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E-COMMERCE AND M-COMMERCE

UNIT :1
1.1 INTRODUCTION E-COMMERCE - short for electronic commerce,
refers to the buying and selling of goods and services over the internet. It
involves the use of electronic platforms, such as websites, mobile applications,
and social media, to conduct transactions between businesses and consumers or
between businesses. E-commerce has revolutionized the way businesses operate
and has created new opportunities for entrepreneurs and consumers alike.
 One of the primary benefits of e-commerce is that it offers a more
convenient and efficient way to conduct business. Consumers can
browse and purchase products from the comfort of their own
homes, while businesses can reach a global audience without the
need for a physical storefront. E-commerce has also enabled
businesses to streamline their operations by automating many of
the tasks involved in the sales process, such as inventory
management, order processing, and shipping.
 E-commerce has continued to grow in popularity and importance,
particularly in light of the COVID-19 pandemic, which has led to a
surge in online shopping as people seek to minimize in-person
interactions. As a result, businesses that are able to adapt to the e-
commerce landscape are likely to have a competitive advantage in
the years to come.
 E-commerce has continued to grow in popularity and importance,
particularly in light of the COVID-19 pandemic, which has led to a
surge in online shopping as people seek to minimize in-person
interactions. As a result, businesses that are able to adapt to the e-
commerce landscape are likely to have a competitive advantage in
the years to come.
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Fig1.1.Process flow diagram E-commerce, making process

Wide range of online business activities, including:

 Online Retailing: Direct sales of products to consumers through
websites or apps.
 Online Marketplaces: Platforms where multiple vendors can list and
sell their products, such as Amazon, eBay, and Alibaba.
 Online Auctions: Platforms where items are sold through bidding,
like eBay.
 Digital Goods: Sales of digital products such as ebooks, software,
music, and videos.
 Subscription Services: Regularly delivering products or services in
exchange for a recurring fee, such as Netflix or meal delivery
services.
 Online Banking: Conducting financial transactions over the internet,
including bill payments, transfers, and investments.
 Mobile Commerce (m-commerce): Transactions conducted via
mobile devices.
1.2 E-COMMERCE ENVIRONMENT: The e-commerce environment refers
to the ecosystem in which online business activities take place. The e-commerce
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industry continues to grow at a breakneck pace. For anyone with ambitions to start
their own businesses, e-commerce offers ample opportunities to turn their dreams into
cash. It’s also good for the environment and the economy. So e-commerce
entrepreneurs cannot only feel good about the money in their bank accounts. They can
also feel good that their brands are more environmentally-friendly than traditional
retail and can also help their local communities.Current stats, e-commerce has
been around since the 1990s when the internet debuted to the average Joe and Jane
with the means to afford it. Nowadays, internet use and online shopping, by extension,
are far more widespread. In 2020, there were over two billion online shoppers, which
has only grown in the last two years. Overall, e-commerce is driving massive job
growth in related industries, mainly:

 Logistics

 Warehousing

 Customer service

 IT support

 Delivery
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Fig:1.2. E-COMMERCE ENVIRONMENT

COMPETITORS:
 Direct Competitors: Other businesses selling similar products or
services.
 Indirect Competitors: Businesses offering alternatives or substitutes.
 Market Positioning: Strategies to differentiate from competitors (e.g.,
price, quality, unique features).
WORKFORCE:
 Skilled Labor: Employees with expertise in e-commerce, such as web
development, digital marketing, and logistics.
 Remote work: The growing trend of employees working remotely,
especially relevant for e-commerce businesses.
 Training and Development: Continuous skill enhancement to keep up
with technological advancements.
ECONOMIC FORCES:
 Consumer Spending: Economic conditions affecting consumer
purchasing power and behavior.
 Inflation and Costs: Changes in the cost of goods, shipping, and
operations.
 Global market: Impact of international trade and currency exchange
rates.
TECHNOLOGY:
 E-commerce Platforms: Software solutions for online store
management (e.g., Shopify, Magento).
 Payment Systems: Secure and efficient payment gateways (e.g., PayPal,
Stripe).
 Data Analytics: Tools for analyzing customer behavior and optimizing
business operations.
 Cybersecurity: Measures to protect against online threats and ensure
data privacy.
LEGAL/REGULATIONS:
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 Consumer Protection Laws: Regulations ensuring fair treatment of

