Change Card

A Change Card is an electronic card used to store and transfer value digitally. It is mainly
used in electronic payment systems and works similarly to prepaid cards. The user
deposits money into the card and later uses it for purchasing goods or services.

Features of Change Card:

• Stores monetary value electronically

• Used for cashless transactions
• Easy and convenient to use
• Reduces the need for physical cash
Applications:

• Public transport systems

• Small retail payments
• Cafeterias and parking systems
Advantages:

• Fast transactions
• Reduces cash handling
• Easy payment process

Client/Server Computing
Client/Server Computing is a computer network model in which one computer called the
client requests services and another computer called the server provides those services.

In E-Commerce:

• Client = Customer’s computer or mobile

• Server = Business website or database server
Working:

1. Client sends request to server.

2. Server processes the request.
3. Server sends response back to client.
Advantages:
 • Fast data processing
• Centralized data management
• Better security
• Easy maintenance
Example:
When a customer visits Amazon, the customer’s browser acts as the client and Amazon’s
system acts as the server.

E-Commerce Channels
E-Commerce Channels are communication and transaction pathways used to conduct
electronic business activities between buyers and sellers.

These channels help in:

• Product promotion
• Communication
• Online ordering
• Electronic payment
• Customer support
Types of E-Commerce Channels:

• Internet websites
• Mobile applications
• Social media platforms
• Email systems
• Online marketplaces
Importance:

• Faster communication
• Global business reach
• Better customer interaction
• Easy online transactions
Electronic Market
An Electronic Market is an online marketplace where buyers and sellers conduct business
transactions electronically through the Internet.

It provides a virtual environment for:

• Product display
• Price comparison
• Online buying and selling
• Electronic payment
Examples:

• Flipkart
• eBay
Advantages:

• 24×7 shopping facility

• Global market access
• Reduced business cost
• Easy product comparison

E-Commerce in Service Industry

E-Commerce is widely used in service industries for providing online services to
customers.

Service industries using E-Commerce:

• Banking
• Education
• Healthcare
• Tourism
• Entertainment
Applications:

• Online banking
• Ticket booking
• Online education
• Food delivery
 • Online consultation
Advantages:

• Faster services
• Customer convenience
• Reduced paperwork
• Improved efficiency
Impact:
E-Commerce has made service delivery faster, cheaper, and more accessible.

Electronic Cash
Electronic Cash (E-Cash) is digital money used for online transactions through electronic
systems instead of physical currency.

It works like normal cash but exists electronically.

Features:

• Cashless payment system

• Fast transactions
• Internet-based usage
• Secure online payment
Advantages:

• Convenient online payment

• Reduces cash handling
• Useful for small transactions
Disadvantages:

• Risk of hacking
• Requires internet and technology

Internet Commerce
Internet Commerce means conducting business activities using the Internet.

It includes:
 • Online shopping
• Electronic payment
• Online banking
• Digital marketing
• Online communication
Features:

• Global connectivity
• Fast transactions
• 24×7 availability
• Electronic communication
Advantages:

• Low business cost

• Worldwide market access
• Better customer service
Internet Commerce is an important part of modern E-Commerce systems.

Industry Value Chains

Industry Value Chain refers to all activities performed by different organizations within an
industry to create and deliver products or services to customers.

It includes:

• Suppliers
• Manufacturers
• Distributors
• Retailers
• Customers
Each participant adds value to the final product.

Importance:

• Improves coordination
• Reduces production cost
• Increases efficiency
• Improves customer satisfaction
Example:
In E-Commerce industry, suppliers, logistics companies, and online retailers work
together.

Credit Card
A Credit Card is an electronic payment card issued by banks that allows customers to
purchase goods and services on credit.

The customer pays the bank later.

Working:

1. Customer enters card details online.

2. Bank verifies information.
3. Payment is approved.
4. Transaction is completed.
Advantages:

• Easy online shopping

• Worldwide acceptance
• Fast payment process
Disadvantages:

• Fraud risk
• Interest charges
• Misuse of card information
Credit cards are widely used in E-Commerce transactions.

Smart Card
A Smart Card is a plastic card containing a microprocessor chip used to store and process
electronic information securely.

Applications:

• Banking
• Identity verification
 • Mobile communication
• Transportation systems
Types:

• Contact smart card

• Contactless smart card
Advantages:

• High security
• Fast processing
• Stores large amount of data
Disadvantages:

• Expensive technology
• Requires card reader
Smart cards are important in secure electronic payment systems.

Transaction Integrity
Transaction Integrity means ensuring that electronic transactions remain accurate,
complete, and unchanged during processing and communication.

It guarantees that:

• Data is not modified illegally

• Transactions are reliable
• Information remains correct
Importance:

• Prevents fraud
• Maintains trust
• Ensures accurate payment processing
Methods Used:

• Digital signatures
• Encryption
• Authentication systems
• Secure payment gateways
Transaction integrity is very important in E-Commerce security.
Impact of E-Commerce on Society
E-Commerce has greatly affected society in many ways.

Positive Impacts:

• Easy online shopping

• Faster communication
• Growth of digital economy
• Employment opportunities
• Better customer convenience
Negative Impacts:

• Reduction in traditional shops

• Cyber crimes and fraud
• Privacy concerns
• Increased dependency on technology
Social Impact:

• Growth of cashless transactions

• Increased internet usage
• Global connectivity
• Better access to services
E-Commerce has changed modern lifestyle and business systems significantly.

Threat
A Threat is any activity or event that can damage, steal, misuse, or destroy computer
systems, networks, or electronic information.

In E-Commerce, threats can affect:

• Customer data
• Payment systems
• Business servers
• Communication channels
Types of Threats:
 • Hacking
• Virus attacks
• Data theft
• Phishing
• Unauthorized access
Effects of Threats:

• Financial loss
• Loss of customer trust
• Data corruption
• Business disruption
Security measures such as firewalls, encryption, antivirus software, and authentication
systems are used to protect E-Commerce systems from threats.

