ELECTRONIC COMMERCE

Unit -1
 CONTEXT:
• Definition of E-Commerce.
• History of E-Commerce.
• Advantages and Disadvantages
of E-Commerce.
• Types of E-Commerce.
• E-Commerce Examples.
• Some of E-Commerce Websites
 WHAT IS E-COMMERCE?
• E-commerce consists of the buying and selling
of products or services over electronic
systems such as the Internet and other
computer networks.
• Electronic commerce commonly known as e-
commerce.
 Introduction
• Electronic commerce was identified as the
facilitation of commercial transactions
electronically, using technology such as
Electronic Data Interchange (EDI) and
Electronic Funds Transfer (EFT).
• What is EDI?
• What is EFT?
 Electronic Data Interchange:
Electronic Funds Transfer:
• EDI is the structured
transmission of data
between organizations
by electronic means. It is
used to transfer
electronic documents or
business data from one
computer system to
another computer
system.
• EFT is the electronic
exchange or transfer of
money from one account
to another.
Electronic Funds Transfer (EFT)
• Electronic Funds Transfer (EFT) is the
process by which a user of one bank can
transfer money from their account to
another by way of payment. It is also called
a direct deposit since it directly deposits
money into the receiver’s account without
the need for any physicality like documents
and cheques, and for its accessibility.
 Types of EFT payments
• Direct deposit
• ATMs (Automated
Teller Machines)
• Credit/debit cards
• Pay-by-phone
systems
• Electronic cheque
(E-check)
History of E-Commerce
• 1969 — Two electrical engineering students
from Columbus, Ohio, launch CompuServe,
which becomes the country’s first-ever
commercial online service.
• 1979 — English inventor Michael Aldrich
uses a transaction-processing computer and
a doctored television to create the very first
secure data transmission, laying the
groundwork for online shopping.
History of E-Commerce
• 1982 — The first online marketplace, Boston
Computer Exchange, opens for business.
• 1995 — Influential e-commerce
marketplaces Amazon and eBay launch. Both
companies complete one million transactions
by 1997.
• 1998 — E-commerce payment system PayPal
debuts, giving consumers a trusted artery to
handle both personal and business-related
financial transactions.
 History of E-Commerce
• 2000 — Google debuts Google AdWords, giving e-commerce
businesses the power to advertise through the Google search
tool.
• 2005 — Amazon launches Amazon Prime membership.
• 2009 — Square debuts, allowing retailers to accept debit and
credit payments through an app.
• 2014 — Apple introduces the mobile payment and digital
wallet tool Apple Pay
Advantages of E-commerce
1. Faster buying process
2. Store and product listing creation
3. Cost reduction
4. Affordable advertising and marketing
5. Flexibility for customers
6. No reach limitations
7. Product and price comparison
8. Faster response to buyer/market
demands
9. Several payment modes
 1. Faster buying process

• Advantages of e-business include helping one

to choose from a wide range of products and
get the order delivered too. Searching for an
item, seeing the description, adding to cart –
all steps happen in no time at all. In the end,
the buyer is happy because he has the item
and didn’t have to travel far.
 2. Store and product listing
creation
• A product listing is what the customer sees when they search
for an item. This is one advantage in ecommerce meant for
the seller. This online business plus point is that you can
personalise your product listing after creating them.
• Customising listings makes them attractive and appealing.
Here the seller has full control over customisation, he can
mention offers available, discounts etc. Other advantages of
e-business product listing are that it is free to upload and fast.
 3. Cost reduction
• One of the biggest advantages of
ecommerce to business that keep sellers
interested in online selling is cost reduction.
Many sellers have to pay lots to maintain
their physical store. They may need to pay
extra up front costs like rent, repairs, store
design, inventory etc. In many cases, even
after investing in services, stock,
maintenance and workforce, sellers don’t
receive desired profits and ROI.
 4. Affordable advertising and
marketing
• Sellers don’t have to spend a lot of money to
promote their items. The world of ecommerce has
several affordable, quick ways to market online.
Ecommerce marketplaces are visual channels – and
sellers can really show off their product. For
example, Amazon sellers can use Advertising tools to
add videos, infographics, good quality resolution
images.
 5. Flexibility for customers

• An important advantage of ecommerce to

business is that sellers can provide flexibility
to customers. One highlight is that the
product and services are ready 24x7. The
result is that seller can offer his item any
place, any time.
 6. Product and price comparison

• In ecommerce, sellers can compare the products

using tools or on their own. This gives them a good
idea of product alternatives available, the standard
rates, if a product need is unfulfilled.

