training, child care, and employee services. Training programs are also

necessary for all employees to develop skills in new technologies

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 E-BUSINESS: AN EMBATTLED BUSINESS CULTURE

its simplest form, e-business involves incorporating the Internet or its technologies to support a basic

business process. For example, your order entry system, connected directly to the inventory database,

is typically accessed from the field by sales reps calling their product availability inquiries in to an

order entry administrator.

The sales reps call in through a static GUI program or by e-mail to an order entry clerk, who

processes each inquiry by order of receipt.

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The process works but may bog down during peak periods of the day or when the staff is short-

handed. Besides, the main function of the order entry staff is to process actual orders.

Providing product availability information to the field is a related responsibility that is often

super ceded by higher priorities.

Processing last minute requests in preparation for a meeting is too often out of the question.

To complicate matters, you also have independent dealers and affiliates requiring product

availability status reports as well as inquiries on an ongoing basis.

After deciding that the product availability inquiry activity is suitable for an e- business

application, the next step is identifying the information asset(s) the process generates.

The mapping of information assets with the processes that support them is a critical requirement

in e-business application development.

PRODUCT INQUIRY FULFILLMENT PROCESS

Instead of field personnel interacting with a character-based, static GUI or other generic front

end to generate the inquiry request, they would access a frontend that is capable of running in

their browser, a personal digital assistant (PDA), or wireless hand device. The front end—Web

server—must be able to perform the function provided by the order entry staff.

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That is, it must be able to access the inventory database, gather the information required by the

inquiry, form at the response, and feed it back via the Internet to the appropriate place (field) in

the user’s browser, which is running the application ona laptop, home office computer, PDA,

and so on. The application also does some housekeeping chores by clearing the inquiries from

the front end and the remote database calls from the back end, or inventory database.

CROSSING THE DIGITAL CHASE WITH MIDDLE WARE

Most likely, the front-end Web application, or what the users see and interact with in the

browser, is developed with Internet-enabled technologies, such as Java or HTML application

tools. The back end could be, for instance, a legacy UNIX database that has been a mission-

critical application for some time.

To accomplish the interconnectivity between the front-end browser application and the back-end

UNIX database, yet another application system, typically referred to as middleware, must be

used to provide the interconnections, or compatibility, between the dissimilar front- and back-

end applications. Examples of middleware are systems developed with J2EE (Java 2 Platform

Enterprise Edition).

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Developed by Sun Microsystems, J2EE is more popular in Web application development than
CORBA (common object request broker architecture), introduced by the Object Management
Group in 1991, or DCOM (distributed component object model), which is Microsoft’s bet for an
object standard. However, the other standards are growing in use for Web application
development.

With middleware in place, the e-business application provides the same functionality of the
previous system. However, the virtual process replaces the traditional product inquiry and
physical clearing house process and provides greater operating advantages and overall benefits to
the enterprise.

E-BUSINESS:THE SHAPING AND DYNAMICS OF A NEW ECONOMY

E-business is a revolution: a business existence based on new models and digital processes,

fueled by hyper growth and new ideals.

It is also pursuit of new revenue streams, cost efficiencies, and strategic and competitive

advantages spawned by virtual business channels. Cutting-edge Internet technologies and new

vistas of emerging technologies enable e-business.

E-business is a forging of a new economy of just-in-time business models,wherebyphysical

processes are being supplanted by virtual operating dynamics. Yes, e- business is all this.

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E-BUSINESS SUPPLY CHAIN

Typically, e-business is described and discussed with more emotion than other business areas,

and rightfully so. After all, we are witnesses to an exciting revolution.

To gain true insight and a conceptual understanding of e-business, it needs to be defined from

both the B2C and the B2B perspectives.

This section also introduces Internet, or digital, supply chains and reveals their underlying

significance to both the B2C and B2B e-business channels.

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THE BUSINESS-TO-CONSUMER PHENOMENON

When consumers purchase goods and certain classes of services directly from the Internet, online

retailers are servicing them. In other words, online retailers, or e- trailers, have initiated a

consumer-oriented supply, or value, chain for the benefit of Internet consumers. This form of

Internet-based activity is known as business-to- consumer (B2C).

Supply chain is used interchangeably with value chain. However, supply chain, in the traditional

sense, refers to the supply and distribution of raw materials, capital goods, and so on, that are

purchased by a given enterprise to use in manufacturing or developing the products and services

for customers or in regular business operations.

