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Introduction to E-Commerce Concepts

E-commerce refers to the buying and selling of products and services over the internet, facilitating transactions without the need for physical stores. The document outlines the history, features, advantages, and limitations of e-commerce, highlighting its evolution from the 1970s to the present, particularly in India. It also discusses the challenges faced by Indian corporates in transitioning to e-commerce amidst growing consumer expectations and technological advancements.

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15 views10 pages

Introduction to E-Commerce Concepts

E-commerce refers to the buying and selling of products and services over the internet, facilitating transactions without the need for physical stores. The document outlines the history, features, advantages, and limitations of e-commerce, highlighting its evolution from the 1970s to the present, particularly in India. It also discusses the challenges faced by Indian corporates in transitioning to e-commerce amidst growing consumer expectations and technological advancements.

Uploaded by

messideepakjr
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

MODULE 1

E-Commerce

● E-commerce (Electronic Commerce) is the activity of electronically buying


or selling of product over Internet.
● E-commerce simply means the way of doing business over the internet or we
can simply state that having the facility to sell and purchase things
without havingto visit Any physical store.
● E-commerce is concerned with the buying and selling of information, products
and services over communication Network.
● E-commerce helps to conduct traditional commerce through new ways
of transferring and processing information.
● Electronic Data Interchange (or EDI) is an early form of e-commerce.

History of E-commerce

1970s:
● E-commerce meant the facilitation of commercial transactions
electronically, using technology such as Electronic Data
Interchange (EDI) and Electronic Funds Transfer (EFT), allowing
businesses to send commercial documents electronically.
● EDI replaced traditional mailing and faxing of documents with a digital
transfer of data from one computer to another.
● EDI is a process which allows one company to send information to
another company electronically rather than with paper.
● Many business documents can be exchanged using EDI, but the two
most common are purchase orders and invoices.
● Business entities conducting business electronically are called
trading partners.
● Electronic funds transfer(EFT) are electronic transfer of money from one
bank account to another, either within a single financial institution or
across multiple institutions, via computer-based systems, without the direct
intervention of bank staff.
1980s:

● The growth and acceptance of credit cards


● Automated teller machines (ATM)
● Telephone banking
● Airline reservation system.

1990s:
The internet commercialized and users flocked to participate in the form of dot-coms
or internet startups.

2000s:
Many European and American business companies offered their services through the
World Wide [Link] then people began to associate the term ‘e-commerce’
● [Link] was one of the first ecommerce sites in the US to start selling products
online and thousands of businesses have followed since.
● Amazon was one of the first online retailers to add user reviews with a rating scale
for products. Customer reviews are now considered the most effective
social media tactic for driving sales.
Traditional vs E-commerce

Traditional Commerce E-Commerce


Heavy dependency on information Information sharing is made easy via
exchange from person to person. electronic communication channels
making little dependency on person to
person information exchange.

Communication/ transaction are done in Communication or transaction can be


synchronous way. Manual intervention is done in asynchronous way. Electronics
required for each communication or system automatically handles when to
transaction. pass communication to required person
or do the transactions.

It is difficult to establish and maintain A uniform strategy can be easily


standard practices in traditional established and maintain in e-commerce.
commerce.

Communications of business In e-Commerce or Electronic


depends upon individual skills Market, there is no human intervention.

Unavailability of a uniform platform as E-Commerce website provides user a


traditional commerce depends heavily platform where all information is
on personal communication. available at one place.

Features of E-commerce

Non-Cash Payment:
○ E-Commerce enables the use of credit cards, debit cards, electronic fund transfer via
bank's website, and other modes of electronics payment.24x7 Service availability
Ubiquity:
○E-commerce automates the business of enterprises and the way theyprovide services
to their customers. It is available anytime, [Link] can enjoy convenience
and want to take only least effort to make purchases.

Advertising / Marketing:
○ E-commerce increases the reach of advertising of products and services of
businesses. It helps in better marketing management of products/services.

ImprovedSales:
○ Using e-commerce, orders for the products can be generated anytime, anywhere
without any human intervention. It gives a big boost to existing sales volumes.

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

Inventory Management:
○Product inventory management becomes very efficient and easy to Maintain.

Global reach:
○ Buying selling has now become more convenient and cost effective than
in traditional commerce.
○ The ever increasing number of customers in an ecommerce business is a good
indicator for their expansion and popularity.