Comparison is faster online and covers many

products - It helps to save time when making this
comparison, as all details are available on the
shopping site.
 7. No reach limitations

• A seller with a physical store may only be able to reach a

certain number of buyers. They can deliver to the customers’
homes but there can be distance limitations. Several e-
commerce marketplaces have their own logistics and delivery
system.

Reaching out to more customers - Sellers that need to

expand their reach to find new customers can benefit from
this. This applies to online-only sellers and those with a
physical store.
 8. Faster response to buyer/market
demands
• Every interaction is faster when you begin selling
online. Ecommerce marketplaces offer you a
streamlined logistics or delivery system. What this
means is that the buyers order gets delivered
efficiently. Product returns management is one more
plus point that can be handled quickly – you either
refund the payments or give a replacement.
 9. Several payment modes

• Buyers like personalisation – the same goes for paying for

their orders. Ecommerce marketplaces permit multiple
payment modes that include UPI, cash on delivery, card on
delivery, net banking, EMIs on credit or debit card and pay-
later credit facility.

Cart recovery – This is one huge benefit or ecommerce.

Sometimes a buyer reaches the checkout page but doesn’t
complete the purchase. Here, you can notify customers via
phone messages, email to finish buying.
 Disadvantages of E-commerce

• Lack of Personal Touch: Some customers appreciate the personal touch they offer
when visiting a physical store by interacting with the sales associates. Such
personal touch is especially essential for businesses that sell high-end products as
customers will want to buy the products and have an excellent experience during
the process.
• Lack of Tactile Experience: No matter how good a video is made, customers still
can’t feel and touch a product. Not to mention, it’s never an easy task to deliver a
brand experience that could often be including the sense of touch, taste, smell,
and sound via the two-dimensionality of any screen.
• Product and Price Comparison: With online shopping, customers can compare
several products and find the least price. This forces many businesses to compete
on price and reduce their profit margin, reducing the quality of products.
 Disadvantages of E-commerce

• Need for Access to the Internet: This is obvious, but don’t forget that the
customers do need access to the Internet before purchasing from any business! As
many eCommerce platforms have the features and functionalities which require a
high-speed Internet connection for an optimal consumer experience, there’s a
chance that companies are excluding visitors who have slow internet connections.
• Credit Card Fraud: Credit card frauds are a natural and growing problem for online
businesses. It can lead to many chargebacks, which result in the loss of penalties,
revenue, and a bad reputation.
• IT Security Issues: More and more organisations and businesses have fallen prey
to malicious hackers who have stolen information of the customers from their
databases. This could have financial and legal implications, but it also reduces the
company’s trust.
 Disadvantages of E-commerce
• All the Eggs in One Basket: E-Commerce businesses
rely solely or heavily on their websites. Even just
some minutes of downtime or technology glitches
could be resulting in a substantial revenue loss and
customer dissatisfaction.
• Complexity in Regulations, Taxation, and
Compliance: Suppose any online business sells to its
consumers in different territories. In that case, they’ll
have to stick to the regulations in their own countries
or states and their consumers’ places of residence.
This could be creating a lot of complexities in
accounting, taxation and compliance.
Types of E-commerce
B2B (Business-to-Business)
B2C (Business-to-Consumer)
C2B (Consumer-to-Business)
C2C (Consumer-to-Consumer)
B2G (Business-to- Government)
G2B (Government-to-Business)
G2C(Government –to- Citizen)
 1) BUSINESS TO BUSINESS (B2B)

• Business-to-business (B2B), also called

B-to-B, is a form of transaction between
businesses, such as one involving a
manufacturer and wholesaler, or a
wholesaler and a retailer. Business-to-
business refers to business that is
conducted between companies, rather
than between a company and individual
consumer.
B2B
 KEY Features (B2B)

• Business-to-business (B2B) is a transaction or business

conducted between one business and another, such as a
wholesaler and retailer.
• B2B transactions tend to happen in the supply chain, where
one company will purchase raw materials from another to be
used in the manufacturing process.
• B2B transactions are also commonplace for auto industry
companies, as well as property management, housekeeping,
and industrial cleanup companies.
 Examples(B2B)
• Many vehicle components are manufactured
independently, and auto manufacturers purchase
these parts to assemble automobiles. Tires,
batteries, electronics, hoses and door locks, for
example, are usually manufactured by various
companies and sold directly to automobile
manufacturers.
• Service providers also engage in B2B transactions.
Companies specializing in property management,
housekeeping, and industrial cleanup, for example,
often sell these services exclusively to other
businesses, rather than individual consumers.
 2) BUSINESS TO CONSUMER
(B2C)
• The term business-to-consumer (B2C) refers to the process of
selling products and services directly between a business and
consumers who are the end-users of its products or services.
Most companies that sell directly to consumers can be
referred to as B2C companies.
B2C
 KEY FEATURES (B2C)

