Chapter1 E Commerce

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1 | P a g e B H A G W A N M A H A V I R U N I V E R S I T Y

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Introduction to E-Commerce

The exchange or buying and selling of commodities on a large-scale involving transportation from place to place is known as commerce.

When all this is done electronically, it is known as “e-commerce”.

E-commerce from communication perspective is the delivery of information, products or services, or payments via telephone lines, computer networks, or any other means.

E-commerce from business perspective is the application of technology toward the automation of business transaction and workflows.

E-commerce from service perspective is a tool that addresses the desire of firms, consumers and management to cut service costs while improving the quality of goods and increasing the speed of service delivery.

E-commerce from online perspective provides the capability of buying and selling products and information on the Internet and other online services.

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. Ecommerce refers to the paperless exchange of business information using the following ways –

• Electronic Data Exchange (EDI)

• Electronic Mail (e-mail)

• Electronic Bulletin Boards

• Electronic Fund Transfer (EFT)

• Other Network-based technologies

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E-Commerce Categories

: 1. Electronic Markets

Present a range of offerings available in a market segment so that the purchaser can compare the prices of the offerings and make a purchase decision.

Example: Airline Booking System 2. Electronic Data Interchange (EDI)

• It provides a standardized system

• Coding trade transactions

• Communicated from one computer to another without the need for printed orders and invoices & delays & errors in paper handling .

• It is used by organizations that a make a large no. of regular transactions .

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Example: EDI is used in the large market chains for transactions with their suppliers.

3. Internet Commerce

• It is use to advertise & make sales of wide range of goods & services.

• This application is for both business to business & business to consumer transactions

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Example: The purchase of goods that are then delivered by post or the booking of tickets that can be picked up by the clients when they arrive at the event.

Categories Of E-Commerce

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Features of E-commerce

E-Commerce provides the following features –

• Non-Cash Payment − E-Commerce enables the 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 the business of enterprises and the way they provide services to their customers. It is available anytime, anywhere.

• 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. 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 − E-commerce automates inventory management. 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.

Electronic Markets

Internet

Commerce

EDI

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• Ubiquity

Internet/Web technology is The marketplace is extended beyond traditional available everywhere: at work, at home, and boundaries and is removed from a temporal and elsewhere via mobile devices, anytime. geographic location. Marketspace‖ is created shopping can take place anywhere. Customer convenience is enhanced, and shopping costs are reduced.

• Global reach

The technology reaches Commerce is enabled across cultural and across national boundaries, around the earth. national boundaries seamlessly and without modification.

Marketspace includes potentially billions of consumers and millions of businesses worldwide .

• Universal standards

There is one set of There is one set of technical media standards technology standards, namely Internet across the globe.

• Richness

Video, audio, and text messages Video, audio, and text marketing messages are are possible. integrated into a single marketing message and consuming experience.

• Interactivity

The technology works Consumers are engaged in a dialog that through interaction with the user. dynamically adjusts the experience to the individual, and makes the consumer a coparticipant in the process of delivering goods to the market.

• Information density

The technology Information processing, storage, and reduces information costs and raises quality. communication costs drop dramatically, while currency, accuracy, and timeliness improve greatly. Information becomes plentiful, cheap, and accurate.

• Personalization/Customization

The Personalization of marketing messages and technology allows personalized messages to customization of products and services are be delivered to individuals as well as groups.

based on individual characteristics.

• Threats of E-commerce:

• Hackers attempting to steal customer information or disrupt the site.

• A server containing customer information is stolen.

• Imposters can mirror your ecommerce site to steal customer money.

• Authorised administrators/users of an ecommerce website downloading hidden active content that attacks the ecommerce system.

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• A disaffected employee disrupting the ecommerce system.

• It is also worth considering where potential threats to your ecommerce site might come from, as identifying potential threats will help you to protect your site.

Consider Who may want to access your ecommerce site to cause disruption or steal data for example competitors, ex-employees, etc.

What level of expertise a potential hacker may possess; if you are a small company that would not be likely to be considered a target for hackers then expensive, complex security may not be needed.