In B2C distribution modes, supply, or value, chain refers to the system, or infrastructure, that

delivers goods or services directly to consumers through Internet-based channels.

B2C e-business is a rich, complex supply chain that bears no direct analogy to the physical

world. In fact, no supply chain in the physical world compares to B2C value chains such that an

apples-to-apples comparison can be made. Thus, B2C e- channels are unique because they are

providing supply chains that streamline and enhance processes of the physical world.

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 Internet-driven supply chains depend heavily on the coordination of information flows,

automated financial flows, and integrated information processes rather than on the physical

processes that traditionally move goods and services from producer to consumer.

THREE CLASSES OF B2C VALUE CHAINS MAKE

POSSIBLETHE FOLLOWING E-BUSINESS REALITIES:

1.Delivery of the universe, or an unlimited number—potentially millions—of goods and services

within established markets, by operating under a single brand identity or as a superefficient

intermediary.

2.Creation of new market channels by leveraging the Internet.

3.Elimination of middlemen while stream lining traditional business processes

E-BUSINESS:THE SHAPING AND DYNAMICS OF A NEW ECONOMY

Amazon.com and CD Now are excellent examples of the B2C class indicated in class 1. Amazon

has succeeded by producing an efficient consumer product delivery system.

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 The value in this e-business channel is the uniting of many back street dealers under the banner

of one popular brand name. CD Now is also attempting to implement a similar strategy.

Furthermore, no one bookstore or music store in the physical world offers 10 million titles like

Amazon.com does or325,000 CDs like CD Now does.

Traditional book or CD retailers in established markets could never offer this vastarray of

merchandise, because of shelf space and inventory constraints. Forexample, the typical super

bookstore or music CD store stocks only150,000 or 60,000 titles, respectively.

An example of B2C class 2 is eBay, which created a new market channel in establishing an

online auction facility. Through this e-business channel, buyers and sellers—everyday

consumers—can interact to sell personal items in a venue that did not exist previously.

Dell.com is an example of the third B2C e-business class. Dell.com is successful because it

incorporates the principle of disintermediation, or the ability to eliminate intermediaries from the

value chain. In other words, disintermediation involves disengaging middlemen, who usually

command a share of the value chain. Research has shown that intermediaries add a large

percentage to the final price of products.

Percentages range from 8 percent for travel agents to more than 70 percent for a typical apparel

retailer.

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 Dell is a business case example of effective deployment of disintermediation because its direct

consumer model delivers custom-built computer systems at reasonable prices by leveraging

Internet channels.

In the future, other online supply chains will successfully remove middlemen, resulting in even

lower prices for other classes of goods and services.

In summary, the Internet supply chains created to support B2C e-business initiatives have no direct

analogy in the traditional, or physical, world of commerce.

True, the two channels have similarities. The goods and services offered in physical bricks-and-

mortar retailers become sexy multimedia presentations and transaction data. E-trailers and

consumers connect via Web portals instead of driving to malls or to various business concerns.

Inventory becomes online transaction data that flows from the consumer’s shopping cart of the

online store— Web site—to fulfillment houses or directly to the producers themselves.

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B2C Value Chains Create The Following ThreeTypesOf E-
Business Realities:

1.In established markets, creation of digital supply chains that eliminatemiddlemen and
enable the availability of a unique service , such as Dell’s direct delivery of custom-built PCs.

1. Creation of a new market channel that did not exist in the physical universe, such as eBay’s
creation of the online auction facility for the convenience ofeveryday consumers.

THE BUSINESS-TO-BUSINESS PHENOMENON

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B2B commerce growing from $150 billion in 1999 to $7.4 trillion by 2004!Presently, the median

transaction for B2Bsites is three to four times the size of the median transaction for B2C sites, or

$800 versus $244.

Important drivers of this projected growth include, but are not limited to, competitive advantage,

reduction of costs, increased profits, and customer satisfaction.

If you are able to build an effective B2B channel, the payoff could be significant, resulting in

improved economies of scale and productivity, reduction in overhead, improved information

flows and processing, and increased operating efficiencies,to name a few.