E-Commerce

Introduction
E-Commerce (Electronic Commerce) means buying and selling of goods and services
through electronic medium, mainly the Internet. It also includes transfer of money,
exchange of data, online marketing, online banking, online ticket booking, online shopping,
etc.

In simple words, when business activities are performed electronically with the help of
computers, mobile phones, and internet, it is called E-Commerce.

Examples of E-Commerce are:

• Amazon
• Flipkart
• Myntra
• Online banking
• Online food delivery
• Online recharge and bill payment
E-Commerce has changed the traditional way of doing business because customers can
now buy products from anywhere and at any time.

Scope of E-Commerce
The scope of E-Commerce is very wide because it covers almost every type of business
activity. The major areas of scope are as follows:

1. Online Shopping
Customers can purchase goods and services online through websites and mobile
applications without visiting physical shops.

2. Online Banking
Banks provide internet banking facilities such as:

• Money transfer
• Balance inquiry
• Online payments
• Mobile banking

3. Online Ticket Booking

Railway, airline, movie, and bus tickets can be booked online easily.

4. Electronic Payments
Digital payment systems like:

• UPI
• Debit/Credit Cards
• Net Banking
• Mobile Wallets
are widely used in E-Commerce.

5. Online Education
Educational institutions provide:

• Online classes
• E-books
• Digital notes
• Online examinations
6. Online Marketing and Advertising
Businesses promote their products through:

• Social media
• Search engines
• Online advertisements
• Email marketing

7. Business-to-Business Transactions
Companies purchase raw materials and services from other companies through online
systems.

8. Government Services
Governments provide online services such as:

• Online form submission

• Tax payment
• License renewal
• E-governance services

9. Entertainment Services
Music, movies, games, and OTT platforms are also part of E-Commerce.

Thus, the scope of E-Commerce is increasing rapidly in every sector of society and
business.

Comparison between Traditional Commerce and E-Commerce

1. Meaning
Traditional commerce refers to buying and selling through physical markets and shops,
whereas E-Commerce refers to buying and selling through the internet.

2. Physical Presence
Traditional commerce requires physical presence of buyer and seller.
E-Commerce does not require physical presence.

3. Time Limitation
Traditional shops work for limited hours.
E-Commerce websites work 24×7.
4. Speed
Traditional commerce is slower because paperwork and manual processes are involved.
E-Commerce is faster because transactions are electronic.

5. Cost
Traditional commerce requires more investment in shop rent, staff, electricity, etc.
E-Commerce reduces operational cost.

6. Market Reach
Traditional commerce has limited market reach.
E-Commerce provides global market reach.

7. Payment Mode
Traditional commerce mainly uses cash payments.
E-Commerce uses electronic payment systems.

8. Customer Convenience
Customers must travel to shops in traditional commerce.
In E-Commerce, customers can shop from home.

9. Information Availability
Product information is limited in traditional commerce.
Detailed product information and reviews are available in E-Commerce.

10. Record Keeping

Traditional commerce uses manual records.
E-Commerce uses computerized records.

Benefits of E-Commerce
E-Commerce provides many advantages to businesses as well as customers.

1. Global Reach
Businesses can sell products worldwide through the internet.

2. 24×7 Availability
Customers can shop anytime without time restrictions.
3. Lower Cost
Business expenses such as rent and staff salary are reduced.

4. Fast Transactions
Orders and payments are completed quickly.

5. Better Customer Service

Customers get product details, reviews, and tracking facilities.

6. Convenience
Customers can buy products from home using mobile or computer.

7. Wide Choice of Products

Customers can compare different products and prices easily.

8. Easy Marketing
Companies can advertise products online at lower cost.

9. Improved Communication
Businesses can communicate directly with customers through emails and social media.

10. Time Saving

Both buyers and sellers save time because business processes become faster.

Impact of E-Commerce
E-Commerce has created a great impact on business, society, and economy.

1. Change in Business Style

Businesses are shifting from traditional methods to online systems.

2. Growth of Digital Economy

Online transactions have increased the use of digital payments and internet services.

3. Employment Opportunities
E-Commerce creates jobs in:

• Delivery services
• IT sector
• Digital marketing
 • Customer support

4. Increase in Competition
Businesses now compete globally, which improves product quality and services.

5. Consumer Empowerment
Customers can compare prices, read reviews, and make better decisions.

6. Faster Services
Products and services are delivered more quickly through online systems.

7. Development of Small Businesses

Small businesses can also sell products online without large investment.

8. Growth of Cashless Transactions

Digital payment systems are becoming more popular.

9. Impact on Traditional Shops

Many traditional businesses face competition from online companies.

10. Improved Supply Chain

E-Commerce improves inventory management and delivery systems.

Obstacles in Adopting E-Commerce Applications

Although E-Commerce has many advantages, there are several problems in adopting it.

1. Security Issues
Risk of:

• Hacking
• Data theft
• Online fraud
• Cyber crimes
creates fear among users.

2. Lack of Internet Access

In rural areas, internet facilities may not be properly available.
3. Lack of Technical Knowledge
Many people do not know how to use online systems.

4. Trust Issues
Customers may not trust online sellers because they cannot physically check products.

5. High Initial Setup Cost

Setting up websites, payment gateways, and security systems may require high
investment.

6. Legal and Regulatory Problems

Different countries have different cyber laws and taxation rules.

7. Payment Problems
Online payment failures and frauds may occur.

8. Delivery and Logistics Issues

Late delivery and damaged products create customer dissatisfaction.

9. Privacy Concerns
Customer personal information may be misused.

10. Resistance to Change

Some businesses and customers still prefer traditional methods of commerce.