customers (e.g., return policies, warranties).
 Data Privacy Laws: Compliance with laws like GDPR or CCPA
regarding customer data handling.
 Intellectual Property: Protection of trademarks, copyrights, and patents.
 Taxation: Understanding and complying with tax obligations in different
regions.
COMMUNITIES:
 Social Media: Platforms for engaging with customers and building brand
loyalty.
 Online Forums: Communities where customers share experiences and
reviews.
 Local Communities: Involvement in local events and sponsorships to
enhance brand presence.
CUSTOMER/CLIENT:
 Customer Service: Providing exceptional support and resolving issues
promptly.
 Personalization: Tailoring the shopping experience to individual
preferences.
 Feedback Mechanisms: Collecting and acting on customer feedback to
improve products and services.
PARTNER:
 Suppliers: Relationships with manufacturers and wholesalers for
inventory management.
 Logistics Providers: Partnerships with shipping and delivery services to
ensure timely order fulfillment.
 Marketing Affiliates: Collaborations with influencers and other brands
for promotions.
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1.3 E-COMMERCE MARKETPLACE:The E-commerce marketplace

or the online e-commerce marketing is a place or a website where one can find
different brands of products coming from multiple vendors, shops or person
showcased on the same platform. The marketplace owner is responsible for
attracting customers and the processed transactions, while the third party vendors
deal with the manufacturing and shipping. Online Marketplace streamlines the
production process through one simple portal, where the manufacturers sell their
products directly to the consumers, therefore avoiding the stagnant process of
stocks holding. This kind of supply chain management is usually referred to as
the “Dropshipping” method.Companies like Amazon, eBay, and Flipkart (India)
have experienced massive success in the e-commerce marketplace business model.

Dropshipping is a retail fulfillment method where a store does not keep the products it
sells in stock. Instead, when a store sells a product, it purchases the item from a third party
typically a wholesaler or manufacturer and has it shipped directly to the customer. This
TYPES OF ONLINE MARKETPLACE:
means the seller never sees or handles the product.

There are different types of e-marketplaces based on different business models or

their method of operation – These are the following e-marketplace
• Buyer-oriented e-marketplace – This marketplace is run by a body of buyers
who want to establish an efficient purchasing environment. This helps the buyers
to lower their administrative costs and get best prices from the suppliers. The
suppliers can also use the buyer oriented e-marketplace to advertise their product
to the set of relevant customers. An example of a buyer-oriented portal that links
many suppliers to a few buyers is the Exostar.
• Supplier-oriented e-marketplace – This marketplace is operated by a large
group of suppliers for establishing an efficient sales channel and increase their
visibility and get leads from a large number of potential buyers. This type of
Supplier-oriented e-marketplace are also called as supplier directory and are
usually searchable by the product or the services being offered. The buyers can
also access information about the suppliers, products or the region that they are not
familiar with. Successful examples of this business model are (CCO) Cisco
connection Online which operates Cisco’s electronic marketplace.
• Vertical and horizontal e-marketplaces – Vertical e-marketplace provides
online access to businesses vertically across every segment of a particular industry
sector such as automotive, chemical, construction or textile. Buying or selling
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using Vertical e-marketplace helps increase the operating efficiency while

decreasing the supply chain and inventories cost and procurement time. A
horizontal e-marketplace on the contrary connects buyers and sellers across
different industries or regions. It will allow the buyers to purchase indirect
products such as office equipment or stationery.
• Independent e-marketplace – It is usually a business to business online
platform operated by a third party and is open to buyers and sellers from a
particular industry. You can register to these platforms and get access to classified
ads, request for quotations and place bids on several products from your industry
sector. Participation in these online auctions and exchanges mostly can be done
through a minimal payment of the registration fee. Some popular examples of
Independent e-marketplace are Alibaba.com, eBay.com etc.
1.4 FOCUS ON PORTAL :: A Web Portal is a specially designed website
which brings information together from various sources in a uniform way. They
can be accessed from multiple platforms like personal computers, smartphones
and other electronic devices.
Why are Portals important?
 Efficiently deliver information to the audience.
 Provides customizable features and development tools.
 Increase interaction between customers and employees.
 Eliminating the need for multiple logins.
MAJOR TYPES OF PORTALS:
 Vertical Portals- These portals covers a particular market(one definite
industry or domain).
 Horizontal Portals- These portals focus on a wide array of interests and
topics, often referred as "mega portals".
 Enterprise Portals- Developed and maintained for use by the members of
intranet or enterprise network.
 Knowledge Portals- Increase the effectiveness of knowledge by
providing easy access to information that is helpful to them in one or
more specific roles.
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 Market Space Portals- These portals exist to support the business to

