Unit- 1

E-business
What is E-Business (Electronic Business)?

E-business (electronic business) refers to the carrying out business activities online with the
help of basic tools internet, intranet, and extranet. E-business also called online business
which includes activities such as buying, selling, business deals, procurements, monetary
transactions over the internet, customer relationship management, collaboration with
suppliers, and other stakeholders.

In simple words, electronic business means the transactions of business activities that take
place online with the help of the internet. It is the modern way of doing business, handling
customers, fulfilling their expectations, and uplifting companies’ profits.

Electronic business has changed the way the traditional businesses used to be where physical
presence is vital for buyers’ and sellers’ interactions and for the delivery of goods and
services. But, in e-business physical presence is not required. Buying and selling, order
processing, and buyers and sellers’ interactions are done electronically using
telecommunication networks.

An E-business system uses a number of information technology-based business practices to

enhance the relationship between business and customers. It includes changes in marketing
communication, distribution systems, and business models.

What is E-Commerce (Electronic Commerce)?

The terms e-commerce and e-business are often used interchangeably but they differ. E-
commerce means buying and selling goods and services online with the help of the internet
and making monetary transactions at the same time. E-commerce remains at this.

But, e-business goes beyond just buying and selling over the internet and making payments
as mentioned above it also includes managing customers, CRM, ERP, managing production
control, processing payments, e-recruiting, e-collaboration, and many more.

In fact, electronic commerce is the part of the electronic business – it can be best convinced
as electronic commerce is the subset of electronic business whereas e-business is the superset
of e-commerce.

Important definitions of electronic business:

 Philip Kotler – Electronic business is the general term for buying and selling
process that is supported by electronic means.
 International Fiscal Association – E-business means commercial
transactions in which an order is placed electronically and goods and services
are delivered in tangible or electronic form.
  European Union Website – E-business is a general concept covering any
form of business transactions or information exchange that is made by using
information and communication technology.

Key points to remember about e-business:

 Electronic business is the conducting of business on the Internet, not only

buying and selling but also servicing customers and collaborating with
business.
 The processes and tools that allow an organization to use Internet-based
technologies and infrastructure, both internally and externally, to conduct day-
to-day business process operations.
 Stands for electronic business and refers to any kind of sales, services,
purchasing, or commerce on the Internet.
 A new-tech jargon word is used more for marketing than for technical
description. Most commonly it broadly refers to conducting business over the
internet (email and web) by communicating and perhaps transacting (buying
and selling) with customers, suppliers, and business partners.

Characteristics of E-Business

Thanks to the electronic business we do not have to go to visit shops and stores physically.
The buying and selling, payments, delivering process, contracting, dealing, etc. are possible
without a physical presence. Some of the salient features/characteristics of the electronic
business are mentioned below:

1. 24×7 Service: - It is electronic business/commerce that helped to achieve to give 24×7

service availability. It has automated the way business enterprises give services to
customers. As such customers can use services at anytime from anywhere.

2. Non-Cash Payments: - In traditional commerce, the transactions – buying and selling

of products were done in cash – in fact, this was the only way to do it. But today to do
such transactions there is no need of carrying cash electronic business has enabled the
use of credit cards, debit cards, smart cards, electronic fund transfers via the bank’s
website, and other modes of electronic payment.

3. Improved Advertising/Marketing: -E-commerce

makes advertising and marketing activities of enterprises global reach. Better
marketing management of goods and services is achieved. Online businesses can
provide value to their clients and appeal to their requirements through individualized
online experiences by using written articles, and visual, and video content.

4. Improved Sales: - 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.
 5. Support: - E-commerce provides various ways to provide pre-sales and post-sales
assistance to provide better services to customers. After buying or before buying
customers can easily interact with the vendors about the products they want to buy or
have bought from companies’ websites.

6. Inventory Management: - E-commerce automates inventory management. Reports get

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

7. Communication Improvement: - E-commerce provides ways for faster, more efficient,

and reliable communication with customers and partners. Since physical presence is
not required as in traditional commerce customers and other stakeholders are
welcome to make contact with the enterprise, and vendors from anywhere.