• Business-to-consumer refers to the process of

businesses selling products and services directly to
consumers, with no middle person.
• B2C typically refers to online retailers who sell
products and services to consumers through the
internet.
• Online B2C became a threat to traditional retailers,
who profited from adding a markup to the price.
 B2C - Models
1. Direct sellers. This is the most common model in which
people buy goods from online retailers. These may
include manufacturers or small businesses or simply online
versions of department stores that sell products from
different manufacturers.
2. Online intermediaries. These are liaisons or go-betweens who
don't actually own products or services that put buyers and
sellers together. Sites like Expedia, trivago, and Etsy fall into
this category.
3. Advertising-based B2C. This model uses free content to get
visitors to a website. Those visitors, in turn, come across
digital or online ads. Large volumes of web traffic are used to
sell advertising, which sells goods and services. One example
is media sites like Huff Post, a high-traffic site that mixes
advertising with its native content.
 B2C - Models
4. Community-based. Sites like Meta (formerly
Facebook), which build online communities based
on shared interests, help marketers and advertisers
promote their products directly to consumers.
Websites typically target ads based on users'
demographics and geographical location.
5. Fee-based. Direct-to-consumer sites like Netflix
charge a fee so consumers can access their content.
The site may also offer free but limited content
while charging for most of it. The New York
Times and other large newspapers often use a fee-
based B2C business model.
 Examples : B2C
• One example of a major B2C company today is
Shopify, which has developed a platform for
small retailers to sell their products and reach
a broader audience online.
• Disney+, which charges a subscription to
stream their video-on-demand content.
3) CONSUMER TO BUSINESS (C2B)
• C2B stands for Consumer-to-Business, and is used to
describe a business model where consumers deliver
value to a business.
• The C2B strategy gets consumers to provide services
or products that appeal to businesses
• In recent years, the freelance work industry has
exploded. Freelancers can provide everything from
a press release to an entire logo for clients who
need assistance in these areas but are unable or
unwilling to hire full-time employees.
• Examples of C2B models include referral programs,
paid testimonials, or data sharing.
C2B
 Benefits : C2B
• Flexibility: Businesses and sellers can define
their own revenue parameters, such as the
duration of services, how often payment gets
collected or product supply dates. This offers
more scheduling flexibility for freelancers to
enjoy while providing their services.
• Higher earning potential: Sellers have
unlimited earning potential; they can work as
much as they want and provide their services
and product to as many businesses as they
choose.
 Benefits : C2B
• Wider reach: Businesses have the opportunity to
prioritize how they hire sellers, which gives them
the ability to hire from specific regions, such as
where the average income or cost of living is lower,
thereby reducing their costs.
• Variety of work: Sellers have the opportunity to
gain valuable work experience with different
businesses across multiple projects, and they have
the opportunity to be paid well for their services.
• Independence: Consumers can provide their
products or services to a business without having to
create a business or go into business for
themselves.
 Examples : C2B
• A food blogger who shares an affiliate link to a kitchen
company’s cooking products on their blog.
• A tech blogger who displays a company's service ads to their
audience in exchange for a cut of the ad revenue.
• Social media users who fill out surveys on Survey Junkie or
promote products and services.
• Large e-commerce websites or sellers who pay or otherwise
reward consumers for reviewing their products or when they
share a review on their personal social media.
 4) CONSUMER TO CONSUMER (C2C)

• It facilitates the online transaction of goods or

services between two people.
• Customer to customer (C2C) is a business
model whereby customers can trade with each
other, typically in an online environment. Two
implementations of C2C markets are auctions and
classified advertisements.
C2C
 KEY Features

• Customer to customer (C2C) is a business

model that enables customers to trade with
each other, frequently in an online
environment.
• C2C businesses are a type of business model
that emerged with e-commerce technology
and the sharing economy.
• Online C2C company sites include Craigslist,
Etsy, and eBay, which sell products or
services through a classified or auction
system.
 Business To Government (B2G)

• B2G model is a variant of B2B model. Such

websites are used by governments to trade
and exchange information with various
business organizations. Such websites are
accredited by the government and provide a
medium to businesses to submit application
forms to the government.
B2G
 Government To Business
(G2B)
• Governments use B2G model websites
to approach business organizations.
Such websites support auctions,
tenders, and application submission
functionalities.
G2B
 Government To Citizen
(G2C)
• Governments use G2C model websites to approach
citizen in general. Such websites support auctions of
vehicles, machinery, or any other material. Such
website also provides services like registration for
birth, marriage or death certificates. The main
objective of G2C websites is to reduce the average
time for fulfilling citizen’s requests for various
government services
G2C
 E-COMMERCE EXAMPLES:

• An individual purchases a book on the Internet.