Conclusion
E-Commerce is a modern method of conducting business through electronic systems and
the internet. It has transformed the global business environment by providing speed,
convenience, wider market reach, and lower costs. Its scope is continuously increasing in
areas like online shopping, banking, education, and digital payments. Although there are
some obstacles such as security and trust issues, the future of E-Commerce is very bright
due to rapid technological development and increasing internet usage.
Objectives of Electronic Commerce

Introduction
Electronic Commerce (E-Commerce) refers to buying and selling goods and services
through electronic networks such as the Internet. The main aim of E-Commerce is to make
business activities faster, easier, cheaper, and more efficient.

Today many companies like Amazon and Flipkart use E-Commerce to conduct business
globally.

Different Objectives of Electronic Commerce

The major objectives of Electronic Commerce are as follows:

1. To Increase Business Reach

One of the main objectives of E-Commerce is to expand business globally. Through the
internet, businesses can reach customers all over the world.

2. To Reduce Business Cost

E-Commerce reduces expenses related to:

• Shop rent
• Paperwork
• Staff
• Advertising
• Inventory handling
This helps organizations save money.

3. To Provide Better Customer Service

E-Commerce aims to provide:

• Quick response
• Product information
• Online support
• Order tracking
• Easy payment options
to improve customer satisfaction.
4. To Increase Sales and Profit
Online business helps companies attract more customers, resulting in higher sales and
profits.

5. To Improve Communication
Electronic communication between buyers, sellers, suppliers, and customers becomes
fast and efficient.

6. To Speed Up Transactions
E-Commerce helps in faster:

• Order processing
• Payments
• Delivery
• Information exchange

7. To Provide 24×7 Services

Online stores remain open all the time, allowing customers to shop anytime.

8. To Promote Paperless Business

E-Commerce reduces paperwork by using electronic records and digital communication.

9. To Improve Competitive Position

Businesses can compete effectively in national and international markets through online
presence.

10. To Support Digital Economy

E-Commerce promotes online banking, digital payments, and electronic business
activities.

Applications of E-Commerce in Direct Marketing and Selling

Direct marketing and selling mean promoting and selling products directly to customers
without middlemen. E-Commerce plays an important role in this field.

1. Online Advertising
Companies advertise products through:

• Websites
• Social media
 • Search engines
• Email marketing
This helps businesses attract customers directly.

2. Online Shopping Websites

Customers can directly purchase products from online stores such as:

• Amazon
• Flipkart
without visiting physical markets.

3. Email Marketing
Businesses send promotional emails about:

• New products
• Discounts
• Offers
• Festivals sales
to customers directly.

4. Online Product Catalogs

Companies provide digital catalogs containing:

• Product images
• Prices
• Features
• Reviews
Customers can easily compare products.

5. Electronic Payment System

E-Commerce supports online payments using:

• UPI
• Debit cards
• Credit cards
• Net banking
• Mobile wallets
6. Customer Relationship Management
Businesses collect customer data and provide personalized services and
recommendations.

7. Social Media Marketing

Products are promoted through platforms like:

• Instagram
• Facebook
• YouTube
to increase direct sales.

8. Online Order Processing

Customers can place orders electronically, and businesses process them quickly.

9. Mobile Commerce
Products and services can be sold through mobile applications and smartphones.

10. Digital Customer Support

Companies provide online help through:

• Chat support
• Emails
• AI chatbots
• Customer care portals

Internet Commerce

Meaning
Internet Commerce means conducting commercial activities through the Internet. It is a
part of E-Commerce where buying, selling, marketing, payment, and communication are
done online using internet technology.

In Internet Commerce, businesses and customers interact electronically without physical

contact.
Features of Internet Commerce

1. Global Connectivity
The Internet connects businesses and customers worldwide.

2. Online Transactions
Payments and orders are completed electronically.

3. Fast Communication
Information exchange becomes quick through emails and websites.

4. Low Cost
Internet-based business reduces operational and communication costs.

5. 24×7 Availability
Services are available anytime and anywhere.

6. Easy Access to Information

Customers can easily search product information and reviews online.

Advantages of Internet Commerce

• Worldwide business opportunities
• Faster transactions
• Better customer services
• Reduced paperwork
• Easy marketing and advertising
• Time saving
• Increased business efficiency

Future of E-Commerce
The future of E-Commerce is very bright because technology and internet usage are
increasing rapidly.

1. Growth of Mobile Commerce

More people are shopping using smartphones and mobile applications.
2. Expansion of Digital Payments
Cashless transactions through UPI and online banking are increasing.

3. Use of Artificial Intelligence

AI helps in:

• Product recommendations
• Chatbots
• Customer support
• Data analysis

4. Growth of Online Services

Education, healthcare, banking, and entertainment services are becoming online.

5. Faster Delivery Systems

Advanced logistics and delivery technologies will improve customer satisfaction.

6. Increase in Global Trade

Small businesses can sell products internationally through E-Commerce platforms.

7. Personalized Shopping Experience

Businesses will use customer data to provide customized products and services.

8. Use of Cloud Computing

Cloud technology will improve storage, security, and online business operations.

9. Social Commerce
Social media platforms will become stronger channels for online selling.

10. Greater Employment Opportunities

E-Commerce will create jobs in:

• IT sector
• Delivery services
• Digital marketing
• Data management
• Customer support
Conclusion
Electronic Commerce is an important part of modern business. Its objectives include
reducing costs, increasing sales, improving customer service, and expanding global
business reach. E-Commerce applications in direct marketing and selling help businesses
connect directly with customers through online systems. Internet Commerce has made
business faster and easier through internet technology. The future of E-Commerce is highly
promising due to rapid growth in digital technology, mobile commerce, artificial
intelligence, and online payment systems.

Threats in E-Commerce and Security Measures

Introduction
E-Commerce involves buying and selling goods and services through the Internet. Since all
business transactions and information are exchanged electronically, security becomes
very important. E-Commerce systems face many threats such as hacking, data theft,
fraud, virus attacks, and unauthorized access.

To protect business data and customer information, proper security measures and
security policies are necessary.