Importance of E-commerce

Consumer sovereignty: Consumer is the king in the market. Can shop


anytime,anywhere and in any device. Orders can be placed over the internet and goods
are delivered at the doorsteps of consumers.
Customisation: High quality relationship between buyer and seller is essential for
retaining customers in e-commerce environment. It becomes necessary for the
company to enhance customer loyalty;otherwise the customer is full of choice to jump
from one website to another.
New markets: It is easier to penetrate and reaching of the customers across the world
within minutes over internet. The net enables marketers to introduce and promote new
products to meet the needs of the individual buyers all over the world.
Efficient use of resources: Availability of plenty of information, no transportation cost
and free entry into markets led to the efficient use of resources that
will in turn reduce both cost and prices.
Low investment: Running an ecommerce business requires far less capital
investments compared to owning physical shops. The responsibility of e-commerce
seller in an online shop is to promote the website and deliver quality products
on-time to the customers.
Employment opportunities: The indirect employment generated in industries like
logistics, warehousing, IT and small and medium enterprises, and other support
industries like payment solutions, marketers and advertisers.
Quick and speedyDisposal of Customers: Internet related technology can process
transactions at a great speed and it takes less time to complete formalities with
minimum investment.
Managing competition: In this competitive market, those who satisfy and exceed
customer’s expectations are going to experience tremendous sales.

Emergence of the Internet

● The origin of internet was rooted in 1950’s when the cold war was at its peak
between America and the Soviet Union.
● A need was realized to connect the top universities of US.
● The first workable prototype of the Internet came in the late 1960s with the creation
of ARPANET, or the Advanced Research Projects Agency Network.
● Used packet switching to allow multiple computers to communicate on a single
Network.
● In 1969, ARPAnet delivered its first message, a node-to-node communication from
one computer to another.
● The message—“LOGIN”—was short and simple, but it crashed the ARPA network
anyway: The receiver computer only received the note’s first twoletters.
● Cheaper technology and the appearance of desktop computers in the early 1980 have
allowed the rapid development of local area network (LAN) and as a result, the internet
flourished.

Emergence of World Wide Web

● In 1989, Tim Berners Lee, published a proposal to build a “Hypertext project” called,
“World Wide Web.”
● The World Wide Web (WWW), commonly known as the Web.
● It is an information system where documents and other web resources are identified
by Uniform Resource Locators (URL) which may be interlinked by hypertext, and
are accessible over theInternet
● The resources of the WWW may be accessed by users by a software application
called a web browser.
●The first web browser was called WorldWideWeb when it was written
in 1990 it was the only way to see the web. Much later it was renamed to Nexus.
● Mosaic was the first browser to display images next to text, rather than in separate
window.
● Today, the major web browsers are Chrome, Safari, Internet Explorer, Firefox,
Opera, andEdge.

Advantages of E-commerce

● International market: The market for web based business is not restricted by
any geographical boundaries. E-commerce enables business firms to have access
to people all around the world.
● Operational cost savings: The cost of creating, processing,distributing, storing
and retrieving paper \ based information hasdecreased.
● Mass customisation: E-commerce has revolutionised the way consumers buy
goods and services. In the e-commerce environment firms are able to customise
their products and services to the customer’s requirements.
● Lower telecommunications cost: It is less costly to communicate over internet.
● Digitisation of products and processes: Digitisation of products and processes
particularly in the case of software and music/video products, which can be
downloaded or emailed directly to customers via the internet in digital or
electronic format within 24 hour time.

Benefits of E-commerce to consumers

● Easy Accessibility: Ecommerce enables customers to shop or conduct


transactions 24 hours a day, all year round from almost any Location.
● More choices: Customers can now choose a wide range of products and
customise. Customer can buy goods and services even from international
suppliers.
● Price comparisons: Customers can make price comparisons either directly by
visiting different sites, or by visiting a single site where prices of different sellers
are Exhibited.
● Improved delivery processes: This can range from the immediate delivery of
digitised or electronic goods such as software or audio visual files by
downloading via the internet, to the online tracking of the progress of packages
being delivered by mail or courier.