History of eBusiness/eCommerce

The development of eCommerce took place in 1969 when the first eCommerce company
CompuServe was established. A brief development period can be presented below:

 1960’s: CompuServe Founded/EDI was Discovered

 1972: Computers Facilitate the First Online Sale
 1976: Online Transaction Processing Introduced
 1979: Electronic Shopping Invented
 1983: Electronic Commerce Acknowledged
 1984: CompuServe Opens the Electronic Mall
 1989: World Wide Web Launches
 1994: The First Secure Online Transaction is Made
 1995: Amazon, eBay, and the Online Marketplace Boom
 1996: Electronic Business (e-business) Was Coined
 1998: PayPal Launches
 1999: Global eCommerce reaches $150 Billion
 2000: The Dotcom Burst and Online Advertising
 2005: eCommerce Made a Comeback
 2006: Online Shopping Platforms Increase
 2012: Food Shopping Goes Virtual
 2017: E-commerce Remains Unstoppable
 2020: The COVID-19 Boost
Since the Covid-19 pandemic has arrived, the trend of e-business/eCommerce growing
tremendously.

Models of E-Business

The e-business or e-commerce model, like any business model, entails how an enterprise
functions, how it provides a product or services, how it generates revenue, and how it will
create and adapt to new markets and technologies. The main models/types of e-business are
mentioned below:

1. Business-to-Business (B2B)
The B2B business model involves a website selling its items to an intermediary buyer, who
then sells the product to the ultimate client. A wholesaler, for example, makes an order on a
company’s website and, after receiving the shipment, sells the finished product to the
ultimate client who visits one of the company’s retail locations.

2. Business-to-Consumer (B2C)

A website that follows the B2C business model sells its items to customers directly.
Customers can look at the products that are shown on the website. The customer can select a
product and place an order for it. The website will then send an email message to the business
organization, which will then ship the merchandise to the customer.

3. Consumer-to-Consumer (C2C)

By putting their information on a website that follows the C2C business model, consumers
can sell their assets such as residential property, vehicles, motorcycles, and so on, or rent a
room. The consumer may or may not be charged for the website’s services. By viewing the
post/advertisement on the internet, another consumer may decide to purchase the initial
customer’s offering.

4. Consumer-to-Business (C2B)

In this e-commerce concept, a customer visits a website that lists numerous business groups
that provide a specific service. The customer enters an estimate of how much he or she wants
to pay for a specific service.

For example, websites can be used to compare interest rates on personal loans and auto loans
offered by multiple institutions. A company contacts a customer and offers its services after
meeting the customer’s needs within the budget constraints.

5. Business-to-Government (B2G)

The B2G model is a subset of the B2B model. Governments utilize such websites to trade and
exchange information with a variety of corporate entities. These websites have been approved
by the government and provide a means for businesses to submit government application
forms.

6. Government-to-Business (G2B)

Governments use G2B model websites to approach business organizations. Such websites
support auctions, tenders, and application submission functionalities.

7. Government-to-Citizen (G2C)

Governments use G2C model websites to approach citizens 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. The main objective of G2C websites
is to reduce the average time for fulfilling citizens’ requests for various government services.

Advantages of E-Business

The advantages/importance of e-business/commerce can be better studied by categorizing

into customers, organizations, and society.

Advantages to Organization:

 E-commerce helps organizations to expand their market to national and

international markets with minimum capital investment.
 E-commerce helps organizations to reduce the cost to create processes,
distribute, retrieve and manage paper-based information by digitizing the
information.
 E-commerce improves the brand image of the company.
 E-commerce helps organizations to provide better customer services.
 E-commerce helps to simplify the business processes and makes them faster
and more efficient.
 E-commerce reduces the paperwork.
 E-commerce increases the productivity of organizations.

Advantages of Customers:

 It provides 24×7 support.

 The E-commerce application provides users with more options and quicker
delivery of products.
 The E-commerce application provides users with more options to compare and
select the cheaper and better options.
 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 purchase.
 E-commerce provides options for virtual auctions.
 It provides readily available information. A customer can see the relevant
detailed information within seconds, rather than waiting for days or weeks.
 E-Commerce increases the competition among organizations and as a result,
organizations provide substantial discounts to customers.

Advantages to Society:

 Customers need not travel to shop for a product, thus less traffic on the road
and low air pollution.
 E-commerce helps in reducing the cost of products, so less affluent people can
also afford the products.
 E-commerce has enabled rural areas to access services and products, which are
otherwise not available to them.
  E-commerce helps the government to deliver public services such as
healthcare, education, and social services at a reduced cost and in an improved
manner.