business, and business to customer e-commerce to find and access rich
information about the products.
1.5 LOCATION OF TRADING IN THE MARKETPLACE:
MARKETPLACE MODELS :
 Direct Sales Model: Businesses sell directly to customers via their own
websites or online stores.
 Marketplace Model: Businesses sell through third-party platforms that
facilitate transactions between buyers and sellers. Examples include eBay,
Amazon Marketplace, and Etsy.
GEOGRAPHIC CONSIDERATIONS :
 Local Marketplaces: Serve a specific geographic area, often focusing on
local goods and services.
 Global Marketplaces: Operate internationally, allowing sellers to reach a
worldwide audience. These require considerations of international shipping,
customs, and differing regulations.
PLATFORM OWNERSHIP:
 Private Marketplaces: Owned and operated by individual businesses for
their exclusive use.
 Public Marketplaces: Open to multiple sellers and buyers, providing a
more diverse range of products and services.
TECHNOLOGY AND INFRASTRUCTURE:
 Web Hosting and Platforms: Choosing the right e-commerce platform
(e.g., Shopify, Magento) and hosting solutions.
 Payment Gateways: Ensuring secure and efficient payment processing.
 Logistics and Fulfillment: Managing inventory, shipping, and delivery
processes.
REGULATORY AND LEGAL ISSUES:
 Consumer Protection: Ensuring compliance with laws and regulations to
protect consumers.
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 Data Privacy: Adhering to data protection regulations like GDPR.

 Taxation: Understanding and managing sales tax and VAT across different
regions.
1.6 COMMERCIAL ARRANGEMENT FOR TRANSACTIONS:
 In recent times, electronic commerce has been growing rapidly in India
and consumers are preferring online transactions due to the convenience
provided by online. The very rapid emergence of Modernization and
technological advancement has increased complexities in the lives of
human beings and this has certainly extended to commercial transactions.
 Thus, the internet has become a new culture and the wide range of
activities performed online has proven to offset the old way of doing the
same activities. The Internet has a great deal of impact on business and
its practices, where local markets are replaced by global markets. This
led to the emergence of new business models i.e. the birth of Electronic-
commerce (E-commerce). One of such Electronic transactions includes
an Internet contract, which is E-contract.
 The basic premise for any commercial or trading activity in general
provided by Contract. Legally enforceable agreements form the structure
of all commercial activity. Except an enforceable contract is concluded,
no commercial transaction can take place.

TRANSACTIONS: The Different transaction models prevalent in e-

commerce, such as B2B (Business-to-Business), B2C (Business-to-Consumer),
C2C (Consumer-to-Consumer), and more recently, emerging models like C2B
(Consumer-to-Business) facilitated by platforms allowing individuals to offer
products or services to businesses.
PAYMENT SYSTEMS: The textbook likely covers various online payment
systems and their functionalities, including credit card transactions, digital
wallets (like PayPal, Apple Pay), cryptocurrency transactions, and emerging
payment technologies.
COMMERCIAL ARRANGEMENTS :
 Affiliate Marketing : Where a business rewards one or more affiliates
for each visitor or customer brought by the affiliate's marketing efforts.
 Subscription Models : Where customers subscribe to receive products
or services regularly.
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1.7 FOCUS ON AUCTIONS :

ONLINE AUCTION:

An online auction is a type of auction that’s held over the internet, unlike in-
person auctions. The best part of holding an online auction is the freedom of
bidding from any location with bidders connected through the internet.
However, activities in online auctions can differ based on it’s type, such as
business-to-business (B2B), business-to-consumer (B2C), and consumer-to-
consumer (C2C).There are many platforms that offer B2B, B2C, or C2C
products for online auctions. EBay is a fine example where all three types of
auctions are used. Apart from eBay, website, Online Auction, and Overstock
are some examples of online auctions platforms.
How do online auction work? An online auction involves several phases,
each requiring enhanced digital product engineering for advanced
functionality.
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 Develop an online auction platform

The first phase of the online auction process is creating a reliable platform that can
handle auction activities such as managing multiple bids, adding or removing
product descriptions, showcasing all the items on the auction, and synchronizing
data in real time. Create a software development plan and onboard developers or
partner with a software development company,

 Design a prototype with all the necessary features.

 Build a minimum viable product for the online auction platform.

 Test the platform using MVP by providing limited access to some

bidders.

 Deploy CI/CD pipelines to achieve continuous improvements.

 Registration process

 The infrastructure needed to store the bidder’s data

 Access management policies for bidders

 Authorization and verification mechanisms

 A unique ID that registers each bid during the auction

 Bidding process

 The bidding process begins with the auctioneer announcing the base price with the
first item on sale and asking for bids. On an online auction platform, auctions are
often live-streamed, where bidders can place their bids in real-time. Take an
example of the online auction platform where an operator works on-site to input
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every bid on the web interface. This feature helps all the bidders to have more
visibility on what is happening in the auction platform.
 Auction houses can use automation and create a virtual clerk that bids on behalf of
the bidders on-site. Each time an online bid is placed, the system records it.
Further, based on this record, a virtual clerk places the bid, and an operator updates
the web interface for all the bidders to view in real time.
 Payment options
 Online auction platforms typically offer a range of payment options to facilitate
transactions between buyers and sellers.
 These payment options include:

 Card payment through secure gateways integrated into the online auction platform.