• REDUCE COSTS OF GOODS AND SERVICES ANDPOTENTIALLY LOWER

CUSTOMER PRICES
By connecting information systems directly with suppliers and distributors, organizations can
realize more efficient processes, resulting in reduced unit costsofproducts or services and,
perhaps, lower prices to customers while effectively achieving economies of scale.

• REDUCE OVERHEAD.
B2B channels can eliminate extraneous or redundant business functions and related
infrastructures, resulting in the reduction of overhead costs.

• INCREASE PRODUCTIVITY
. By eliminating operational waste and the automation of inefficient business practices,
organizations can realize productivity gains.

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• ENHANCE PRODUCT AND SERVICE OFFERINGS
With economies of scale, reduction of overhead, operating efficiencies, and lower operating costs,
such gains maybe passed onto the customer through lower prices or as enhanced or additional
features of products or services.

• CUSTOMER SATISFACTION
A strategic benefit of the successful implementation of dynamic B2B business models is
improved customer perception of the transaction.

This metamorphosis will not occur unless companies undergo radical changes. Enterprises will
begin with critical self-examination and comprehensive process analysis to determine what
internal operating functions, underlying infrastructures, and critical practices are necessary to
transform into a B2B channel that is capable of leveraging the Internet.

This in turn will lead to the reengineering of processes, elimination of operational inefficiencies,

and, ultimately, increased productivity. If companies are successful, they will reinvigorate their

value chains, incorporate technology-driven processes that become the foundation for B2B, and

increase transactions with customers.

END-TO-END SOLUTION

company cannot merely incorporate e-business technologies into an existing system (that is,

write something in Java). Rather, it must become an e-business through-and-through.

To reap full value, e-business methodologies should be universal throughout the organization,

from interaction with suppliers to transactions with customers.

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More importantly, an e-business focused organization integrates these e-functions with core business

applications to maximize efficiencies at all operational levels. Business intelligence is also key to the

e-business model since, without the benefit of buying pattern analyses, companies tend to simply open

a Web catalog and compete on price — often with disastrous results. Without a value add, an e-

business is dead on arrival.

With this understanding, I Series provides an ideal end-to-end solution platform. From customer

relationship management (CRM) to supply chain management(SCM), it applies analytical

business intelligence to better target e-business efficiencies. Emphasizing both B2C and B2B

practices — e-business on I Series is so much more than simply an electronic shopping cart

application.

E-BUSINESS FRAME WORK

By anyone’s measure, embarking on a mission to establish a cohesive e-business project is

challenging. Couple that with the need to interoperate with tried-and-true back-office systems,

and you can end up with a task so large that a beginning point is hard to locate. To meet this need,

IBM developed the e-business ApplicationFramework.

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The Internet makes it possible to extend these mission-critical applications even further.

I Series allows customers to easily integrate e-business solutions with line-of- business and front-

office applications that are being re-engineered as Web-based applications. I Series is unique in

that it offers integrated (not add-on) e-business capabilities that optimize this server for end-to-

end e-business solutions and emerging workloads.

TOOLS OF E-BUSINESS

TOOLS AND MIDDLE WARE

A wide range of tools are available to allow an I Series or AS/400e system to play a key role in

the development and deployment of e-business applications. Within the e-business/e-commerce

modernization strategy, a number of specific categories of tools can be brought to bear:

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Application Servers are development and execution environments, many of which come complete

with developer tool sets for creating applications that may interoperate with other like or unlike

systems. These are typically based on Java and open standards-based models.

1.Application Service Provider (ASP) Solutions include tools that allow Application Service

Providers to create and/or deploy applications via the Internet to multiple customers from the ASP's

site(s).

2.B2B Connectors & Enablers are tools specifically targeted to B2Bapplications and the Internet

deployment of the supply chain. Many of these tools focus on connecting buyers and sellers via e-

marketplaces, as well as other many- to-one and one-to-many scenarios, thus consolidating the catalog

and buying process.

2. Browser Front End to Existing Application Solutions are created with tools that can be
used to connect core business application code to a browser-based presentation of that code via

Java or HTML with little or no actual coding required onthe part of the programmer.

 New Browser-based Applications can be built from scratch using tools that create

the GUI client presentation code and the back-end processing code.

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 3. Browser Utilities can be used to create and maintain components of a Web-Based application
and can also be used to build app let store access data. Other miscellaneous tools are included

here as wel.