Applications of E-Business

Electronic business applications are enhancing the way companies perform over the internet.
The major e-business applications are:

 Online Marketing and Purchasing – Data of customers are collected

consisting of needs, wants, tastes, preferences, etc., and marketing campaigns
are applied that best-fit customers’ actual needs hence customers get a
sweetened purchase experience.
 Finance – Banks and financial institutions are using e-commerce to a great
extent to provide their financial services as such customers can easily check
balances and account activities.
 Online Booking – Booking hotels, air tickets, film tickets, etc. are common
nowadays been possible by an internet booking engine.
 Online Publishing – Electronic publishing includes the digital publication of
e-books, digital magazines, and the development of digital libraries and
catalogues.
 Auctions – Customer-to-Customer E-commerce is the direct selling of goods
and services among customers. It also includes electronic auctions that involve
bidding.

E-Business Vs. E-Commerce

In the actual field of online business – e-business and e-commerce are used interchangeably.

 E-commerce is buying and selling products online but e-business is more than
that.
 E-commerce is a subset and an essential part of e-business.
 E-commerce is limited to monetary transactions but e-commerce includes
monetary transactions and allied activities.
 To communicate with their online customers from all over the world, E-
Commerce needs the internet. To connect with the parties, E-Business can use
the internet, intranet, and extranet.
Conclusion…

E-business hence is the process of conducting business activities over the internet. The
development of electronic business has made online shopping possible and enhanced the
company’s performance. And, the trend of e-business/eCommerce is tremendous that has
never been seen before and further Covid-19 has boosted its growth.

Applications of E-business
  E-business may be defined as conducting of activities of industry, trade and
commerce through the computer network. The most common network used is the
internet.
 Applications of e - business are as follows :
 1. E-bidding / E-auction: Many shopping sites such as airline tickets, etc. have 'Quote
your price', wherein one can bid for the goods and services online. It also provides the
facility for e-tendering under which quotation can be submitted online.
 2. E-trading: It involves trading of securities like shares and other financial
instruments. The securities are bought and sold online.
 3. E-procurement: It involves sales transactions between business firms through the
internet. It includes 'reverse auctions' and 'digital market places'. Reverse auction
facilitates online trade between a single business purchaser and many sellers. Digital
market places facilitate online trading among multiple buyers and sellers.
 4. E-delivery: It involves electronic delivery of photographs, videos, journals and
other multimedia contents to the user's computer. It also involves rendering various
consulting services like legal, medical, accounting, etc. electronically.
 5. E-communication / E-promotion: It involves advertisement through banners, pop-
ups, customer surveys, opinion polls, publication of online catalogues, displaying
images of goods, etc.Diffetwee E-Commerce and E-Business

E-Commerce Vs E-Business

While most believe that E-Commerce and E-Business can be used interchangeably, it is not
so. While E-Commerce may refer to conducting online transactions, E-Business encompasses
all the business activities and services conducted using the web. Here, in this article, we have
attempted to explain the definitions and compare both these terms to understand their
differences.

The terms discussed in this article are:

 E-Commerce
 E-Business

What is E-Commerce?
E-Commerce is about conducting commercial transactions via the web or getting involved in
selling and buying items over the internet. It also covers monetary transactions. Some other
online e-commerce activities include:

 Ticketing over internet

 Paying different taxes
 Online payments
 Products purchased or sold online
 Online Accounting Software
 Online Customer Support
Meanwhile, also find examples of E-Commerce sites. They include Flipkart, Paytm Mall,
Amazon, Myntra and more.

What is E-Business?

E-Business encompasses executing all types of business transactions and services via the
web. This includes procuring raw materials, online education, commercial transactions,
monetary transactions on the internet and more. This indicates an online presence of all types
of businesses and services.

Examples are E-Commerce companies and their additional internal business activities such as
classifieds, auction sites, software or hardware developer sites, etc. The E-Business online
activities, in the meantime, include:

 Setting up an online store

 Supply chain management
 Online commercial transactions (buying and selling products)
 Customer Education
 Monetary Business Transactions
 E-Mail Marketing

Difference between E-Commerce and E-Business

E-Commerce E-Business

Carrying out commercial Conducts all kinds of business activities and

transactions online services over the internet
 Buying/ selling, monetary Online presence of the business
transactions online

A sub-set of E-Business, it is also a A super-set of E-Commerce. Business

narrow concept transactions are supported in E-Business

Limited transactions Transactions are not limited

Involves use of only one website Multiple websites and CRMs, ERPs that
connect different business processes are used

Mandatory use of internet Internet, Intranet or Extranet are used

It is more relevant in B2C, This is more appropriate to B2B or Business to

Business to customer context Business context

Also cover external or outward Covers internal as well as external business

business processes activities or processes

NETWORK INFRASTRUCTURE FOR E- BUSINESS

E‐business infrastructure is the architecture of hardware, software, content and data used to
deliver e‐business services to employees, customers and partners.

