Module 1- Introduction to E-commerce

Topic Covered:

1. Features
2. Traditional Commerce v/s E-Commerce
3. Advantages and Disadvantages of E-Commerce
4. Business Models.

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Meaning of E-Commerce:

(a) E-Commerce is defined as those commercial transactions carried out using the
electronic means, in which goods or services are delivered either electronically or in their
tangible or intangible form.

Examples of E-Commerce:

(a) Online shopping: Buying and selling goods on the internet is one of the most popular
examples of E-Commerce .

(b) Electronic payments:

When we are buying goods online, there needs to be a mechanism to pay online too. That

is where the payment processors and payment gateways come into the picture. Electronic

payments reduce the inefficiency associated with writing the Cheque books. It does

away with many of the safety issues that arise due to the payments made in currency

notes.

E-Commerce or Electronics Commerce is also a methodology of modern business which

addresses the need of business organizations, vendors and customers to reduce cost and improve
the quality of goods and services while increasing the speed of delivery.

E-commerce refers to paperless exchange of business information using following .

 Electronic Data Exchange EDI

 Electronic Mail e − mail
 Electronic Bulletin Boards
 Electronic Fund Transfer EFT
 Other Network-based technologies
Features
E-Commerce provides following features

 Non-Cash Payment: E-Commerce enables use of credit cards, debit cards, smart cards,
electronic fund transfer via bank's website and other modes of electronics payment.

 24x7 Service availability: E-commerce automates business of enterprises and services

provided by them to customers are available anytime, anywhere. Here 24x7 refers to 24 hours of
each seven days of a week.
 Advertising / Marketing: E-commerce increases the reach of advertising of products
and services of businesses. It helps in better marketing management of products /services.

 Improved Sales: Using E-Commerce, orders for the products can be generated anytime,
anywhere without any human intervention. By this way, dependencies to buy a product reduce at
large and sales increases.

 Support: E-Commerce provides various ways to provide pre sales and post sales assistance to
provide better services to customers.

 Inventory Management: Using E-Commerce, inventory of products becomes automated.

Reports get generated instantly when required. Product inventory management becomes very
efficient and easy to maintain.

 Communication improvement: E-Commerce provides ways for faster, efficient, reliable

communication with customers and partners.

Traditional Commerce v/s E-Commerce

Advantages of E-Commerce:
E-Commerce advantages can be broadly classified in three major categories:

 Advantages to Organizations

 Advantages to Consumers

 Advantages to Society

Advantages to Organizations

 Using E-Commerce, organization can expand their market to national and international
markets with minimum capital investment. An organization can easily locate more
customers, best suppliers and suitable business partners across the globe.

 E-Commerce helps organization to reduce the cost to create process, distribute, retrieve
and manage the paper based information by digitizing the information.

 E-commerce improves the brand image of the company.

 E-commerce helps organization to provide better customer services.

 E-Commerce helps to simplify the business processes and make them faster and
efficient.

 E-Commerce reduces paper work a lot.

 E-Commerce increased the productivity of the organization. It supports "pull" type

supply management. In "pull" type supply management, a business process starts when a
request comes from a customer and it uses just-in-time manufacturing way.

Advantages to Customers

 24x7 support. Customer can do transactions for the product or enquiry about any
product/services provided by a company anytime, anywhere from any location. Here
24x7 refers to 24 hours of each seven days of a week.
  E-Commerce application provides user more options and quicker delivery of products.

 E-Commerce application provides user more options to compare and select the cheaper
and better option.

 A customer can put review comments about a product and can see what others are
buying or see the review comments of other customers before making a final buy.

 E-Commerce provides option of virtual auctions.

 Readily available information. A customer can see the relevant detailed information
within seconds rather than waiting for days or weeks. E-Commerce increases
competition among the organizations and as result organizations provides substantial
discounts to customers.

Advantages to Society
 Customers need not to travel to shop a product thus less traffic on road and low air
pollution.
 E-Commerce helps reducing cost of products so less affluent people can also afford the
products.
 E-Commerce has enabled access to services and products to rural areas as well which
are otherwise not available to them.
 E-Commerce helps government to deliver public services like health care, education,
social services at reduced cost and in improved way.

Disadvantages:
E -Commerce disadvantages can be broadly classified in two major categories:
 Technical disadvantages
 Non-Technical disadvantages

Technical Disadvantages
 There can be lack of system security, reliability or standards owing to poor implementation of
e-Commerce.
 Software development industry is still evolving and keeps changing rapidly.
 In many countries, network bandwidth might cause an issue as there is insufficient
telecommunication bandwidth available.
 Special types of web server or other software might be required by the vendor setting the e-
commerce environment apart from network servers.
 Sometimes, it becomes difficult to integrate E-Commerce software or website with the
existing application or databases.
 There could be software/hardware compatibility issue as some E-Commerce software may be
incompatible with some operating system or any other component.

Non-Technical Disadvantages
 Initial cost: The cost of creating / building E-Commerce application in-house may be very
high. There could be delay in launching the E-Commerce application due to mistakes, lack of
experience.
 User resistance: User may not trust the site being unknown faceless seller. Such mistrust
makes it difficult to make user switch from physical stores to online/virtual stores.
 Security / Privacy: Difficult to ensure security or privacy on online transactions.
 Lack of touch or feel of products during online shopping.
 E-Commerce applications are still evolving and changing rapidly.
 Internet access is still not cheaper and is inconvenient to use for many potential customers like
one living in remote villages.
Business Model:
E -Commerce or Electronics Commerce business models can generally categorized in following
categories.
 Business - to - Business (B2B)
 Business - to - Consumer (B2C)
 Consumer - to - Consumer (C2C)
 Consumer - to - Business (C2B)
 Business - to - Government (B2G)
 Government - to - Business (G2B)
 Government - to - Citizen (G2C)

Business - to - Business (B2B)

Website following B2B business model sells its product to an intermediate buyer who then sells the
product to the final customer. As an example, a wholesaler places an order from a company's website
and after receiving the consignment, sells the end product to final customer who comes to buy the
product at wholesaler's retail outlet.
Business - to - Consumer (B2C)
Website following B2C business model sells its product directly to a customer. customer can view
products shown on the website of business organization. The customer can choose a product and order
the same. Website will send a notification to the business organization via email and organization will
dispatch the product/goods to the customer.
Consumer - to - Consumer (C2C)
Website following C2C business model helps consumer to sell their assets like residential property, cars,
motorcycles etc. or rent a room by publishing their information on the website. Website may or may not
charge the consumer for its services. Another consumer may opt to buy the product of the first customer
by viewing the post/advertisement on the website.
Consumer - to - Business (C2B)
In this model, a consumer approaches website showing multiple business organizations for a particular
service. Consumer places an estimate of amount he/she wants to spend for a particular service. For
example, comparison of interest rates of personal loan/ car loan provided by various banks via website.
Business organization that fulfills the consumer's requirement within specified budget approaches the
customer and provides its services.
Business - to - Government (B2G)
B2G model is a variant of B2B model. Such websites are used by government 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.

Government - to - Business (G2B)

Government uses B2G model website to approach business organizations. Such websites support
auctions, tenders, and application submission functionalities.

Government - to - Citizen (G2C)

Government uses G2C model website 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. Main objectives of G2C website are to reduce average time for fulfilling
people requests for various government services.