5.CRM Solutions are tools that are designed to assist customer servicefunctions. These

tools include business rules that can be implemented to enhance the support or customers.

6.EAI(EnterpriseApplicationIntegration)toolsfacilitatetheconnectionofERP solutions to other back

end applications, including the extraction of data from ERP, reformatting and transport of the data

across heterogeneous servers and loading of the data into the databases used by the receiving

application such as Business Intelligence.

E-Commerce Solutions are largely “already finished” applications that can be customized with

minor effort to perform a specific purpose — generally a "shopping cart" type of application,

although some solutions maybe dedicated to CRM or other mission-critical application areas.

Electronic Data Interchange/ eXtensible Markup Language (EDI/XML) Refers to tools that

allow for the movement, via the Internet, of data between vendors and systems with the supply

chain.

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Payment Servers are tools that validate charge card purchases by contacting the holding card

company to confirm the availability of credit for the purchaser. These tools also provide trusted

security and confidentiality routines, as is demanded more and more by consumers when

providing personal and private information.

Portals & Personalization tools allow the creation of web portals and creation of personalized

user interfaces. Users are given the capability to save their configurations for future web site

visits.

Web Access to DB2 UDB for AS/400 is delivered via tools and utilities that provide access

from the browser to DB2 UDB for AS/400 tables. These tools may simply provide database

connection drivers via JDBC, or they may be higher level tools with their own GUI for building

queries against DB2 UDB for AS/400.

Web Report Viewers are tools that allow the end user to view I Series or AS/400 print spool

files via a browser. These tools hold promise for workers whose jobs involve many hours of

browsing through archived AS/400print output. These tools can also extract AS/400 print and

distribute the print files in PDF or other Web formatsto Internet users via e-mail tools.

Wireless Access Solutions can be achieved by using tools for writing/extending applications to

handheld devices. As an interesting side point, the personal information management (PIM)

industry (which includes Palm Pilots and Hand Spring Visors that link to e-mail via wireless

modems) is expecting record- breaking sales in the last quarter of 2000.

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Wireless access is becoming as mainstream as the cellular phone, both of which will accelerate

demand for wireless access solutions. These tools allow the programmer to deploy a 5250

application to a tier0 device with no change to the underlying RPG application in most cases.

BUSINESS MODELS:

A method of doing business by which a company can generate revenue to sustain itself. Spells out
where the company is positioned in the value chain. Business models are a component of a business
plan or a business case.

THE CONTENT OF A BUSINESS PLAN

Mission statement and company description.

• The management team.

• The market and the customers.

• The industry and competition.

• The specifics of the products and/or services

• Marketing and sales plan.

• Operations plan.

• Financial projections and plans.

• Risk analysis.

• Technology analysis.

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STORE FRONT MODEL:

• Store front model enables merchants to sell products on the Web.

• Transaction processing, security, online payment, information storage.

• E-commerce allows companies to conduct business 24-by-7, all day everyday

worldwide.

• An e-commerce store front should include:

• Online catalog of products

• Order processing

• Secure payment

• Timely order fulfillment

SHOPPING CART TECHNOLOGY

SHOPPING CART

• An order-processing technology allowing customers to accumulate lists of itemsthey wishto

buy as they continue to shop.

• Product catalog

• Merchant server

• Data base technology

• Combine a number of purchasing methods to give customers a wide array of options

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ONLINE SHOPPING MALLS

• Wide selection of products and services.

• Offers greater convenience than shopping at multiple online shops.

• Consumers can make multiple purchases in oneTransaction.

AUCTION MODEL

1.ONLINE AUCTIONSITES

• Act as forums through which Internet users can log-on and assume the role of either bidder or

seller.

• Collect a commission on every successful auction.

• Sellers post items they wish to sell and wait for buyers to bid.

2.RESERVE PRICE:

• The minimum price a seller will accept in a given Auction.

3.REVERSE AUCTIONS

Allow the buyer to set a price as sellers compete to match or even beat it.

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PORTAL MODEL

PORTAL SITES
• Give visitors the chance to find almost everything they are looking for in one place

HORIZONTAL PORTALS

• Portals that aggregate information on a broad range of topics.

• Yahoo! Alta Vista, Google.

VERTICAL PORTALS
• Portals that offer more specific information within a single area of interest.

• WebMD.