Limitations of Ecommerce

● E-Infrastructural issues: Internet is the backbone of ecommerce. In India,


internet penetration is low.
● Logistics & supply chain: Logistics failure in any area leads to very harmful
damage to company’s future and can hurt the brand overall.
● Branding & marketing: To get people to come on an e-commerce site and
make a purchase involves heavy cost due to branding and marketing.
● Security: There are numerous reports of websites and databases being hacked
to, and securityloopholes in software.
● Security and privacy: Privacy of an individual customer is greatly affected
because of sharing some critical information about a customer.
● Pressure for innovation: Pressure to innovate and develop business models to
exploit the new opportunities may sometimes leads to strategies harmful to the
Organization.
● Price wars: Facing increased competition from both national and international
competitors often leads to price wars and subsequent occurrence of losses for the
organization.
● Computerliteracy: A basic technical knowledge is required of both computing
equipment and navigation of the internet and the world wide web.
● Nopersonal contact: Customers are more comfortable in buying products
physically face to face. Customers are unable to touch and feel goods being sold
online. A lack of trust exists because they are interacting with computers.

E-commerce in india

● The concept of e-commerce first formally came forth in 1991, a time when internet
practically did not even exist in India.
● Commercial internet services in india were launched only in 1995. Before that,
internet was only meant for the use of educational and research Communities.
● It was only in 2002, when the IRCTC introduced an online reservation system, that
the public widely accepted the internet as something fruitful.
● E-commerce has transformed the way business is done in India.
● The Indian E-commerce market is expected to grow to US$ 200 billion by 2026 from
US$ 38.5 billion as of 2017.
● Much of the growth for the industry has been triggered by an increase in internet
and smartphone penetration.
● As of August 2020, the number of internet connections in India significantly
increased to ~760 million, driven by the ‘Digital India’ programme.
● Factors such as increased use of smartphones convenient and economic internet
access lead to the growth of ecommerce. This is also lead to the increase in the sales
through mobile commerce.
● Companies have introduced return policies ranging from 7 - 30 days,free home
delivery and “cash on delivery” model.
● It is estimated that most of all online transactions in India are based on the cash on
delivery (COD) payment methodology.

E-transition challenges for Indian corporates


● The internet is changing the way of business in all industries and corporate
companies in India.
● Indian corporate executives are facing several challenges since they want to move
with IT based technologies for effective performance.
- These challenges are mainly classified as :
1) Internal resisting issues
● Bureaucratic resistance: Ecommerce may compel staff to follow new
method of operation instead of traditional way doing things. The fear
among staff is a major barrier for a transition to ecommerce.
● Cultural changes: Implementation of e commerce is done by young tech
talents. They come in the organization with modern culture that are
entirely different from traditional culture maintained by the existing Staff.
● Lack of preparation: Going for ecommerce require a good
amount of home work. Lack of adequate preparation is one of the
challenges for effective transition to ecommerce.
● Lack of resources:Lack of funds, non availability of expert staff, absence of
Training facilities to the existing employees are major barriers facing
by organisation.
2) External driving forces
● Strong competition: Now competitions are the part of any business and
companies are implementing new techniques every day to face the attack from
their competitors.
● Increase expectation ofconsumers: The expectation of consumers about quality
and services are very high, so it works like driving force for ecommerce.
● Government regulations: In order to regulate ecommerce business and other
internet related activities the IT Act gives various provisions which provide a
right environment for the ecommerce.
● Technological changes: Technology is a factor which provides e commerce an
opportunity to become and perfect solution for business.

Common questions

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Companies choose to invest in e-commerce platforms over physical retail outlets due to several economic and strategic reasons. Economically, e-commerce requires lower initial investment as there is no need to lease or maintain physical storefronts. Operational costs related to staffing, utilities, and rent are also reduced. Strategically, e-commerce allows companies to reach a global audience without geographical constraints, significantly expanding their potential market . E-commerce platforms enable better inventory management, easier scalability, and the ability to quickly adapt to market changes and consumer preferences through digital analytics . The flexibility and cost-effectiveness of e-commerce make it an attractive option for businesses aiming for sustained growth and competitive edge.

Key advantages of e-commerce for consumers include easy accessibility, a wider range of choices, and the ability to perform price comparisons. Consumers can shop 24/7 from any location, which offers unmatched convenience compared to traditional shopping that is limited by store hours . E-commerce platforms provide access to a broader variety of products, including options for customization, which may not be feasible in physical stores . Additionally, customers can compare prices across different sellers or through price comparison platforms, enabling more informed purchasing decisions. E-commerce enhances the consumer shopping experience by removing geographical barriers and offering more control over the buying process .

