Chapter 5 – Emerging Modes of Business

E-Commerce and E-Business

• E-Business is described as the use of computer networks to conduct business,

trade, and commerce.

• E-business is a more comprehensive phrase that encompasses a wide range

of electronic business transactions and services, including the more well-
known 'e- commerce' operations.

• E-commerce refers to a company's online interactions with its customers

and suppliers.

• E-business encompasses not just e-commerce, but also production,

inventory management, product creation, accounting and finance, and
human resource management.

• Also, the scope of E-business is said to be wider and broader than that of e-commerce.

• Examples of E-commerce and E-business are Amazon, Flipkart, eBay.

Scope of E-Business

Scope of Business on the Basis of Business:

• Over computer networks, functions like production, finance, marketing, and

personnel administration, as well as management operations such as planning,
organising, and controlling, can be performed.
 Scope of Business on the Basis of Parties :

• B2B, which is an abbreviation for business-to-business refers to a

company's interactions with other companies.

• B2C, or business-to-consumer, refers to a company's interactions with its customers.

• Intra-B, which refers to a company's internal operations.

B2B Commerce

• Because both parties involved in e-commerce transactions are businesses, the

term B2B (business-to-business) was coined.

• A business must engage with a number of other businesses in order to create utility
or deliver value.

• These businesses may be suppliers or vendors of various inputs, or they may be

part of the distribution channel through which a company distributes its items to
clients.

• Example [Link]

B2C Commerce

• Business-to-customer (B2C) interactions involve business organizations on one

hand and their customers on the other.

• It encompasses a wide range of internet marketing operations such as

identifying activities, promoting them, and occasionally even delivering items.

• It enables a business to be in touch with its customers on round-the-clock basis

which helps in knowing the customer satisfaction level.

• Few examples are Amazon, Walmart etc.

Intra-B Commerce

• The parties participating in electronic transactions are all from the same company.
 • Today's businesses are able to engage in flexible manufacturing in great part due
to the use of intra-B commerce. The use of computer networks allows the
marketing department to communicate with the production department on a
continuous basis, allowing for the creation of personalised products according to
the needs of each unique customer.

C2C Commerce

• The consumer is the source of the business, and consumers are the
ultimate destination.

• This form of business is best for dealing with items for which no recognised
market mechanism exists.

• Few examples are Quickr, Olx etc.

Difference Between E-Business and Traditional Business.

Basis Traditional Business E-Business

Ease Of Formation Difficult Simple

Physical Presence Required Not required

Yes, in terms of finding a

location which is nearer to
Cost Of Setting Up the source of raw materials None
or the market for the
products.
 High, because various
Low as no requirement of
Operating Cost costs has to be incurred in
physical facilities.
terms of rent payment etc.

High due to fixed charges

Low as a result of reliance
Nature Of Contact With associated with investment
on a network of relationships
The Suppliers And The in procurement and
rather than ownership of
Customers storage, production,
resources.
marketing and distribution
facilities.

Nature Of Internal Indirect through

Direct
Communication intermediaries

Hierarchical
Non-hierarchical.
Response Time For From top level
Meeting Allowing direct vertical,
management to middle
Customers horizontal and diagnostic
level management, and
communication
/Internal then to lower level
instantaneously.
management to
operatives.

Because of the directness of

Vertical/ tall due to
Shape Of The the order
hierarchy or chain of
Organisational Structure and
command.
communication, it is
horizontal/flat.

Simultaneous (concurrence)
Sequential procedure i.e
different processes take
Business Processes And
place at a time. Business
Length Of Cycle Purchase-
process cycle is therefore
production/operation-
shorter.
marketing-sales. The
 business processes cycle is
therefore longer.

Opportunity For More, because of higher

Less
Interpersonal Touch personal contact.

Less. However, for digital

Opportunity For Physical products such an opportunity
Pre Sampling Of The More is tremendous. One can
Products presample books, journals
etc

Less, because a lot of legal Much, as cyberspace is truly

Ease Of Going Global
formalities have to be done. without boundaries.

Much as IT sector is among

Govt. Patronage Shrinking with time. the topmost priorities of the
government.

Technically
Semi-skilled and even semi
Nature Of Human Capital an
skilled manpower needed.
d professionally qualified
personnel needed.

Low due to arm’s length

high due to the distance and
Transaction Risk transaction and face to face
anonymity of the parties.
contact.
Benefits of E-Business

1. Easy to Set Up:

If we have the necessary software, a device, and access to the internet, we can start
an online business from the comfort of our own homes.

2. Cheaper than Traditional Business:

The cost taken to set up any business is cheaper. In addition, the transaction costs
are effectively lower.