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HORIZONTAL PORTALS

DYNAMIC PRICING MODELS

• The Web has changed the way products are priced and purchased.
COMPARISON PRICING MODEL

• Websites using shopping both technology to find the lowest price for a given Item.

DEMAND-SENSITIVE PRICING MODEL

• Group buying reduces price as volume of sales increase.

NAME-YOUR-PRICE MODEL

• Name-your-price for products and services.

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 BARTERING MODEL
• Individuals and business trade in needed items for items they desire.

REBATE MODEL

• Sites offer rebates on product at leading online retailers in return for commissionor
advertising revenues.

FREE OFFERING MODEL

• Free products and services generate high traffic.

E-BUSINESS ADVERTISING

• Traditional

• Television, movies, newspapers and magazines

• Establish and continually strengthen branding.

• Brand is a symbol or name that distinguishes a company and its products or services from its
competitors and should be unique, recognizable and easy to remember.

• Publicize URL on direct mailings and business cards

• Online advertising

• Place links on other sites, register with search engine

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BANNER ADVERTISING

1. BANNER ADS

• Located on Web pages, act like small bill boards, usually contain graphics and an
advertising message.

• Increased brand recognition, exposure and possible revenue.

2. SIDE PANEL ADS OR SKYSCRAPER BANNERS

• Advertisements that lie vertically on Web sites

• Place logo on banners, enhancing brand Recognition

BANNER ADVERTISING

• Inventive color schemes and movement.

• Flashing, scrolling text, pop-up boxes and color changes.

• Pop-up box is a window containing an advertisement that appears separate from the screen the
user is viewing, pops up randomly or as a result of user actions (can have a negative effect
due to their intrusive nature)

• Determine the best position on sites for a banner

• Websites cluttered with ads annoy visitors
• Space can be more expensive during high traffic
• Exchanging banners with another site

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BUYING AND SELLING BANNER ADVERTISING

• Buy advertising space on sites that receive a large number of hits and target a

similar market.

• Selling ad space provides additional income.

• Monthly charges for online advertising rarely used.

CPM (COST PER THOUSAND)

• A designated fee for every one thousand people who view the site on which your
advertisement is located.

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1.ADVERTISING PAYMENT OPTIONS

• Pay-per-click: you pay the host according to the number of click-through to your site

• Pay-per-lead: you pay the host for every lead generated from the advertisement.

• Pay-per-sale: you pay the host for every sale resulting from a click-through.

• Selling advertising space.

• Provide appropriate contact information on your Website.

• Register with organizations that will sell your space for you.

• These companies typically charge a percentage of there venue you receive fromthe
Advertisements placed on your site.

ORGANIZATIONAL STRATEGIES FOR E-BUSINESS

To be successful in e-business, an organization must master the art of electronic relationships.

Traditional means of customer acquisition such as advertising, promotions, and public relations

are just as important with a Web site. Primary business areas taking advantage of e-business

include:

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 • MARKETING / SALES

• FINANCIAL SERVICES

• PROCUREMENT

• CUSTOMER SERVICE

• INTERMEDIARIES

MARKETING / SALES

Direct selling was the earliest type of e-business and has proven to be a steppingstone to more

complex commerce operations. Successes such as eBay, Barnes and Noble, Dell Inc., and

Travelocity have sparked the growth of this segment, proving customer acceptance of e-business

direct selling. Marketing and sales departments are initiating some of the most exciting e-

business innovations.

Cincinnati’s WCPO-TV was a ratings blip in 2002 and is now the number three ABC affiliate in

the nation. WCPO-TV credits its success largely to digital billboards that promote different

programming depending on the time of day. The billboards are updated directly from a Web site.

The station quickly noticed that when current events for the early-evening news were plugged

during the afternoon, ratings spiked. The digital billboards let several companies share one space

and can change messages directly from the company’s computer. In the morning, a department

store can advertise a sale, and in the afternoon, a restaurant can advertise its specials.

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Eventually customers will be able to buy billboard sign time in hour or minute increments.

Current costs to share a digital billboard are $40,000 a month, compared with $10,000 for one

standard billboard.

FINANCIAL SERVICES

Financial services Web sites are enjoying rapid growth as they help consumers, businesses, and

financial institutions distribute information with greater convenience and richness than is

available in other channels. Consumers in e- business markets pay for products and services

using a credit card or one of the methods outlined.

