INTRODUCTION:

UNIT
Q
E-Commerce: Meaning – Advantages & Limitations – E-Business: Traditional
& Contemporary Model, Impact of E-Commerce on Business Models –

I
Classification of E-Commerce: B2B – B2C – C2B – C2C

Applications of E-commerce: E-Marketing – E-Advertising – E-Banking –

Mobile Commerce - E-Trading – E-Learning – E-Shopping

INTRODUCTION TO E-COMMERCE

E-Commerce : E-Commerce refers to the performing online

commercial activities, transactions over internet. It includes
activities like buying and selling products, making monetary
transactions etc. over internet. Internet is used for E-commerce.
Websites and applications (apps) are required for e-commerce.

Examples of E-Commerce are online retailers like Amazon,

Flipkart, Myntra seller of digital goods like E-books, online
service etc.

E-Commerce Workflow Procedure

Ecommerce works by connecting sellers with customers and allowing exchanges to take place
online. It can work in many different ways and take many forms.

Here’s a general overview of how the process can look:

1. The seller chooses online selling channels, like a website or social media, and promotes products or
services for sale.

2. Customers find the products or services and place orders.

3. A payment processor enables the exchange of the goods or services electronically via payment options
like credit cards or digital currencies.

4. The customer receives a confirmation email or SMS along with a printable receipt.

5. If the transaction is for goods, the seller ships the products and sends the customer a tracking number
via email or SMS. If the transaction is for a service, the service provider can reach out to schedule and
complete the service.
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Fig 1.1: E-Commerce Working Model

1.1.1 ADVANTAGES OF E-COMMERCE

 Open 24/7

online stores are always open, customers can purchase anytime they like without traveling
to a physical location to see your products. Simply by using their mobile devices, they can browse
through your product descriptions and high-quality product photos to gather information before
buying.

 Selling Internationally

It is a platform where any trader or business may advertise their goods as much as
possible around the globe. Additionally, anybody can purchase the item for themselves from any
location.

 Accessibility

Anything may now be purchased quite easily. On the e-commerce platform, products are
accessible around the clock. Compared to offline markets, it is considerably better.

 Reduces Costs
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E-commerce also helps to reduce business costs as it eliminates the need for a physical
store and sales staff. It also reduces inventory costs and transportation costs. There are also many
opportunities for cost-saving through online auctions and supply chains.

 Locating Basics

Finding the products you need in the offline market is really challenging. At the same
time, we may use a single click to browse an online e-commerce website and purchase the products
we need. Customers have far more convenience with this alternative than with an offline market.

 Domestic Delivery

A customer's requested item is quickly delivered to his home via an e-commerce

company. Additionally, client complaints are addressed along with this. People prefer to purchase
goods online because of this.

1.1.2 DISADVANTAGES / LIMITATIONS OF E-COMMERCE

 Lack of Social Interaction

One disadvantage is that there is a lack of social interaction, as people cannot see or touch the
product before they buy it. This may lead to dissatisfaction with the purchase if the product is not
what was expected.

 Safety

E-Commerce has a significant issue from online fraud. Hackers steal personal information,
financial information, and other data from websites. The issue of hacking persists because of any
negligence.

No website makes any assurances that your personal information won't be compromised, and
hacking has always been seen as a drawback of e-commerce.

 Lack of Trust
There may be a lack of trust among consumers when it comes to buying goods and services
online. This is because they may be afraid of being scammed or not receiving the product that they
ordered.

1.2 INTRODUCTION TO E-BUSINESS

E-Business : E-Business refers to performing all type of business activities through internet. It
includes activities like procurement of raw materials /goods, customer education, supply activities
buying and selling products, making monetary transactions etc. over internet. Internet, intranet,
extranet are used in e-business. Websites, apps, ERP(Enterprise Resource Planning),
CRM(Customer Relationship Management ) etc. are required for e-business.
[4] E-COMMERCE
Examples of E-Business are e-commerce companies and its various internal business activities,
auction site, classified site, software and hardware developer site etc.