3. No Geographical Boundaries:

Anyone from anywhere can order anything at any time. On the one hand it allows the
seller and access to the global market, on the other hand It offers the buyer freedom
to choose products from almost any part of the world.

4. Flexible Business Hours:

The internet is available at all times. The time barrier that location-based firms face is
broken by e-business.

5. Speed and Efficiency:

Online ordering systems scans process payment and orders in real-time, usually
faster, more accurately and cheaper than human workers.

6. Movement towards Up Paperless Society:

Use of the internet has considerably reduced dependence on paperwork. In fact,

administrative reforms are attracting E-Commerce solutions to speed up the process
of giving rights, approvals, and licenses.
Limitation of E-Business

1. Lack of Personal Touch:

• Unlike traditional business, you cannot touch and feel the product. So it is
difficult for the consumers to check the quality of the product, until the order
has been delivered.

• Traditional businesses have contact with the salesperson in the traditional

way, and there is a sense of humanity and trustworthiness as a result of this.
It also fosters customer confidence. Such characteristics will always be
absent from an e-business paradigm.

2. Delivery Time:

• The delivery of the products takes time in e-business. This lag time
often discourages customers.

• However, these days, e-businesses are trying to resolve such issues by

promising very limited time. For example Amazon now guarantees delivery
within one day.

3. Security Issues:

• Many people are capable of conducting online business. Additionally,

hackers have an easier time obtaining one’s financial information. It
has a few concerns with security and integrity. This creates skepticism
among potential clients.

4. Technology Capability and Competency of E-business Participants are

Required:

• E-business necessitates a high level of computer literacy among the

parties involved. This obligation can also be blamed for the so-called digital
divide.

• The term "digital divide" refers to the separation of society based on

one's familiarity or lack thereof with digital technologies.
5. Ethical Fallouts:

• Companies utilise an 'electronic eye' to keep track on your computer files,

email account, and internet visits, among other things, so as to gain
knowledge about your interests, preferences etc. It’s unethical in a number of
ways

Process of Online Trading

Registration ⇒ Placing an order ⇒ Payment mechanism

Step 1: Registration:

• When you register with an online retailer, you create an 'account’, by filling up the
registration form.

• A "password" must be entered among the numerous details since the areas relating
to an individual’s "account" and "shopping basket" are password protected.

Step 2: Placing an Order:

• You can add products to the shopping cart by dragging and dropping them.

• A shopping cart is an online record of what an individual has added to his cart
while visiting an online store.

• Once you've decided what you want to buy, you may 'checkout.'

Step 3: Payment Mechanism:

Purchases through online shopping may be done in a number of ways.

• Cash-on-Delivery: Payment for things ordered online can be made in cash when
the goods are delivered physically.

• Cheque: The online merchant may arrange for the customer's cheque to be picked
up. After realisation, product delivery may be attempted.
 • Net-banking Transfer: Modern banks provide to their customers the facility of
electronic transfer of funds over the Internet using Immediate Payment
Service (IMPS), NEFT and RTGS.

• Credit or Debit Cards: The holders of credit cards can enjoy making purchases on
credit. The amount owed by the cardholder to the online seller is assumed by the
card issuing bank, which then transfers the transaction's amount to the seller's
credit.

A debit card permits the holder to make purchases up to the amount of money in the
linked account. The moment a transaction is made, the amount due as payment is
deducted electronically from the card.

• Digital Cash: This type of currency has no physical qualities, but it allows you to
utilise real money in an electronic format, such as through e-wallets or PayTm.

E-Business Risks

a. Transaction Risks:

• Either the seller or the customer may refuse an order being made or
placed. This might be cited as 'default on order taking/giving.

• The supposed delivery doesn't take place, or is delivered at the incorrect

address, or product apart from ordered is delivered. This can be thought of
as "default on delivery."

• The vendor doesn't get payment for the things provided, despite the fact that
the customer states that payment was created. This might be cited as 'default
on payment'.

• As a result, order taking/giving in e-business may pose a danger to the

vendor or the client.

b. Data storage and Transmission Risks:

• Data in the systems and on the way is vulnerable to a variety of threats.

• Important data may be stolen or altered for nefarious purposes or merely

for fun/adventure
 • Antivirus softwares installed and updated on a regular basis prove useful
in scanning files and discs, protecting data files, folders, and systems
against virus attacks.

• Data could be intercepted during transmission. Cryptography can be used

for this. It refers to the process of encrypting data and transforming it to
cyphertext, an unreadable format.

• Only those with a secret key may decipher (or decrypt) the message
into 'plaintext.'

c. Risks of Threats to Intellectual Property and Privacy Include:

• Once the material is available on the internet, it is no longer considered

private. It got more difficult to protect it from being copied after that.

• Data provided during online transactions may be shared with others, who
may begin flooding one’s inbox with advertising and promotional materials.