Online business payments differ from online consumer payments because businesses tend to

make large purchases (from thousands to millions of dollars) and typically do not pay with a

credit card. Businesses make online payments using electronic data interchange (EDI)

Transactions between businesses are complex and typically require a level of system integration

between the businesses. Many organizations are now turning to providers of electronic trading

networks for enhanced Internet-based network and messaging services. Electronic trading

networks are service providers that manage network services.

They support business to- business integration information exchanges, improved security,

guaranteed service levels, and command center support.

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As electronic trading networks expand their reach and the number of Internet businesses

continues to grow, so will the need for managed trading services. Using these services allows.

Organization to reduce time to market and the overall development, deployment, and

maintenance costs associated with their integration infrastructures.

PROCUREMENT

Web-based procurement of maintenance, repair, and operations (MRO) supplies is expected to

reach more than $200 billion worldwide by the year 2009. Maintenance, repair, and operations

(MRO) materials (also called indirect materials) are materials necessary for running an

organization but do not relate to the company’s primary business activities. Typical MRO goods

include office supplies (such as pens and paper), equipment, furniture, computers, and

replacement parts.

In the traditional approach to MRO purchasing, a purchasing manager would receive a paper-

based request for materials. The purchasing manager would need to search a variety of paper

catalogs to find the right product at the right price.

Not surprisingly, the administrative cost for purchasing indirect supplies often exceeded the unit

value of the product itself. According to the Organization for Economic Cooperation and

Development(OECD), companies with more than

$500 million in revenue spend an estimated $75 to $150 to process a single purchase order for

MRO supplies.

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 E-PROCUREMENT

E-procurement is the B2B purchase and sale of supplies and services over the Internet. The

goal of many e-procurement applications is to link organizations directly to preapproved

suppliers’ catalogs and to process the entire purchasing transaction online.

Linking to electronic catalogs significantly reduces the need to check the timeliness and

accuracy of supplier information.

An electronic catalog presents customers with information about goods and services offered for

sale, bid, or auction on the Internet. Some electronic catalogs manage large numbers of

individual items, and search capabilities help buyers navigate quickly to the items they want to

purchase. Other electronic catalogs emphasize merchandise presentation and special offers,

much as a retail store is laid out to encourage impulse or add-on buying. As with other aspects

of e- business, it is important to match electronic catalog design and functionality to a

company’s business goals.

CUSTOMER SERVICE

E-business enables customers to help themselves by combining the communications capability of a

traditional customer response system with the content richness only the Web can provide—all

available and operating 24x7.

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As a result, conducting business via the Web offers customers the convenience theywant

while freeing key support staff to tackle more complex problems. The Web also allows an

organization to provide better customer service through e-mail, special messages, and private

password -Web access to special areas for top customers.

Customer service is the business process where the most human contact occurs between a buyer

and a seller. Not surprisingly, e-business strategists are findingthat customer service via the

Web is one of the most challenging and potentially lucrative areas of e-business.

Theprimaryissuefacingcustomerservicedepartmentsusinge-businessisconsumer protection.

CONSUMER PROTECTION

An organization that wants to dominate by using superior customer service as a competitive

advantage must not only consider how to service its customers, but also how to protect its

customers. Organizations must recognize that many consumers are unfamiliar with their digital

choices, and some e-businesses are well aware of these vulnerabilities.

For example, 17-year-old Miami high school senior Francis Corn worth offered his “Young

Man’s Virginity” for sale on e-Bay. The offer attracted a $10 million phony bid. Diana Duyser of

Hollywood, Florida, sold half of a grilled cheese sandwich that resembles the Virgin Mary to the

owners of an online casino for $28,000 on eBay.

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Highlights the different protection areas for consumers. Regardless of whether the customers are

other businesses or end consumers, one of their greatest concerns is the security level of their

financial transactions.

This includes all aspects of electronic information, but focuses mainly on the information

associated with payments (e.g., a credit card number) and the payments themselves, that is, the

“electronic money.” An organization must consider such issues as encryption, secure socket

layers (SSL), and secure electronic transactions (SET)

NEW TRENDS IN E-BUSINESS: E-GOVERNMENT AND

M-COMMERCE

Recent business models that have arisen to enable organizations to take advantage of the Internet

and create value are within e-government. E-government involves the use of strategies and

technologies to transform government(s) by improving the delivery of services and enhancing

the quality of interaction between the citizen consumer within all branches of government.

customer-focused links connect users to millions of Web pages, from the federal government, to

local and tribal governments, to foreign nations around the world.