Sr. No. Traditional Commerce E-Commerce

1 Heavy dependency on information exchange from person to person.

Information sharing is made easy via electronic communication channels making little

dependency on person to person information exchange.

2 Communication/ transaction are done in synchronous way. Manual intervention is required for each communication or transaction.

Communication or transaction can be done in asynchronous way. Electronics system

automatically handles when to pass

communication to required person or do the transactions.

3 It is difficult to establish and maintain standard practices in traditional

commerce.

A uniform strategy can be easily established and maintain in e-commerce.

4 Communications of business depends upon individual skills.

In e-Commerce or Electronic Market, there is no human intervention.

5 Unavailability of a uniform platform as traditional commerce depends heavily on personal communication.

E-Commerce website provides user a platform where al l information is available at one place.

6 No uniform platform for information sharing as it depends heavily on personal communication.

E-Commerce provides a universal platform to support commercial / business activities across the globe.

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Advantages & Disadvantages of E-Commerce

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Advantages

E-Commerce advantages can be broadly classified in three major categories –

• Advantages to Organizations

• Advantages to Consumers

• Advantages to Society Advantages to Organization

▪ 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 Consumer

▪ It provides 24x7 support. Customers can enquire about a product or service and place orders anytime, anywhere from any location.

▪ 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 reviewed 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.

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▪ 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.

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Disadvantages

The disadvantages of e-commerce can be broadly classified into 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. Vaibhav Desai (SDJ International College, Surat)

▪ 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 some operating system or any other component.

Non-technical Disadvantages

▪ Initial cost: The cost of creating / building E-Commerce application inhouse may be very high. There could be delay in launching the ECommerce 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.

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▪ 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.

Difference between E-Commerce and E-Business

1. E-Commerce : E-Commerce refers to the performing online commercial activities, transactions over internet. It includes activities like buying and selling product, making monetary transactions etc over internet. Internet is used for E-commerce. Websites and applications (apps) are required for e-commerce. it is mainly connected with the end process of flow means connected with the end customer.

Examples of E-Commerce are online retailers like amazon, flipkart, Myntra, paytm mall, seller of digital goods like ebooks, online service etc.

Activities of E-Commerce are : Buying and selling product online Online ticketing

Online Payment Paying different taxes Online accounting software Online customer support

2. E-Business : E-Business refers to performing all type of business activities through internet.

It includes activities like procurement of raw materials/goods, customer education, supply activities buying and selling product, making monetary transactions etc over internet. Internet, intranet, extranet are used in e-business. Websites, apps, ERP, CRM etc are required for e- business.

Examples of E-Business are e-commerce companies and its various internal business activities, auction site, classified site, software and hardware developer site etc.

Activities of E-Business are : Online store setup

Customer education

Buying and selling product Monetary business transaction Supply Chain Management E-mail marketing

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Difference between E-Commerce and E-Business :

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E Business models OR Types of E-Business

E-commerce business models can generally be categorized into the following categories.

• Business - to - Business (B2B)

• Business - to - Consumer (B2C)

Sr No. E-COMMERCE E-BUSINESS

1. E-Commerce refers to the performing online commercial activities, transactions over internet

E-Business refers to performing all type of business activities through internet.

2. E-Commerce is a narrow concept and it is considered as a subset of E-Business.

E-Business is a broad concept and it is considered as a superset of E-Commerce.

3. Commercial transactions are carried out in e-commerce.

Business transactions are carried out in e-business.

4. In e-commerce transactions are limited.

In e-business transactions are not limited.

5. It includes activities like buying and selling product, making monetary transactions etc over internet.

It includes activities like procurement of raw materials/goods, customer education, supply activities buying and selling product, making monetary transactions etc over internet.

6. It usually requires the use of only a website.

It requires the use of multiple websites, CRMs, ERPs that connect different business processes.

7. It involves mandatory use of internet.

It involves the use of internet, intranet or extranet.

8. E-commerce is more appropriate in Business to Customer (B2C) context.

E-business is more appropriate in Business to Business (B2B) context.

9. E-Commerce covers

outward/external business process.

E-Business covers internal as well as external business process/activities.