Defining an adequate E‐business infrastructure is vital to all companies adopting e ‐business

as it affects directly the quality of service experienced by users of the system in terms of
speed and responsiveness.

E-Business needs a network infrastructure to transport the content through electronic,

interactive or multimedia superhighway. Information superhighways(I-way) describe a high
capacity (broadband), interactive (two way) electronic pipeline to home or office that capable
of supporting a large number of e-com applications.

E-business user requires voice, data and video conferencing services with their respective
separate networks.

There are 3 major components which build the information superhighway or E-business
infrastructure.
- Consumer access equipment.
- Local on - ramps.
- Global Information distribution network.

1. CONSUMER ACCESS EQUIPMENT

It represents a critical category, the absence or slow progress of which is holding up other
segments of the I-way.
It includes hardware and software vendors such as:
- Physical devices: Routers and switches and hubs.
- Access devices such as computers and set-top boxes
- Software platforms such as browsers and operating systems like Mozilla Firefox, Internet
explorer, AOL Explorer etc.

2. LOCAL OR ACCESS ROADS, OR ON-RAMPS

· This segment of network infrastructure provides linkages between businesses, schools, and
homes to the communications backbone. This component is often called the "last mile" in the
telecommunications industry.
· The providers of access ramps can be differentiated into four categories: telecom-based,
cable TV—based, wireless-based, and computer-based on-line information services that
include value-added networks (VANs).

3. GLOBAL INFORMATION DISTRIBUTION NETWORKS

· It represents the infrastructure crisscrossing countries and continents.

· Most of the infrastructure for the I-way already exists in the vast network of fiber optic
strands, coaxial cables, radio waves, satellites, and copper wires spanning the globe.
· Linking all the components of the I-way will require large capital investments in "open"
systems (interoperable equipment that uses common standards) and installing gateways
between various networks.
· A final requirement is switching hardware and software to move huge amounts of data
effortlessly over such a complex network.

What is an Ecommerce Business Model?

An ecommerce business model refers to how a business operates to sell goods and services
online. There are 6 main types of ecommerce business models, namely Business-to-
Government (B2G), Business-to-Business (B2B), Business-to-Consumer (B2C), Consumer-
to-Consumer (C2C), Consumer-to-Business (C2B), and Business-to-Business-to-Consumer
(B2B2C).

In order to find the right ecommerce model for your business, you need to define two things.
Firstly, you will have to define who you will sell to, and then define how you will position
what you have to sell. Then, figure out your ecommerce business plan. This will define how
you will attract customers and how they will engage with your product. Lastly, figure out
your delivery framework, by assessing what will work best for your ecommerce business.

What do You Want to Sell?

The beauty of online commerce is that you can sell pretty much anything. However, it is
always a good idea to start with a small range of products. Your store can sell physical
products (clothing or shoes), digital products (ebooks are a good place to start), or services
such as babysitting.

Let’s see what type of products are currently being sold online and how you can tap their
market.

Physical Products

This is the most commonly sold commodity on ecommerce stores. Physical products (pretty

much anything that requires packing, shipping and delivery) often achieve the highest sales.

Discover what you are passionate about. Do you love cars? How about selling car parts and
accessories then? Do you love books? Why not start an online book store? Online commerce
gives you the perfect opportunity for converting your passion into a viable business.

Analyze your chosen niche and find the opportunity gaps. This covers all the aspects of the
industry that are underserved. Similarly, try to analyze the pain points of the target customers.

Next, conduct keyword research on the product you wish to sell. This way, you can pinpoint
the demand for your product that will help you plan your inventory and order placements.

Digital Products

There are many products that can be delivered to a customer online. Are you a web designer,
content writer, or drawing artist? You can create an ecommerce store around digital products.
Piracy and Copyrights infringements is a serious challenge for such stores. Another important
requirement is the FAQ and Legal sections that cover the mechanism of product delivery and
the copyright status of your offerings.