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M-COMMERCE:

In a few years, Internet-enabled mobile devices will outnumber PCs. Mobile commerce, or m-

commerce, is the ability to purchase goods and services through a wireless Internet-enabled

device. The emerging technology behind m-commerce is a mobile device equipped with a Web-

ready micro-browser. To take advantage of the m-commerce market potential, handset

manufacturers Nokia, Ericsson, Motorola, and Qualcomm are working with telecommunication

carriers AT&T Wireless and Sprint to develop smartphones. Using new forms of technology,

smartphones offer fax, e-mail, and phone capabilities all in one, paving the wayfor m- commerce

to be accepted by an increasingly mobile workforce. Figure 3.33 gives a visual overview of m-

commerce.

Amazon.com has collaborated with Nokia to pioneer a new territory. With the launch of its

Amazon.com Anywhere service, it has become one of the first major online retailers to recognize

and do something about the potential of Internet enabled wireless devices. As content delivery

over wireless devices becomes faster, more secure, and scalable, m-commerce will surpass

landline e-business (traditional telephony) as the method of choice for digital commerce

transactions.

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According to the research firm Strategy Analytics, the global m-commerce market was expected

to be worth more than $200 billion by 2005, with some 350 million customers generating almost

14 billion transactions annually.

Additionally, information activities like e-mail, news, and stock quotes will progress to

personalized transactions, “one-click” travel reservations, online auctions, and

videoconferencing.

M-C OMMERCE TECHNOLOGY OVERVIEW

1900s. Technology is a primary force driving these changes. Organizations that want to survive

must recognize the immense power of technology, carry outrequired organizational changes in

the face ofit, and learn to operate in an entirely different way.

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OFFICIALSITESOFE-BUSINESS

1. Flipkart

Website:(www.flipkart.com)

Flipkart is an Indian e-commerce company headquartered in Bangalore, Karnataka. It was

founded by Sachin Bansal and Binny Bansal in 2007. In its initial years, Flipkart concentrated on

online sales of books, but it later on expanded to electronic goods and a diversity of other

products. Flipkart offers multiple payment methods like credit card, debit card, net banking, e-

gift voucher, and the major of all Cash on Delivery. The cash-on-delivery model adopted by

Flipkart has proven to be of great significance since credit card and net banking penetration is

very low in India.

2. Snapdeal:

Website:(www.snapdeal.com)

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Snapdeal is a leading online marketplace, headquartered in New Delhi, India. Snapdeal features

products across categories like mobiles, electronics, fashion accessories, apparel, footwear, kids,

home and kitchen, sports, books; and services like restaurants, spas & entertainment amongst

others. The company was started by Kunal Bahl, a Wharton graduate and Rohit Bansal, alumnus

of IIT Delhi, in February 2010. Snapdeal also provides discounted deals connecting with local

merchants.

3.Fashion and you:

Website:(www.fashionandyou.com)

Fashion and You is a private invitation only shopping club, based in Gurgaon, India. It was

founded by Harish Bahl in November, 2009. The fashion site features collections by top

designers for men, women and children for up to 80% off retail prices.

Fashion and You obtain authentic designer merchandise straight from the brand and provides it

exclusively to its members through limited-time events.

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4. Myntra:

Website:(www.myntra.com)

Myntra was established by Mukesh Bansal, Ashutosh Lawania, and Vineet Saxena in February

2007. All three are IIT graduates, and have worked for several start- ups. Myntra is

headquartered in Bangalore and has been funded by Venture Capital funds like IndoUS, IDG &

Accel Partners. Myntra.com works as an online shopping retailer of fashion and casual lifestyle

products. The company started off in the business of personalization of products, and soon

expanded to set up regional offices in New Delhi, Mumbai and Chennai.

5. Homeshop 18:-

Website:(www.homeshop18.com)

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HomeShop18 is the online and on-air retail and distribution venture of Network 18 Group,

headquartered in NOIDA, India. HomeShop18 was launched on 9 April, 2008 as India's first 24-

hour Home Shopping TV channel, where anchors performed live demonstration of products on

sale. The television channel established HomeShop18's foothold in Indian retail because of high

television penetration. Later, as the internet reach grew all over the country, HomeShop18

expanded to the internet.