Different Types of Threats in E-Commerce

A threat is any activity that can damage, steal, misuse, or destroy information and systems
used in E-Commerce.

The major threats in E-Commerce are as follows:

1. Intellectual Property Threats

Meaning
Intellectual Property (IP) refers to creations of the human mind such as:
 • Software
• Designs
• Logos
• Brand names
• Music
• Videos
• Written content
In E-Commerce, these valuable digital assets may be copied or misused illegally.

Types of Intellectual Property Threats

(i) Copyright Violation

Unauthorized copying of:

• Software
• Images
• Videos
• Music
• Website content
without permission.

(ii) Trademark Infringement

Illegal use of company names, logos, and brand identity.

(iii) Software Piracy

Illegal duplication and distribution of software products.

(iv) Theft of Business Secrets

Hackers may steal:

• Business plans
• Customer databases
• Product designs
• Source code

(v) Fake Websites

Fraudsters create duplicate websites to cheat customers.
Security Measures for Intellectual Property Threats
• Use copyright and trademark registration
• Apply encryption techniques
• Use licensed software
• Install anti-piracy systems
• Use digital signatures and watermarking
• Regular monitoring of online content
• Use strong access control systems

2. Communication Channel Threats

Meaning
Communication channels are the pathways through which data travels between
customers, businesses, and servers over the Internet.

Hackers may attack these communication channels and steal information.

Types of Communication Channel Threats

(i) Eavesdropping
Unauthorized persons secretly listen to communication and steal information.

(ii) Data Interception

Sensitive information like passwords and credit card details may be captured during
transmission.

(iii) Message Modification

Hackers may change the transmitted data.

(iv) Phishing Attacks

Fraud emails or websites trick users into revealing confidential information.

(v) Spoofing
Attackers pretend to be genuine users or websites.

(vi) Man-in-the-Middle Attack

An attacker secretly intercepts communication between two parties.
Security Measures for Communication Channel Threats
• Use SSL/TLS encryption
• Use secure communication protocols
• Install firewalls
• Use Virtual Private Networks (VPN)
• Apply digital signatures
• Use two-factor authentication
• Educate users about phishing attacks

3. Copyright and Intellectual Property

Meaning
Copyright is a legal protection given to creators for their original work such as:

• Software
• Articles
• Images
• Videos
• Music
Intellectual Property Rights (IPR) protect ownership rights of creators and businesses.

Importance in E-Commerce
• Protects original business content
• Prevents illegal copying
• Encourages innovation
• Maintains business reputation
• Provides legal protection

Violations in E-Commerce
• Copying website designs
• Illegal sharing of software
• Using copyrighted images without permission
• Selling duplicate branded products
Protection Measures
• Copyright registration
• Trademark protection
• Patents for inventions
• Licensing agreements
• Legal action against violators
• Digital watermarking technology

4. Server Threats

Meaning
A server is a computer system that stores websites, databases, and business information.
If servers are attacked, the whole E-Commerce business may stop functioning.

Types of Server Threats

(i) Hacking
Unauthorized access to server systems.

(ii) Virus and Malware Attacks

Malicious software damages server data and programs.

(iii) Denial of Service (DoS) Attack

Attackers overload servers with traffic, making websites unavailable.

(iv) Data Theft

Hackers steal confidential customer and business information.

(v) Password Attacks

Weak passwords can be cracked easily.

(vi) Database Attacks

Attackers target databases to steal or destroy information.
Security Measures for Server Threats
• Use strong passwords
• Install antivirus and anti-malware software
• Use firewalls
• Regular software updates
• Backup important data
• Use Intrusion Detection Systems (IDS)
• Restrict unauthorized access
• Use secure hosting services

Security in E-Commerce

Meaning
Security in E-Commerce means protecting:

• Data
• Networks
• Transactions
• Customer information
• Computer systems
from unauthorized access, misuse, or damage.

The main goal is to ensure:

• Confidentiality
• Integrity
• Authentication
• Availability

Security Policy

Meaning
A security policy is a set of rules and procedures designed to protect E-Commerce
systems and information from threats and attacks.

It defines how security should be maintained in an organization.

Objectives of Security Policy
• Protect customer data
• Prevent unauthorized access
• Ensure secure transactions
• Reduce cyber crimes
• Maintain business continuity

Components of Security Policy

1. Access Control Policy

Defines who can access information and systems.

2. Password Policy
Rules for creating strong passwords.

3. Data Protection Policy

Protects sensitive business and customer data.

4. Network Security Policy

Secures communication networks from attacks.

5. Backup and Recovery Policy

Ensures recovery of data after system failure.

6. Employee Security Policy

Employees must follow security rules and confidentiality.

Integrated Security

Meaning
Integrated Security means combining different security technologies and methods
together to provide complete protection for E-Commerce systems.

It protects hardware, software, networks, databases, and communication channels

together.
Features of Integrated Security

1. Multiple Layers of Protection

Security is provided at different levels.

2. Centralized Security Management

All security systems are controlled together.

3. Real-Time Monitoring
Continuous monitoring helps detect attacks quickly.

4. Data Protection
Sensitive information is secured using encryption.

5. Authentication and Authorization

Only authorized users can access systems.

Components of Integrated Security

(i) Firewalls
Protect networks from unauthorized access.

(ii) Encryption
Converts data into secret code.

(iii) Antivirus Software

Protects systems from viruses and malware.

(iv) Digital Signatures

Verify identity and authenticity.

(v) Biometric Authentication

Uses fingerprints or face recognition for security.

(vi) Intrusion Detection Systems

Detect suspicious activities in networks.
Conclusion
E-Commerce provides many business opportunities, but it also faces several security
threats such as intellectual property theft, communication channel attacks, copyright
violations, and server attacks. These threats can cause financial loss and damage
business reputation. Therefore, proper security measures, strong security policies, and
integrated security systems are essential for protecting E-Commerce applications and
ensuring safe online transactions.