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• Consumer - to - Consumer (C2C)

• Consumer - to - Business (C2B)

• Business - to - Government (B2G)

• Government - to - Business (G2B)

• Government - to - Citizen (G2C)

• Business - to - Business (B2B)

A website following the B2B business model sells its products 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 endproduct to the final customer who comes to buy the product at one of its retail outlets.

• Business - to - Consumer (B2C)

A website following the B2C business model sells its products directly to a customer. A customer can view the products shown on the website. The customer can choose a product and order the same.

The website will then send a notification to the business organization via email and the organization will dispatch the product/goods to the customer.

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• Consumer - to - Consumer (C2C)

A website following the C2C business model helps consumers 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 a website showing multiple business organizations for a particular service. The consumer places an estimate of amount he/she wants to spend for a particular service. For example, the comparison of interest rates of personal loan/car loan provided by various banks via websites. A business organization who fulfills the consumer's requirement within the specified budget, approaches the customer and provides its services.

• Business - to - Government (B2G)

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• Government - to - Business (G2B)

Governments use B2G model websites to approach business organizations. Such websites support auctions, tenders, and application submission functionalities.

• Government - to - Citizen (G2C)

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

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E-Commerce Framework

Framework tells about the detail of how e-commerce can take place. It defines actually how e- commerce implemented, how online trading or business can be done. It defines important components that should be present to do some transaction.

The important components of this framework are:

1. Network Infrastructure

▪ Network Infrastructure is called as “INFORMATION SUPERHIGHWAY” is the path through which actual information flows and moves between sender and receiver.

▪ Information Superhighway consists of telecommunication companies that provide telephone lines.

▪ Cable TV systems that provide coaxial cables and direct broadcast satellite networks.

▪ Wireless companies that provide mobile radio and satellite networks.

▪ Computer networks include private networks and public data networks like the Internet.

All these modes of communication are interconnected. They are connected with routers, switches, bridges, gateways etc which are devices to connect similar and different network. All the information flow on these lines and through these devices and reach the desired destinations.

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2. Multimedia Contents and Network Publishing

The Information Superhighway is the transportation foundation that enables the transmission of content. The most prevalent architecture that enables networking publishing is the World Wide Web.

The web allows small businesses and individuals to develop content in the form of Hypertext Markup Language (HTML) and publish it on a web server. Web provides a means to create product information (content) and a means to publish it in a distribution center. (network server).

3. Messaging and Information Distribution Infrastructure

The information content transferred over the network consists of text, numbers, pictures, audio and video. But the network does not differentiate among content as everything is digital, that is, combinations of zero’s and one’s.

Once contents have been created and stored on a server, messaging and information distribution methods carry that content across the network. Messaging vehicle is called middleware software.

Messaging and information distribution include translators that interpret and transforms data formats.

4. Common Business Services Infrastructure

This infrastructure includes the different methods for facilitating online buying and selling processes. In online commerce, the buyer sends an electronic payment as well as some remittance information to the seller.

Settlement occurs when the payment and remittance information are authenticated by the seller and accepted as valid. In order to enable online payment for information and ensure its safe delivery, the payment services infrastructure needs to develop encryption (making contents indecipherable except for the intended recipient) and authentication (making sure that customers are who they say they are) methods that ensure security of contents traveling on the network.

5. Public Policy and Technical Standards

Public Policy and Technical Standards are two support pillars for all ecommerce applications and infrastructure. Public policy related to ecommerce encompasses such issues as universal access, privacy and information pricing.

Technical Standards dictate the specifics of information publishing tools, user interfaces and transport. Standards are essential to ensure compatibility across the entire network of world. These

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are the main components of framework of e-commerce. By following all this trade can be done efficiently on the network. There are many applications of e-commerce which work on this framework.

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International issues of Electronic Commerce

To do that, let’s examine the most-common challenges to international ecommerce as well as how to overcome them …

What Are the Most-Common International Ecommerce Issues?

1. Language and Localization 2. Content and Cultural Perceptions 3. Technical Infrastructure and Speed 4. Customer Support and Service 5. Currency and Payment Preferences 1. Language and Localization

When operating in a single country, language issues are few and far between. Even if you’re not a native speaker, the fact that you have a single language to master means your attention can be devoted to this task.