Difference between E-Commerce and E-Business :

S.No. E-COMMERCE E-BUSINESS

E-Commerce refers to the performing online

commercial activities, transactions over E-Business refers to performing all type
01. internet. of business activities through internet.

E-Commerce is a narrow concept and it is E-Business is a broad concept and it is

02. considered as a subset of E-Business. considered as a superset of E-Commerce.

Commercial transactions are carried out in e- Business transactions are carried out in
03. commerce. e-business.

04. In e-commerce, transactions are limited. In e-business, transactions are not limited.

It includes activities like procurement of raw

It includes activities like buying and selling materials / goods, customer education, supply
products, making monetary transactions etc. activities buying and selling products, making
05. over internet. monetary transactions etc. over internet.

It requires the use of multiple websites, CRMs,

06. It usually requires the use of only a website. ERPs that connect different business processes.

It involves the use of internet, intranet or

07. It involves mandatory use of internet. extranet.

E-commerce is more appropriate in Business E-business is more appropriate in Business to

08. to Customer (B2C) context. Business (B2B) context.
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1.2.1 TRADITIONAL MODEL

1. Traditional Commerce :
Traditional commerce refers to the commercial transactions or exchange of information,
buying or selling products/services from person to person without use of internet which is a older
method of business style and comes under traditional business. Now a days people are not preferring
this as it is time taking and needs physical way of doing business.

Example includes physical market/bazaar.

1.2.2 CONTEMPORARY MODEL (OR) E-COMMERCE

E-commerce refers to the commercial transactions or exchange of information, buying or

selling product/services electronically with the help of internet which is a newer concept of
business style and comes under e-business. Now a days people are preferring this as it is less time
taking and does not need physical way of doing business everything can be done with laptop or
smart phone and internet.
Example includes online shopping sites.

1.2.3 IMPACT OF E-COMMERCE ON BUSINESS MODELS

OR

ICDT MODEL

A Model developed by Albert Angehrn(1997) called the Information, Communication,

Distribution, Transaction(ICDT) model .
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The ICDT Model( see in Fig 1.2 below) takes its name from the four “virtual spaces” created by the
Inernet: a Virtual / Information Space, a Virtual Communication Space, a Virtual Distribution Space,
and a Virtual Transaction Space.

Fig 1.2: The four Virtual Business Spaces

Virtual Information Space(VIS): The Virtual Information Space (VIS) is about visibility. It operates
like a large billboard. It shows who's who, what's available, how much it costs and so on. It may offer
flexible access which allows visitors to "choose their own path" but it remains a one-way communication
channel.

Virtual Communication Space (VCS): The Virtual Communication Space (VCS) is about interaction.
Like a café, it is provides a "space" for engaging in relationship-building, exchange of ideas or opinions.
The "space" itself can range from a simple chat-line to a sophisticated 3D space in which individuals
"meet". Members of the virtual community can communicate at high speed, low cost, and bypass
traditional physical and geographical constraints.

Virtual Distribution Space (VDS): The Virtual Distribution Space (VDS) is about service delivery. As
with the postal service, there are constraints on the types of items that can be delivered through this
channel - it is only suitable for products and services which can be wholly or partly digitalized. Also the
recipient takes "something" away, but payment itself happens elsewhere.
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Virtual Transaction Space (VTS): The Virtual Transaction Space (VTS) is about trading. It is a bit like
a stock exchange in that goods and services are not transferred in this space - only orders, commitments,
invoices or transfers of payment.

1.3 THREE PILLARS OF E-COMMERCE

The three Pillars of E-Commerce include:

a. Electronic Information
b. Electronic Relationship
c. Electronic Transaction

Fig 1.3: Three Pillars of E-Commerce

a. Electronic Information

Electronic Information Pillar is about storing information. This pillar is constructed by

assigning the information in such a way that it is easily understood by the users. Before constructing the
electronic pillar, the following rules need to be considered.

(i) The content must be in web-readable format.

(ii) The webpage containing the required information should not hang up.
(iii) The links provided in the webpage must navigate to correct location.
(iv) The user must easily find the necessary information.

b. Electronic Relationship

The Central Pillar i.e, Electronic Relationship Pillar specify the way of constructing a
website such that a user viewing the website must revisit the same site in a positive manner. This pillar
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concentrates on establishing relationship with the user in an electronic form. This relationship can be
maintained if the constructed website consists of the following features.

