3.

1 E-Commerce concepts

E-Commerce or Electronics Commerce is 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 ways.

 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 management 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

Sr. Traditional Commerce E-Commerce
No.

1 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.

2 Communication/ transaction are Communication or transaction can be done

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

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

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

4 Communications of business In e-Commerce or Electronic Market, there

 depends upon individual skills. is no human intervention.

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

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

6 No uniform platform for information E-Commerce provides a universal platform

sharing as it depends heavily on to support commercial / business activities
personal communication. across the globe.

E-Commerce 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.

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.

3.2 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.
B2B implies that seller as well as buyer is a business entity. B2B covers large number of applications which
enables business to form relationships with their distributors, resellers, suppliers etc. Following are the leading
items in B2B e-Commerce.
 Electronics
 Shipping and Warehousing
 Motor Vehicles
 Petrochemicals
 Paper
 Office products
 Food
 Agriculture
Key technologies
Following are the key technologies used in B2B e-commerce −
Electronic Data Interchange (EDI) − EDI is an inter organizational exchange of business documents in a
structured and machine processable format.
Internet − Internet represents World Wide Web or network of networks connecting computers across the world.
Intranet − Intranet represents a dedicated network of computers within a single organization
Extranet − Extranet represents a network where outside business partners, supplier or customers can have limited
access to a portion of enterprise intranet/network.
Back-End Information System Integration − Back End information systems are database management
systems used to manage the business data.
Architectural Models
Following are the architectural models in B2B e-commerce −
Supplier Oriented marketplace − In this type of model, a common marketplace provided by supplier is used by
both individual customers as well as business users. A supplier offers an e-stores for sales promotion.
Buyer Oriented marketplace − In this type of model, buyer has his/her own market place or e-market. He
invites suppliers to bid on product's catalog. A Buyer company opens a bidding site.
Intermediary Oriented marketplace − In this type of model, an intermediary company runs a market place
where business buyers and sellers can transact with each other.

Business - to – Consumer (B2C)

Website following B2C business model sells its product directly to a customer. A
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.

In B2C Model, a consumer goes to the website, selects a catalog, orders the catalog and an
email is sent to business organization. After receiving the order, goods would be dispatched to
the customer. Following are the key features of a B2C Model
  Heavy advertising required to attract large no. of customers.
 High investment in terms of hardware/software.
 Support or good customer care service
Consumer Shopping Procedure
Following are the steps used in B2C e-commerce
A consumer

 Determines the requirement.

 Searches available items on the website meeting the requirment.
 Compares similar items for price, delivery date or any other terms.
 Gives the order.
 Pays the bill.
 Receives the delivered item and review/inspect them.

Consults the vendor to get after service support or returns the product if not satisfied with the
delivered product.
Disintermediation and Reinter mediation
In traditional commerce, there are intermediating agents like wholesalers, distributors, retailers
between manufacturer and consumer. In B2C website, manufacturer can sell products directly to
consumers. This process of removal of business layers responsible for intermediary functions is
called Disintermediation.
Now-a-days, a new electronic intermediary breed is emerging like e-mall and product selection
agents are emerging. This process of shifting of business layers responsible for intermediary
functions from traditional to electronic mediums is called Reinter mediation.
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 who 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.
3.3 E-Commerce – EDI

EDI stands for Electronic Data Interchange. EDI is an electronic way of transferring business
documents in an organization internally between its various departments or externally with
suppliers, customers or any subsidiaries etc. In EDI, paper documents are replaced with
electronic documents like word documents, spreadsheets etc.

EDI Documents
Following are few important documents used in EDI −

 Invoices
 Purchase orders
 Shipping Requests
 Acknowledgement
 Business Correspondence letters
 Financial information letters
Steps in an EDI System
Following are the steps in an EDI System.

 A program generates the file which contains the processed document.

 The document is converted into an agreed standard format.
 The file containing the document is send electronically on network.
 The trading partner receives the file.
 An acknowledgement document is generated and sent to the originating organization.
Advantages of an EDI System
Following are the advantages of an EDI System.

 Reduction in data entry errors. − Chances of errors are much less being use of
computer in data entry.
 Shorter processing life cycle − As orders can be processed as soon as they are entered
into the system. This reduced the processing time of the transfer documents.
 Electronic form of data − It is quite easy to transfer or share data being in electronic
format.
 Reduction in paperwork − As lot of paper documents are replaced with electronic
documents there is huge reduction in paperwork.
 Cost Effective − As time is saved and orders are processed very effectively, EDI proves
to be highly cost effective.
 Standard Means of communication − EDI enforces standards on the content of data
and its format which leads to clearer communication.

3.4 Common Challenges Faced by e-Commerce Businesses

1. Finding the right products to sell

Shopping cart platforms like Shopify have eliminated many barriers of entry.  Anyone can
launch an online store within days and start selling all sorts of products.

Amazon is taking over the e-Commerce world with their massive online product catalog.  Their
marketplace and fulfillment services have enabled sellers from all over the world to easily reach
paying customers.

2. Attracting the perfect customer

Online shoppers don’t shop the same way as they used to back in the day.  They use Amazon to
search for products (not just Google).  They ask for recommendations on Social Media. They use
their smartphones to read product reviews while in-store and pay for purchases using all sorts of
payment methods.

Lots has changed including the way they consume content and communicate online.  They get
easily distracted with technology and social media.

Retailers must figure out where their audience is and how to attract them efficiently without
killing their marketing budget.
3. Generating targeted traffic

Digital marketing channels are evolving.  Retailers can no longer rely one type of channel to
drive traffic to their online store.

They must effectively leverage SEO, email, social, display ads, retargeting, mobile, shopping
engines and affiliates to help drive qualified traffic to their online store.  They must be visible
where their audience is paying attention.

4. Achieving profitable long-term growth

Increasing sales is one way to grow the business but in the end, what matters most is
profitability.

Online retailers must always find ways to cut inventory costs, improve marketing efficiency,
reduce overhead, reduce shipping costs and control order returns.

5. Choosing the right technology & partners

Some online retailers may face growth challenges because their technology is limiting them or
they’ve hired the wrong partners/agencies to help them manage their projects.

Retailers wanting to achieve growth must be built on a good technology foundation.  They must
choose the right shopping cart solution, inventory management software, email software, CRM
systems, analytics and so much more.

3.3.1Opportunities of e- commerce

1. e- Commerce is not just about big business and retail

When talking about e-Commerce, there’s a tendency to think about the big names;
Amazon, ASOS, John Lewis, AO.com. Yes, these business have undoubtedly done well online,
but there are a whole raft of smaller businesses who are also using online to grow

2. Marketplaces
Amazon and eBay, whilst big global names, can also be highly useful to small businesses by
providing a platform for them to sell products via their websites. Although not suitable for all
industries, companies can list products on these sites and access their millions of registered
customers, thereby providing a fast track route to sales. There are some important considerations
for selling on these marketplaces, but that’s a blog in itself and a topic we’ll be covering in the
future.

3. Improving Convenience for Customers

Buyers in businesses can be quite restricted in how they procure products and services. It can
sometimes involve opening an account with a company, something which can take a long time,
or liaising with the accounts department to obtain a purchase order.

4. Reaching a Global Market

One of the key opportunities that e-Commerce offers businesses is the chance to easily sell their
products and services globally. Reflecting on my own early e-Commerce experiences, we saw
rapid growth outside of the UK from North America and Australia.