The development of Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT) in the 1970s laid the groundwork for modern e-commerce by allowing the electronic transmission of commercial documents and financial transactions without the need for paper or direct human intervention. EDI replaced traditional mailing and faxing, allowing businesses to send purchase orders and invoices electronically, facilitating quicker and more reliable transactions . EFT allowed the electronic transfer of money between bank accounts, making financial transactions faster and more efficient . These technologies introduced businesses to the concept of conducting transactions digitally, which later evolved with the internet into comprehensive e-commerce platforms.

The development of internet technology from the 1960s to the early 1980s was instrumental in facilitating the growth of e-commerce. ARPANET, established in the late 1960s, introduced packet switching, which improved network reliability and facilitated communication among multiple computers . The proliferation of cheaper technology and desktop computers in the 1980s led to the advancement of local area networks (LANs), which expanded internet accessibility and utility. This technological foundation enabled the emergence of the World Wide Web, allowing users to access interconnected web resources through browsers. The commercial use of the internet flourished as businesses recognized the potential to reach global markets and conduct transactions online, laying the foundation for modern e-commerce .

E-commerce has significantly transformed job opportunities, particularly impacting the logistics and IT industries. The growth of online shopping has increased demand for efficient logistics and supply chain management, leading to more jobs in storage, transport, and delivery services. Roles in logistics have expanded as companies require sophisticated systems to manage inventory and ensure fast, accurate delivery of goods . In IT, e-commerce has spurred employment in areas such as website development, cybersecurity, and digital marketing, as businesses require robust platforms to facilitate online transactions and engage customers. The demand for advanced technological solutions and data analysis to optimize e-commerce operations further drives employment opportunities in these industries, reflecting the integral role of technology in modern commerce .

Cultural changes within companies significantly impact their ability to transition effectively to e-commerce models. The introduction of e-commerce often requires adopting new operational methods and integrating modern technology, which can conflict with established traditional practices. Companies must overcome internal resistance, where staff accustomed to older methods may resist change due to uncertainty and fear of new practices . Successful transition depends on fostering a culture open to innovation and continuous learning, embracing technologically driven approaches spearheaded by younger, tech-savvy talent . Additionally, proper preparation and resource allocation, including training existing employees to adapt to new systems and processes, are crucial. Without addressing these cultural aspects, organizations might face difficulties fully implementing e-commerce solutions, affecting their competitive position .

Features like non-cash payment options and 24/7 service availability distinguish e-commerce from traditional commerce by enhancing convenience and accessibility for consumers. Non-cash payment systems such as credit cards, debit cards, and electronic fund transfers allow transactions without the need for cash, facilitating quicker and more secure purchases . The 24/7 service availability means that consumers can shop at any time, removing the limitations imposed by traditional store hours, thus making e-commerce highly convenient for users who have varied schedules or seek to make late-night purchases . These features cater to the modern consumer’s demand for speed and flexibility, making e-commerce a competitive alternative to traditional commerce.

Governmental regulation has played a pivotal role in shaping the e-commerce landscape by both facilitating growth and posing challenges. Regulations such as the IT Act provide a legal framework to support e-commerce transactions, ensuring consumer protection and data security, which are essential for building trust in digital marketplaces . These regulations establish standards for privacy, electronic contracts, and cybercrime prevention, enhancing the credibility and reliability of e-commerce platforms. However, compliance with stringent regulatory requirements can also be challenging for businesses, especially startups and smaller companies, which may face additional costs and complexities in adhering to these norms. Balancing regulation to enable innovation while ensuring consumer and data protection remains a key challenge for policymakers in the e-commerce sector .

E-commerce businesses face significant challenges in securing online transactions, primarily due to risks of hacking and data breaches. The security and privacy of individual customer data can be compromised, leading to potential identity theft and financial loss. These security concerns impact customer trust in online platforms, as consumers may hesitate to share personal and payment information if privacy is not fully assured . Furthermore, maintaining secure software and systems requires constant updates and innovation, imposing additional operational costs on businesses. A high-profile security breach can severely damage a company's reputation and trust among consumers, making security a critical challenge for sustainability in e-commerce .

The emergence of the World Wide Web revolutionized e-commerce by vastly expanding the reach and capabilities of online transactions through hypertext and the use of web browsers. Unlike earlier systems like EDI and EFT, which focused on the digital exchange of specific documents and funds, the Web provided a platform for wide access to interconnected documents and resources identified by URLs. This allowed businesses to offer extensive product catalogs, customer reviews, and customized purchasing experiences directly through web browsers, changing how consumers interacted with businesses . The Web also enabled the integration of multimedia content and a global market presence without geographic limitations .

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