(i) The website must be innovative and must contain certain new features that attracts the users.
(ii) The website must create forms for enabling the user to provide their valuable feedback.
(iii) This website must provide information and include interaction facility.

c. Electronic Transaction

Electronic Transaction Pillar is the most important and the final pillar of an e-
commerce system. Every e-commerce business should design its payment gateway very
highly sophisticated and secure, so as to avoid cyber crimes and makes the consumers to
believe the payment made for the product purchased, as genuine.

1.4 CLASSIFICATION OF E-COMMERCE

Mainly E-Commerce has Four classifications

 Business to Business (B2B)

 Business to Consumer (B2C)
 Consumer to Business (C2B)
 Consumer to Consumer (C2C)

 Business to Business (B2B)

In B2B E-Commerce, commercial transactions take place between different business

organizations, through the Internet. For example, a cycle company may buy tyres from another
company for their cycles. When compared to other models, the value per transaction in B2B transaction
is high, because of bulk purchase. The company also might get the advantage of discounts on bulk
purchases. See Figure 1.3

Out-sourcing and Off-shoring are generally associated with B2B E-Commerce.

● If a company’s work is hired to another company, it would be termed as out-sourcing.

● If the work is outsourced to a company, which is outside its own country, it is called as off-shoring.
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Fig 1.3: Business to Business

 Business to Consumer (B2C)

In B2C E-Commerce, commercial transactions take place between business firms and their
consumers. It is the direct trade between companies and end-consumers via the Internet. B2C
companies sell goods, information or services to customers through online in a more personalized
dynamic environment and is considered as real competitor for a traditional storekeeper. An example of
B2C transaction is a book company selling books to customers. This mode is intended to benefit the
consumer and can say B2C E-Commerce works as ’retail store’ over Internet. See Figure 1.4

Fig 1.4: Business to Consumer

 Consumer to Business (C2B)

C2B can be described as a form of E-Commerce where, the transaction is originated by the
consumers. The consumers will fix a requirement or specific price for a service or a commodity. C2B
model, is also called as reverse auction model. Here, customer bid his price for a service or a product.
Then E-Commerce business entity will match the requirement of the consumer to the best possible
extent.

For instance, in a travel website (eg.yatra.com) a consumer may specify his dates of travel, his source
and destination, number of tickets required and range of hotel etc. The website then finds out the
various options for him which best meets his requirements. These websites generate revenue through
affiliate links, sponsored advertisement or even a small commission in every booking. e.g. Name-your-
price websites. See Figure 1.5

Fig 1.4: Consumer to Business

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 Consumer to Consumer(C2C)

C2C in E-Commerce provides opportunity for trading of products or services among

consumers who are connected through the Internet. In brief when something is bought and sold
between two consumers using Internet it is called C2C E-Commerce. Here the websites act as a
platform to facilitate the transaction. The electronic tools and Internet infrastructure are employed to
support transactions between individuals. Typically, this type of E- Commerce works as Consumer to
Business to Consumer (C2B2C). It means that a consumer would contact a business in search of a
suitable customer. Most of the auction websites and matrimonial websites are working on this
methodology.
For example, a consumer who wants to sell his property can post an advertisement on the website
(eg:timesclassifieds.com). Another person who is interested in buying a property can browse the
property, advertisement posted on this site. Thus, the two consumers can get in touch with each other
for sale/purchase of property through another business’ website. See Figure 1.5

Fig 1.5: Consumer to Business

1.5 APPLICATIONS OF E-COMMERCE

Globally E-Commerce is applied in the following fields .

 E-Marketing
 E-Advertising
 E-Banking
 Mobile Commerce
 E-Trading
 E -Learning
 E-Shopping
 E-Marketing
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E-Marketing is also known as Internet Marketing, Online Marketing, Web Marketing. It

is the marketing of products or services over the internet. Internet marketing is a
growing business mainly because more and more people use the internet every day.
The internet has brought media to a global audience. The interactive nature of internet marketing in
terms of providing instant response is a unique quality of the medium.
Internet Marketing ties together the creative and technical aspects of the internet, including design
development, advertising and sales.