Services

If you have a crew of skilled carpenters, or house cleaners, or you are an expert hair stylist
who offers to visit the customer’s residence, why not create a website to sell these services
online? You can significantly increase the demand for your services by creating a
comprehensive FAQ section and a Legal section detailing exactly what you are offering and
what the customers can expect.

6 Types of Ecommerce Business Models

Ecommerce is a global phenomenon and as such support several models. The good thing
about ecommerce is that you could choose one or more models for your venture.

1. Business-to-Business (B2B)

If the nature of your products or services is geared towards meeting the needs of businesses,
setting up a B2B strategy is your best bet. Networking and reaching out is a bigger part of
this strategy. A big advertising budget is not of much help. The most important challenge you
would face is convincing established businesses that your products/services are a great fit for
their processes.

The advantage of this business model is that order sizes are usually large, and repeat orders
are very common, if you maintain the quality of your products and services. An example of a
great B2B model is Media Lounge.

2. Business-to-Consumer (B2C)

This is the model you should adopt if your products/services are targeted primarily towards
individuals. The potential customer finds your website and determines whether your product
could address their pain points.
After browsing the store, the customer may decide to place an order. An example of a
successful B2C business is Portugal Footwear.

3. Consumer-to-Consumer (C2C)

While B2B and B2B business concepts are familiar, Customer-to-Customer (C2C) is a
concept unique to ecommerce. This is mainly due to the sheer demand of the platforms such
as Craigslist, OLX, and eBay.

These platforms allow their users to trade, buy, sell, and rent products and services. In all
transactions, the platforms receives a small commission. This business model is complex and
requires careful planning to operate. Many platforms have failed, generally due to legal
issues.

4. Consumer-to-Business (C2B)

Customer-to-Business (C2B) business model is another great concept that is popular mainly
due to platforms that cater to freelancers. In C2B, freelance workers work on tasks provided
by clients. Most of these clients are commercial entities and freelancers are often individuals.
In simpler terms, consider C2B is a sole proprietorship serving larger businesses.

Reverse auction websites, freelance marketplaces, affiliate marketing all form part of this
business model. Again, this model requires planning due to the legal complexities involved.

5. Business to Government (B2G)

Business to Government (B2G) is an ecommerce business model where a business markets

its products to government agencies. If you want to choose this ecommerce business model,
you will have to bid on government contracts. Governments usually put-up requests for
proposals and ecommerce businesses then have to bid on government projects. In most cases,
a government agency would not come to place an order on your ecommerce website.
However, some local government agencies are exceptions to the rule, depending on their
needs.
6. Business to Business to Consumer (B2B2C)

When a business sells products to another business, and then that business sells to the
consumers online, this is what is defined as B2B2C ecommerce.

There are three parties involved in this type of ecommerce business model. For example, if
you choose to go with it, you will have to partner with another business, and only then can
you sell its products and offer the partner a commission for each sale.

Ecommerce store owners choose this business model mainly for new customer acquisition.
This happens because even though customers are already familiar with the partner’s products,
they can’t order from them online, due to obstacles such as geographical location, hefty
shipping costs, and others.

Hence, this ecommerce business model is most suitable for new ecommerce store owners
who want to expand their customer base.

1. Just-in-Time Purchasing

Just-in-time purchasing is a popular business plan in which an ecommerce store put up

products on the store. Whenever a user orders an item, the store gets the item from the
supplier and ships it to customer. The plan is ideal for people with low budget or no
warehousing space.

Just-in-Time Purchasing Example: Both Apple and McDonald’s follow the just-in-time
delivery framework. A case study on Apple suggests how this value delivery framework
helped it streamline the waiting time and a number of steps in the delivery of its tailor-made
iPods. From 90 days the delivery time was reduced to 90 hours as the JIT framework helped
Apple produce tailor-made products when customers had placed orders.
2. Drop shipping

In this plan, an ecommerce store gets the products from a wholesale or manufacturer and sells
to the visitors at a commission. For example, you have an ecommerce store where you add
products from AliExpress and set the prices at a higher level. Once the store is up, the store
targets potential customers through ads and other digital marketing channels.

Drop shipping became very popular when ecommerce drop shipping platforms like
WooCommerce, PrestaShop, and Shopify went mainstream.