• A government employee reserves a hotel room over
the Internet.
• A business buys office supplies on-line or through an
electronic auction.
• A manufacturing plant orders electronic components
from another plant within the company using the
company's intranet.
 Nature of E-Commerce
• Anytime, Anywhere, Anyone
• Information Density
• Digital Convergence
• Product Promotion
• Redefining Organizations
• Direct savings
• No trail of Paper documentation
Challenges and Barriers in E-Commerce
Environment
• Customers’ Exploding Expectations
It is very difficult to meet customer expectations,
competing with them and fulfilling the ever-evolving
customer demands is a huge challenge for retailers
today.
• Online Identity Verification
When a visitor registers on an eCommerce website, the information
they enter may not be genuine – therefore you cannot know if
they are genuinely interested in purchasing. For example, cash-on-
delivery purchases made with a fake phone number and address
can result in massive losses in revenue.

•
 Challenges and Barriers in
E-Commerce Environment
• Cyber security
Cyber attacks can compromise the security of your e
Commerce website by infecting it with viruses and,
what’s even worse, they may compromise the
security of your registered customers’ data.
• Shopping Cart Abandonment
One of the biggest problems eCommerce businesses
are facing – no matter their size – is shopping cart
abandonment.
Stats show that online shoppers abandon their
shopping carts 68% of the time and some stores can
see abandonment rates as high as 80%.
 Challenges and Barriers in
E-Commerce Environment
Product Returns And Refunds
• Over 60% of online shoppers look at a shop’s return
policy before making a purchase.
• 48% of customers would shop more if stores offered
less complicated returns and an inconvenient returns
policy deters 80% customers.
• Furthermore, 89% of online shoppers have made a
return at one point during their shopping experience.
Challenges and Barriers in
E-Commerce Environment
• Competition From Manufacturers And
Retailers
• Manufacturers and retailers that online stores buy
products from in bulk eventually begin selling their
goods directly to customers.
• Digital Marketing Is Getting More
Expensive
• Digital marketing has long been a more affordable
form of advertising, compared to traditional
marketing.
• The cost of digital marketing has increased 12% on
average across all channels, meaning that every
dollar eCommerce managers invest may have less
impact now than it had in the past.
 Ecommerce in India
• E-Commerce is a type of virtual industry where the buying
and selling of products and services is conducted over
electronic systems such as the internet and other computer
networks.
• Earlier, there were no such concepts for the retailers or for
the customers to play with. They were restricted to their
physical stores for the purpose of buying and selling but now
there are many online websites
 Ecommerce in India
• In India the users of computers and internet have
increased drastically from 1995 to 2022. Now the
entire business scenario has changed as everything
has become online now.
There were 658.0 million internet users in India in
January 2022.
E-commerce has transformed the way business is
done in India. The Indian E-commerce market is
expected to grow to US$ 188 billion by 2025 from
US$ 46.2 billion as of 2020. By 2030, it is expected
to reach US$ 350 billion. In 2022, the Indian e-
commerce market is predicted to increase by
21.5%, reaching US$ 74.8 billion.
 Transition to E-Commerce in India

• The potential for e-commerce is enormous in India,

owing to the rapid growth of the number of internet
users.
• The huge savings in time and money by both buyers
and sellers is the principal advantage.
• The pandemic has expanded online shops to include
more groceries and household items and forced an
increase in virtual traffic and in return, physical
stores have suffered.
 Indian Readiness for Ecommerce

• India is the second fastest growing economy in the world. In

the last few years, Indian has developed radically.
• In India, the year 1990 marked the year of science and
technological advancement in the country. In the last two
decades, the country has come a long way.
• Computer and internet have become available in almost
every home. This has created a market for e-commerce in
India.
 Reasons Which Make India A Suitable Market For E-
commerce

1.The mindset of consumer has changed

2.Internet friendly users
3.Entry of big names in the Indian e-commerce
market
4.The success of the some of the sectors in the
e-commerce market.
 E Transition Challenges To
Corporate
• Poor knowledge and Awareness
• Cash on Delivery
• Online Security
• Logistic and shipment services
• Tax Structure
• Fear Factor
• Touch and Feel Factor
Queries ?