Internet marketing is associated with several business models i.e, B2C, B2B and C2C.

Advantages of E-Marketing:

 Global Reach
 Easy Marketing
 Updates(change of contents, add new products)

Fig 1.6: E-Marketing

 E-Advertising

E-Advertising is also known as Online Advertising. It is a form of promotion that uses

internet and World Wide Web to deliver marketing messages to attracts customers.

Examples: Banner ads, Social network advertising, Online classified advertising etc.,

The growth of these particular media attracts the attention of advertisers as a more productive source
to bring in consumers.

Mainly two types of online advertising;

 Search advertising
 Display advertising
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Fig 1.7: E-Advertising

 E-Banking

E-Banking is also Known as Internet Banking. Internet Banking means any user with a
personal computer and browser can get connected to his banks, website to perform any of the banking
functions. In internet banking system the bank has a centralized database i.e., web enabled.
Customers should never share personal information’s like pin no’s, passwords etc., with any one.
Through internet banking, we can check our transactions at any time of the day, and as many times as
we want.

Best example for E-Banking is ATM.

An ATM is an electronic fund transfer terminal capable of handling cash deposits, Balance
enquiries, cash withdrawals and pay bills.

Services through E-Banking:

 Bill Payment Service

 Fund Transfer
 Investing through internet banking
 Shopping
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Fig 1.8: E-Banking

 Mobile Commerce

Mobile Commerce also known as M-Commerce. The use of wireless handheld devices such
as cellular phones and laptops to conduct commercial transactions online. Mobile commerce
transactions continues to grow, and the term includes the purchase and sale of a wide range of goods
and services, online banking, bill payment, information delivery and so on.

Services through M-Commerce are:

 Mobile Ticketing
 Mobile Vouchers, Coupons
 Mobile contract purchase and delivery
 Local base services

 Local discount offers

 Local Weather

 Information Services

 News
 Sports, Scores

 Mobile Banking
 Mobile Browsing
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Fig 1.9: Mobile Commerce

 E - Trading

Electronic Trading deals with buying and selling financial instruments online using
computer programs.

You can trade things like bonds, money, stocks, and goods over the Internet through a middleman or
directly with other traders. Instead of the old-fashioned way of trading on a trading floor, electronic
trading lets you trade from wherever you are. To start, you need to set up an account with a brokerage
firm and share some personal and financial information. When you want to make a trade, the brokerage
works with stock exchanges to make it happen, all done through computers. This system can handle
lots of trades super quickly.

Fig 1.10: E-Trading

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 E-Learning

E-Learning is the use of technology to enable people to learn anytime and anywhere. E-
Learning can include training, the delivery of just-in-time information and guidance from experts.

 E-Learning is essentially the computer and network-enabled transfer of skills and knowledge.
 E-Learning applications and processes include web-based learning, computer-based learning.
 E-Learning is naturally suited to distance and flexible learning, but can also be used conjunction
with face-to-face teaching.
 E-Learning can also refer to the educational website such as those offering learning scenarios and
interactive exercises for children.
 Communication technologies are used in E-Learning.
 A Learning Management System(LMS) is software used for delivering, tracking and managing
training/education.

Fig 1.11: E-Learning

 E-Shopping / Online Shopping

Online shopping is the process of buying goods and services from merchants over the
Internet.. Recently online shopping has become very popular because of the vast availability of internet.
Online shopping is one kind of E-business where one consumer can directly shop over the internet. E-
bay and Amazon are the two most popular and trusted website for shopping online. Millions of
products are sold all over the world through this E-business model.

Nowadays many people prefer to shop online because it's numerous benefit. Besides many
advantages, online Shopping has got many disadvantages as well.
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Advantages of online shopping
 Easy to Find

 Products can be cheaper

 Save time and energy

 Freedom of choice

 24/7 Availability

Fig 1.12: E-Shopping Process