Value Chain in Electronic Commerce

Introduction
In E-Commerce, businesses perform many activities such as purchasing raw materials,
production, marketing, delivery, and customer service. These activities together help in
creating value for customers and increasing profit for the organization.

The concept of Value Chain was given by Michael Porter. According to Porter, every
business is a collection of activities that add value to products and services.

The value chain helps organizations:

• Reduce cost
• Improve efficiency
• Increase customer satisfaction
• Gain competitive advantage

Meaning of Value Chain

A Value Chain is a series of business activities performed by an organization to create,
deliver, and support products or services for customers.

Each activity adds some value to the final product.

In E-Commerce, value chain activities are performed electronically using:

 • Internet
• Computers
• Digital communication
• Online payment systems

Porter’s Value Chain Model

Meaning
Porter’s Value Chain Model explains how different activities within a business help in
creating value and competitive advantage.

According to Porter, value chain activities are divided into two categories:

1. Primary Activities
2. Support Activities

1. Primary Activities
These activities are directly related to production, sale, and delivery of products.

(i) Inbound Logistics

These activities involve receiving and storing raw materials.

Functions include:

• Receiving goods
• Warehousing
• Inventory management
• Supplier coordination
In E-Commerce, software systems help manage inventory efficiently.

(ii) Operations
Operations convert raw materials into finished products.

Activities include:

• Manufacturing
 • Packaging
• Processing orders
Automation and digital systems improve operational efficiency.

(iii) Outbound Logistics

These activities involve distribution of products to customers.

Functions include:

• Order processing
• Warehousing
• Transportation
• Delivery tracking
E-Commerce companies use online tracking systems for delivery.

(iv) Marketing and Sales

These activities help promote and sell products.

Examples:

• Online advertisements
• Social media marketing
• Email marketing
• Online catalogs
E-Commerce websites attract customers globally.

(v) Service
Service activities help maintain customer satisfaction after sales.

Examples:

• Customer support
• Online complaint handling
• Product return services
• Technical support
Good customer service increases customer loyalty.
2. Support Activities
Support activities help primary activities perform efficiently.

(i) Firm Infrastructure

Includes:

• Management
• Finance
• Legal systems
• Planning
These support overall business operations.

(ii) Human Resource Management

Deals with:

• Recruitment
• Training
• Employee development
• Performance management
Skilled employees improve business efficiency.

(iii) Technology Development

Technology is very important in E-Commerce.

Examples:

• Website development
• Database management
• Security systems
• Software applications
Technology improves speed and efficiency.
(iv) Procurement
Procurement means purchasing resources needed for business operations.

Examples:

• Raw materials
• Hardware
• Software
• Office equipment
Electronic procurement systems reduce cost and time.

Importance of Porter’s Value Chain Model in E-Commerce

• Improves business efficiency
• Reduces operational cost
• Increases customer satisfaction
• Supports better decision making
• Creates competitive advantage
• Improves coordination among departments

Supply Chain

Meaning
Supply Chain refers to the complete network involved in producing and delivering products
from suppliers to final customers.

It includes:

• Suppliers
• Manufacturers
• Warehouses
• Transporters
• Retailers
• Customers
Activities in Supply Chain

1. Purchasing Raw Materials

Obtaining materials from suppliers.

2. Production
Converting raw materials into finished products.

3. Inventory Management
Managing stock levels properly.

4. Transportation
Moving products from one place to another.

5. Delivery to Customers
Final distribution of products.

Importance of Supply Chain in E-Commerce

• Faster delivery
• Reduced inventory cost
• Better customer service
• Efficient product movement
• Improved coordination
Companies like Amazon use advanced supply chain systems for quick delivery.

Strategic Business Unit (SBU) Chain

Meaning
A Strategic Business Unit (SBU) is a separate business division within an organization that
focuses on a particular product or market.

Each SBU has:

• Its own objectives

• Competitors
• Strategies
• Resources
The SBU chain focuses on creating value within a particular business unit.

Features of SBU Chain

• Independent business planning
• Separate management
• Specific target market
• Focus on profitability
• Better strategic control

Importance of SBU Chain

• Improves business specialization
• Helps in better decision making
• Increases efficiency
• Supports market-focused strategies
• Improves business performance

Industry Value Chains

Meaning
Industry Value Chain refers to the activities performed by all organizations within an
industry to deliver products or services to customers.

It includes:

• Suppliers
• Manufacturers
• Distributors
• Retailers
• Service providers
All participants together create value for the final consumer.

Example
In the online shopping industry:

• Suppliers provide products

 • E-Commerce companies sell online
• Logistics companies deliver products
• Payment gateways process payments

Importance of Industry Value Chains

• Improves industry coordination
• Increases efficiency
• Reduces production cost
• Enhances customer satisfaction
• Encourages innovation

Inter-Organizational Value Chains

Meaning
Inter-Organizational Value Chain refers to value creation activities shared among different
organizations working together electronically.

Different companies exchange information and coordinate through digital networks.

Features

1. Information Sharing
Organizations share data electronically.

2. Electronic Coordination
Business operations are coordinated online.

3. Collaborative Business Processes

Companies work together for common business goals.

4. Faster Communication
Internet technology improves communication speed.

Examples
• Online supplier systems
 • Electronic Data Interchange (EDI)
• Online payment systems
• Shared inventory systems

Importance of Inter-Organizational Value Chains

• Reduces transaction cost
• Improves supply chain management
• Increases business efficiency
• Enhances communication
• Supports faster decision making

Conclusion
The Value Chain concept helps organizations understand how different business activities
create value for customers. Porter’s Value Chain Model explains primary and support
activities that improve efficiency and competitive advantage in E-Commerce. Supply
chains, strategic business unit chains, industry value chains, and inter-organizational
value chains all play important roles in modern electronic business systems. Proper
management of these chains helps businesses reduce cost, improve coordination, and
provide better services to customers.