8.Yebhi.com:

Website:(www.yebhi.com)

Yebhi.com is an Indian Online Shopping E-commerce portal for Home, Lifestyle& Fashion e-

retailer, launched in the year 2009. Yebhi, which began as BigShoeBazaar.com, has a registered

user base of about1.5 million people, of who about half a million have transacted on the site.

Nexus Venture Partners and N. R. Narayana Murthy’s Catamaran Ventures invested

40croreinAgarwal’scompany in mid-2011. On July' 10th 2012, Big Shoe Bazaar India Pvt Ltd.

owner of Brand Yebhi. comannounced that it has raised 100 Cr in Series C round of funding led

byFidelity Growth Partners India and Qualcomm.

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9) Carat lane:
Website:(www.caratlane.com)

Carat lane is India's first online jewelry store with an assorted range of diamond jewelry designs

to offer every customer. They offer more than 1,40,000 loose diamonds, and over 1000 ready to

choose diamond jewelry online like diamond rings, pendants, earrings, bracelets, bangles and

gold coins for all budgets. The quality& authenticity of diamond jewelry is validated with BIS

Hallmarking and Certification from International labs like GIA, IGI, HRD and AGS. The

website offers discount up to 25 percent of prices. This advantage is achieved with no inventory

cost, minimal overhead cost, no intermediaries and in-house manufacturing facility.

Buying jewelry online in India is more challenging with the lack of touch and feel factor. To

counter this, Cartlane.com also offers ‘try at home’ facility before buying a jewelry online, to

ensure complete satisfaction of look and size. The clients also receive personalized service from

the qualified jewelry consultants every time they buy jewelry online. With easy payment options

including convenient 6 or 12-month EMIs, customers can enjoy free, insured delivery anywhere

in India.

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Research Limitation

One of the limitations in research includes lack of adequate information on a particular subject.

Research equipment’s are very hard or expensive to acquire leading to formulation mere

assumptions. Another hindrance is poor or inaccessibility to the region of study.

Some of the limitations of doing a research include access of information, availability of enough

resources and time management. The availability of experts in editing and guidance may also be

minimal where support from friends ororganization may not be enough.

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 DATA ANALYSIS AND INTERPRETATION AND FINDINGS

1) What is the price control between Flipkart and amazon?

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2) What is the annual profit between Amazon and Flipkart?

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3) What is the Brand counting Flipkart and Amazon?

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4) What is the page views per visit of the customer in online shopping websites?

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5) How many negative response in the following online shopping websites?

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6) What is the E-commerce companies seeing growing mobile app access?

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7) What were the highest number of shopping queries in E-commerce
industry in India before four years?

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8) How many ways customer is accessing Flipkart and Amazon websites?

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9) What number of books for which a store is cheapest for top 5000 books
without shipping charges?

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10) What is the Stock Keeping Units in Flipkart and Amazon?

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 CONCLUSIONS

 The e-commerce has been in the peak in India during past 2 years, the fast growing
technological changes has opened an option of online selling and purchase for a
common man in India.

While comparison between both Flipkart and Amazon, it is observed thatFlipkart

maintains more number of stock keeping units (SKU) as compared to amazon
considering the four popular electronic products

 On the other hand the product sub categories offered by Flipkart is 422 with 86 main
categories on the website as compared to 186 subcategories and16 maincategories of
Amazon.

 It has been seen that there is a tie between both amazon India and Flipkart when
compared the work satisfaction level of employees.

 Both Flipkart and Amazon have established a strong base in India and a strong
competition can be seen between them in coming years

 Community consensus on essential details to improve quality of products and services

based on real requirements of end-users.

 successful implementation among early adopters which then results in a faster and
broader adoption process.

 Greater flexibility for innovation and increased revenues.

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RECOMMENDATIONS

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 Bibliography

 http://en.wikipedia.org/wiki/myntra

 http://en.wikipedia.org/wiki/flipkart

 http://www.google.com

 http://www.yebhi.com

 http://en.wikipedia.org/wiki/homeshop18

 http://www.myntragroup.co.in/about-us.html

 http://www.flipkart.com/

 http://www.cartlane.com

 http://www.snapdeal.com
THANK YOU

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