These gateways ensure that sensitive payment information is encrypted and

transmitted securely.

 Third-party payment system for online transactions, including auctions. Bidders can

link their third-party payment accounts, like Pay pal or others, to online auction

platforms for their purchases.

 Bank transfers where buyers can make payments directly from their bank

accounts. The auction platform provides the seller’s bank details, and the

buyer can transfer the payment directly to the seller’s account.

 Escrow services (third-party services) hold the payment until the transaction is

completed. This option provides additional security to both the buyer and seller, as

the payment is released once the buyer receives the product and confirms its

condition.

 Certificate of sale
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 A certificate of sale is the legal document issued by an online auction

platform to the bidder after a successful auction. It serves as proof of
purchase and ownership of the items on auction. This document typically
includes the auction date, item description, purchase price, and buyer’s
details.
 The technology behind the certificate of sale involves a secure database that stores all
transaction data related to the auction. The online auction platform uses this database
generate the certificate of sale, which is then sent to the buyer via email or the
platform’s messaging system.
1.7 BUSINESS MODELS FOR E-COMMERCE:
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 Business-to-Consumer (B2C) : This is the most common form of e-
commerce where businesses sell products or services directly to consumers.
Examples include online retailers like Amazon and eBay.

 Business-to-Business (B2B): In this type, businesses sell products or

services to other businesses. It includes transactions between
manufacturers and wholesalers or wholesalers and retailers. Examples
include Alibaba and industry-specific marketplaces.
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 Consumer-to-Consumer (C2C) : This involves transactions between

consumers, usually facilitated by a third-party platform. Examples include
eBay and Craigslist, where individuals can sell to other
individuals.

Consumer-to-Business (C2B): Here, individuals sell products or services to

businesses. This is common in freelance marketplaces like Upwork, where
freelancers offer services to companies.
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 Business-to-Government (B2G): This involves businesses providing

products or services to government entities. It includes public sector
procurement through government tenders and contracts. Examples include
companies providing IT services to government agencies.

1.8 REVENUE MODELS:

E-commerce revenue models define how online businesses generate income
from their products or services. Here are some common revenue models in
e-commerce.
 Business-to-Consumer (B2C):
 Sales revenue: Earn money by selling products directly to
customers.
 Business-to-Business (B2B):
 Wholesale revenue: Sell products in bulk to other businesses.
 Subscription-based:
 Recurring revenue: Customers pay a recurring fee for access to
products or services.
 Advertising:
 Display ads: Earn money from displaying ads on your website or
app.
 Affiliate marketing: Promote other companies' products and earn a
commission.
 Commission-based:
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 Marketplace revenue: Earn a commission by facilitating

transactions between buyers and sellers.
 Data monetization:
 Sell data insights: Collect and analyze data, then sell the insights to
other businesses.
 Freemium:
 Offer basic products or services for free and charge for premium
features.
 Pay-per-use:
 Charge customers for each use or transaction. Licensing: Sell
licenses for digital products, such as software or digital content.
 Affiliate marketing:
Promote other companies' products and earn a commission for each sale
made through your unique referral link.

1.9 FOCUS ON INTERNET START-UP COMPANIES:

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1.10 THE dot-com:

The "dot-com" in e-commerce refers to the period during the late 1990s
and early 2000s characterized by a rapid rise and subsequent crash of
internet-based companies, particularly those involved in e-commerce.
This era saw the emergence of many online businesses with ".com"
domain names, leading to the term "dot-com bubble." E-commerce
companies were a significant part of this phenomenon, leveraging the
internet to sell goods and services directly to consumers. The bubble
burst in 2000, leading to a market crash, but it also paved the way for the
evolution of sustainable online business models and the growth of
successful e-commerce giants like Amazon and eBay.
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1.11 E-COMMERCE VERSUS E-BUSINESS:

E-Commerce: refers to the performing online commercial activities,
transactions over internet. It includes activities like buying and selling
product, making monetary transactions etc. over internet. Internet is used for
E-commerce. Websites and applications (apps) are required for e-commerce.
it is mainly connected with the end process of flow means connected with the
end customer.
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Activities of E-Commerce are :

 Buying and selling product online

 Online ticketing
 Online Payment
 Paying different taxes
 Online accounting software
 Online customer support

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 product, making monetary transactions etc
over internet. Internet, intranet, extranet are used in e-business. Websites, apps,
ERP, CRM etc are required for e-business.

Activities of E-Business are :

 Online store setup

 Customer education
 Buying and selling product
 Monetary business transaction
 Supply Chain Management
 E-mail marketing
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