Electronic Payment System

Introduction
Electronic Commerce (E-Commerce) involves online buying and selling of goods and
services. For completing online transactions, money is transferred electronically instead of
using physical cash. This method is called Electronic Payment.

Electronic payment systems have become very important because they make online
transactions fast, secure, and convenient.
Examples of electronic payments include:

• UPI
• Debit cards
• Credit cards
• Net banking
• Mobile wallets

Meaning of Electronic Payment

Electronic Payment (E-Payment) is a method of making payments electronically through
computers, mobile phones, or internet-based systems without using physical cash or
paper cheques.

It allows transfer of money between buyers and sellers through digital systems.

Features of Electronic Payment

• Fast and easy transactions
• Cashless payment system
• 24×7 availability
• Secure money transfer
• Convenient for online shopping
• Reduces paperwork
• Supports global transactions

Different Electronic Payment Systems Used in E-Commerce

There are various electronic payment systems used in E-Commerce.

1. Credit Card System

Meaning
A credit card allows customers to purchase goods and services on credit from banks or
financial institutions.
The customer can pay the amount later.

Working of Credit Card

1. Customer enters card details online.
2. Payment request goes to the bank.
3. Bank verifies the card.
4. Payment is approved.
5. Seller receives payment confirmation.

Advantages
• Easy online shopping
• Quick payment process
• Worldwide acceptance
• Useful during emergencies

Disadvantages
• Risk of fraud
• Interest charges on delayed payment
• Misuse of card information

2. Debit Card System

Meaning
A debit card deducts money directly from the customer’s bank account during payment.

Advantages
• Direct payment from bank account
• No credit burden
• Easy to use

Disadvantages
• Requires sufficient account balance
 • Risk of card theft and fraud

3. Net Banking

Meaning
Net banking allows customers to perform banking activities online using internet services.

Services Provided
• Fund transfer
• Online shopping payment
• Bill payment
• Balance inquiry

Advantages
• 24×7 banking service
• Saves time
• Secure transactions

4. Mobile Payment System

Meaning
Payments made through mobile phones are called mobile payments.

Examples:

• UPI apps
• Mobile banking apps
• QR code payments

Advantages
• Fast payment
• Easy to use
• Highly convenient
5. Electronic Cheque (E-Cheque)

Meaning
Electronic cheque is the digital version of a paper cheque used for online transactions.

It contains:

• Bank details
• Amount
• Digital signature

Advantages
• Secure payment method
• Reduces paperwork
• Suitable for large transactions

6. Electronic Cash (E-Cash)

Meaning
Electronic cash is digital money used for online payments.

It works like physical cash but exists electronically.

Advantages
• Fast transactions
• Useful for small payments
• Convenient system

7. Smart Card

Meaning
A Smart Card is a plastic card containing an embedded microprocessor chip that stores
and processes information electronically.

It is used for:

• Payments
 • Identification
• Banking
• Security purposes
Examples:

• ATM cards
• SIM cards
• Metro cards

Features of Smart Card

• Contains memory chip
• Stores user information securely
• Supports electronic transactions
• Can process data automatically

Types of Smart Cards

(i) Contact Smart Card

Requires physical contact with a card reader.

(ii) Contactless Smart Card

Works through radio frequency without direct contact.

Working of Smart Card

1. User inserts or taps the card.
2. Card reader reads information from chip.
3. System verifies user information.
4. Transaction is completed.

Advantages of Smart Card

• High security
• Fast processing
• Stores large amount of data
 • Reduces fraud risk
• Easy to carry and use

Disadvantages of Smart Card

• Higher cost
• Requires special card reader
• Risk of technical failure

Applications of Smart Card

• Banking
• Online shopping
• Identity cards
• Transportation systems
• Mobile communication

Electronic Wallets (E-Wallets)

Meaning
Electronic Wallet or Digital Wallet is a software application used to store payment
information electronically and make online transactions.

It stores:

• Card details
• Bank account details
• Digital money
Examples:

• Paytm
• PhonePe
• Google Pay

Features of Electronic Wallets

• Easy online payments
 • Secure transactions
• Quick money transfer
• Mobile-based payment system
• Stores transaction history

Working of Electronic Wallets

1. User creates wallet account.
2. User adds money or links bank account.
3. Customer selects wallet during payment.
4. Payment is processed electronically.

Advantages of Electronic Wallets

• Fast payment system
• Convenient and user-friendly
• Reduces need for cash
• Secure transactions
• Supports online and offline payments

Disadvantages of Electronic Wallets

• Requires internet connection
• Risk of hacking or fraud
• Technical issues may occur

Applications of Electronic Wallets

• Online shopping
• Mobile recharge
• Utility bill payment
• Ticket booking
• Fund transfer
Security Measures in Electronic Payment Systems
To make electronic payments safe, the following security measures are used:

• Encryption technology
• Password protection
• OTP verification
• Digital signatures
• Biometric authentication
• Secure payment gateways

Conclusion
Electronic Payment systems are essential for modern E-Commerce because they provide
fast, secure, and convenient methods of online transactions. Different payment systems
such as credit cards, debit cards, net banking, smart cards, and electronic wallets have
made online business easier and more efficient. Smart cards provide secure storage of
information, while electronic wallets support quick and cashless transactions. With
increasing internet usage and digital technology, electronic payment systems are
becoming more popular across the world.

Business to Business (B2B) E-Commerce

Introduction
Electronic Commerce (E-Commerce) refers to buying and selling goods and services
through electronic networks such as the Internet. One important form of E-Commerce is
Business-to-Business (B2B) E-Commerce.

In B2B E-Commerce, business transactions take place between one business organization
and another business organization through electronic systems.

Examples:
 • Manufacturer purchasing raw materials from suppliers
• Wholesalers dealing with retailers online
• Companies using online procurement systems
Large companies like Amazon and Alibaba Group support B2B business activities.

Meaning of Business-to-Business (B2B) E-Commerce

Business-to-Business E-Commerce is a type of E-Commerce in which electronic
transactions are conducted between two or more business organizations through the
Internet or private business networks.

In B2B E-Commerce:

• Buyer and seller are both businesses

• Transactions are usually large
• Long-term business relationships are maintained
• Electronic systems are used for ordering, payment, and communication

Features of B2B E-Commerce

1. Business Organizations as Participants

Transactions occur between companies instead of individual customers.

2. Large Volume Transactions

B2B transactions usually involve bulk orders.

3. Long-Term Relationship
Businesses maintain long-term supplier and customer relationships.

4. Electronic Data Exchange

Information is exchanged electronically through networks.

5. Automated Business Processes

Order processing, inventory control, and payments are computerized.

6. High Security Requirement

Business transactions involve confidential information and require strong security.
Advantages of B2B E-Commerce

1. Reduced Business Cost

Electronic systems reduce paperwork, labor, and operational costs.

2. Faster Transactions
Orders and payments are processed quickly.

3. Improved Supply Chain Management

Businesses coordinate efficiently with suppliers and distributors.

4. Better Communication
Electronic communication improves coordination among organizations.

5. Increased Market Reach

Companies can deal with businesses worldwide.

6. Better Inventory Management

Online systems help track inventory accurately.

Disadvantages of B2B E-Commerce

1. High Initial Investment

Setting up electronic systems may be expensive.

2. Security Risks
Confidential business data may be attacked by hackers.

3. Technical Complexity
Advanced technology and skilled employees are required.

4. Dependence on Internet and Technology

Business operations may stop if systems fail.
Inter-Organizational Trade Cycle

Meaning
Inter-Organizational Trade Cycle refers to the sequence of activities performed
electronically between different organizations during business transactions.

It involves:

• Buyers
• Sellers
• Suppliers
• Banks
• Logistics companies
The trade cycle manages complete business transactions from inquiry to payment.

Stages of Inter-Organizational Trade Cycle

1. Pre-Sales Stage
This is the first stage where buyers collect information about products and suppliers.

Activities include:

• Product search
• Price inquiry
• Online advertisements
• Negotiation
Electronic systems help businesses exchange information quickly.

2. Execution Stage
In this stage, actual business transactions are performed.

Activities include:

• Placing orders
• Sending invoices
• Delivery of goods
• Electronic payment
Most activities are automated through E-Commerce systems.
3. Settlement Stage
This stage involves completion of financial transactions.

Activities include:

• Payment transfer
• Credit verification
• Receipt generation
• Account settlement
Banks and payment gateways play an important role.

4. After-Sales Stage
This stage ensures customer satisfaction after delivery.

Activities include:

• Customer support
• Complaint handling
• Product return
• Maintenance services
Electronic communication improves after-sales service quality.

Importance of Inter-Organizational Trade Cycle

• Improves coordination between businesses
• Reduces transaction time
• Increases business efficiency
• Reduces paperwork
• Improves customer service
• Supports secure electronic transactions
Credit Transaction Trade Cycle

Meaning
Credit Transaction Trade Cycle refers to business transactions where payment is not made
immediately. The buyer purchases goods or services on credit and payment is made later
according to agreed terms.

This type of trade cycle is common in B2B E-Commerce.

Stages of Credit Transaction Trade Cycle

1. Product Inquiry and Negotiation

Buyer and seller discuss:

• Product details
• Quantity
• Price
• Credit terms
• Delivery conditions
Negotiations are often done electronically.

2. Order Placement
Buyer places electronic purchase order to the seller.

The order contains:

• Product details
• Quantity
• Delivery instructions
• Payment terms

3. Credit Approval
Seller checks buyer’s:

• Credit history
• Financial condition
• Payment capability
After verification, credit approval is given.

4. Delivery of Goods
Seller delivers goods or services to the buyer according to agreement.

Electronic tracking systems may be used.

5. Invoice Generation
Seller sends electronic invoice containing:

• Product information
• Amount payable
• Payment due date
• Tax details

6. Payment Settlement
Buyer makes payment on or before due date using electronic payment systems.

7. Record Maintenance
Both buyer and seller maintain electronic transaction records for:

• Accounting
• Auditing
• Legal purposes

Advantages of Credit Transaction Trade Cycle

1. Improves Business Relationships

Credit facilities build long-term business partnerships.

2. Increases Sales
Buyers can purchase goods even without immediate cash payment.

3. Better Cash Flow Management

Businesses can manage payments more efficiently.
4. Faster Electronic Processing
Electronic systems speed up transaction processing.

Risks in Credit Transaction Trade Cycle

1. Payment Default Risk

Buyer may fail to pay on time.

2. Fraud Risk
Fake businesses may misuse credit facilities.

3. Data Security Risks

Financial information may be attacked by hackers.

Security Measures in Credit Transactions

• Credit verification systems
• Digital signatures
• Secure payment gateways
• Encryption technology
• Authentication systems
• Electronic transaction monitoring

Conclusion
Business-to-Business (B2B) E-Commerce is an important form of electronic business
where transactions take place between organizations through electronic networks. It
improves efficiency, communication, and supply chain management. Inter-organizational
trade cycle manages the complete process of electronic business transactions among
organizations, while the credit transaction trade cycle handles transactions where
payment is made later on credit terms. Both systems play an important role in modern E-
Commerce and help businesses perform faster, secure, and efficient transactions.
Electronic Data Interchange (EDI)

Introduction
In traditional business systems, organizations exchange business documents such as
purchase orders, invoices, bills, and shipping documents on paper. This process is slow,
costly, and time-consuming.

Electronic Data Interchange (EDI) was developed to solve these problems. EDI allows
businesses to exchange documents electronically in a standard format through computer
networks.

EDI is one of the most important technologies used in E-Commerce and Business-to-
Business (B2B) transactions.

Meaning of Electronic Data Interchange (EDI)

Electronic Data Interchange (EDI) is the electronic exchange of business documents and
information between organizations in a standardized format without human intervention.

In simple words, EDI allows companies to exchange documents directly from one
computer system to another.

Examples of documents exchanged through EDI:

• Purchase orders
• Invoices
• Shipping notices
• Payment information
• Inventory reports

Features of EDI

1. Paperless Communication
Business documents are exchanged electronically.
2. Standard Format
EDI uses standard document formats understandable by different computer systems.

3. Fast Processing
Transactions are completed quickly.

4. Accurate Data Exchange

Human errors are reduced because manual data entry is minimized.

5. Business Integration
EDI connects suppliers, manufacturers, distributors, and customers electronically.

Working of EDI
The working of EDI generally follows these steps:

1. Document Preparation
Business documents such as invoices or purchase orders are prepared electronically.

2. Translation into EDI Format

The document is converted into a standard EDI format using EDI software.

3. Transmission
The EDI document is transmitted through communication networks such as:

• Internet
• VAN (Value Added Network)
• Private networks

4. Receiving the Document

The receiving organization gets the EDI message electronically.

5. Translation into Readable Format

The received EDI document is converted into a format understandable by the receiving
system.

6. Processing
The business document is processed automatically by the organization’s computer
system.
Benefits of EDI
EDI provides many advantages to organizations.

1. Faster Communication
Business documents are exchanged instantly through electronic systems.

2. Reduced Paperwork
EDI eliminates paper-based documentation and supports paperless business.

3. Cost Reduction
Organizations save money on:

• Printing
• Postage
• Storage
• Manual labor

4. Improved Accuracy
Manual data entry errors are reduced because information is transferred automatically.

5. Better Business Efficiency

Business operations become faster and more organized.

6. Improved Customer Service

Orders and deliveries are processed quickly, improving customer satisfaction.

7. Better Inventory Management

Real-time data exchange helps organizations manage inventory effectively.
8. Strong Business Relationships
EDI improves communication and coordination among business partners.

9. Increased Transaction Speed

Purchase orders, invoices, and payments are processed quickly.

10. Competitive Advantage

Organizations using EDI can perform business operations more efficiently than
competitors.

EDI Standards

Meaning
EDI standards are predefined rules and formats used for exchanging electronic business
documents between organizations.

These standards ensure that different computer systems can understand and process
information correctly.

Common EDI Standards

1. ANSI X12
Developed in the United States for business document exchange.

Widely used in:

• Retail
• Banking
• Transportation

2. EDIFACT
Developed by the United Nations for international EDI transactions.
EDIFACT stands for:
Electronic Data Interchange for Administration, Commerce, and Transport.

It is widely used in global trade.

3. TRADACOMS
Used mainly in the retail industry in the United Kingdom.

4. XML-based EDI
Modern EDI systems use XML technology for flexible data exchange over the Internet.

Importance of EDI Standards

• Ensure compatibility between systems
• Reduce communication errors
• Improve data accuracy
• Support international business transactions
• Simplify electronic communication

EDI Agreement

Meaning
EDI Agreement is a formal agreement between trading partners that defines rules and
conditions for exchanging electronic documents.

It ensures that both organizations understand their responsibilities and procedures.

Components of EDI Agreement

1. Communication Method
Defines how documents will be transmitted.

Example:
 • Internet
• VAN
• Private networks

2. Security Rules
Specifies security procedures for protecting data.

3. Document Standards
Defines which EDI standard will be used.

Example:

• ANSI X12
• EDIFACT

4. Legal Responsibilities
Defines legal rights and obligations of trading partners.

5. Error Handling Procedures

Explains how errors and failed transactions will be handled.

6. Data Storage and Backup

Defines procedures for maintaining records and backups.

Importance of EDI Agreement

• Avoids misunderstandings
• Ensures smooth communication
• Provides legal protection
• Improves coordination
• Defines security responsibilities
EDI Communication

Meaning
EDI Communication refers to the electronic transmission of EDI documents between
organizations through communication networks.

Methods of EDI Communication

1. Value Added Network (VAN)

Meaning
A VAN is a private network service provider that helps organizations exchange EDI
documents securely.

Functions
• Message delivery
• Data storage
• Security services
• Error checking

Advantages
• Reliable communication
• Better security
• Easy management

2. Direct EDI

Meaning
Organizations communicate directly through private networks or internet connections.

Advantages
• Faster communication
• Lower long-term cost
3. Internet-based EDI

Meaning
EDI documents are exchanged using Internet technology.

Advantages
• Low cost
• Global connectivity
• Easy implementation

EDI Security

Meaning
EDI Security refers to protecting electronic business documents and communication
systems from unauthorized access, misuse, or attacks.

Security is very important because EDI involves confidential business information.

Security Threats in EDI

• Data theft
• Hacking
• Unauthorized access
• Data modification
• Virus attacks
• Communication interception

Security Measures in EDI

1. Encryption
Converts data into secret code during transmission.

2. Authentication
Verifies the identity of users and organizations.
3. Digital Signatures
Provide authenticity and integrity of documents.

4. Access Control
Only authorized users can access EDI systems.

5. Firewalls
Protect EDI networks from unauthorized access.

6. Antivirus Software
Protect systems from malware and viruses.

7. Secure Communication Networks

Secure protocols such as SSL/TLS are used for safe communication.

8. Backup and Recovery Systems

Help restore data in case of system failure.

Advantages of EDI Security

• Protects confidential business information
• Prevents fraud and hacking
• Ensures transaction integrity
• Improves trust between organizations
• Supports secure electronic business
Conclusion
Electronic Data Interchange (EDI) is an important technology used in E-Commerce for
exchanging business documents electronically in a standard format. It improves business
efficiency, reduces paperwork, saves time and cost, and supports fast communication
between organizations. EDI standards ensure compatibility between systems, while EDI
agreements define rules for communication and security. Proper EDI security measures
such as encryption, authentication, and firewalls help protect business information and
ensure safe electronic transactions.