With international ecommerce, things get complicated as the need to provide consistent customer experiences increases. When a prospect comes from China or Germany, even if their browser is set to English, they won’t necessarily grasp subtleties, idioms, or colloquialisms.

This challenge becomes all the more pressing when you consider.

2. Content and Cultural Perceptions

Of course, language isn’t the only factor that determines whether content resonates.

Sometimes, even the best literal translations end up in embarrassing blunders, like when KFC’s motto

— “Finger-lickin’ good” — was translated in China to read: “We'll eat your fingers off.” Or when Ford’s ad — “Every car has a high-quality body” — ended up reading in Belgium: “Every car has a high-quality corpse.”

Worse, different people groups have different cultural standards and customs. What can be considered funny or casual in one culture may be nonsensical or downright offensive to those from different backgrounds.

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3. Technical Infrastructure and Speed

Infrastructure within most developed countries is more or less uniform, and — unless you opt for a cheap solution — your visitors will enjoy solid uptimes and loading speeds.

When you move overseas, things change dramatically. If you rely on the same servers as a one-size- fits-all solution, you’ll soon notice that certain geographies have much slower access.

The result is an inevitable drop in conversion rates.Customer Support and Service

Depending on your products, customer support can be a critical consideration. For example, if you sell electronic equipment or anything with that requires assembly, you may need to provide both static instructions and live support in native languages. Furthermore, you may need to provide maintenance and service for the products themselves.

Observing how your FAQ pages perform with customers in different languages — as well as search queries in your onsite search — can uncover a lot about what support different areas need.

4. Currency and Payment Preferences

Converting prices into local currency is a fairly straightforward task that can be accomplished through your store’s theme, customer-facing apps, or multiple storefronts.

The real issue is offering optimized payment preferences. While credit cards are a universally known payment method, in some countries there may be other and more popular methods that users are simply more familiar with and consequently more trustful of. Make an effort to find out if this may be the case and try to fix this.

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Digital India Services, Digi Locker and others tools

What is Digital India?

The Government of India launched the Digital India campaign to ensure that the services of the Government are made available electronically to all citizens.

This objective is achieved by strengthening online infrastructure and improving internet connectivity or to make India digitally empowered in the field of technology.

The Digitize India scheme includes plans to connect rural areas with high-speed internet networks and improve digital literacy. The vision of the campaign is inclusive growth in all sectors.

Objectives of Digital India?

• The development of a stable and secure digital infrastructure

• Delivering government services digitally

• Universal digital literacy

The initiatives under Digital India are categorized based on the objectives of the scheme. The initiatives under Digital India are as follows:

Infrastructure

Under this initiative, the Government provides multiple programs that facilitate a reliable digital infrastructure. The following are some of the programs under this:

▪ AADHAR: One of the key strengths of ‘Digital India’, wherein every resident of the country is given a unique identity number.

▪ Bharat Broadband Network (BBNL): This is the custodian of Digital India. The creation of the National Optical Fiber Network (NOFN) has been mandated in India.

▪ Centre for Excellence for Internet of Things (CoE-IT): The main objective of the center is for creating domain capability and innovative applications.

▪ CERT-IN: This is formed with the intention to secure Indian cyberspace.

▪ Common Services Centres (CSCS): CSCs are the access points for the delivery of essential public utility services, healthcare, social welfare schemes, financial, education, and agriculture services.

▪ Cyber Swachhta Kendra: The purpose of this is to generate secure cyberspace by detecting botnet infections in India and to notify, enable cleaning, and secure systems of end-users so as to prevent further infections.

▪ DigiLocker: A digital wallet to empower citizens digitally.

▪ Digital Saksharta Abhiyaan (DISHA): This aims to provide IT training to 52.5. lakh persons.

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▪ Digitize India Platform: This platform provides digitization of scanned document images or physical documents.

Services

Under this initiative, the Government has introduced multiple online services to facilitate greater reach and accessibility:

▪ Accessible India Campaign and Mobile App: This nation-wide flagship campaign is for achieving universal accessibility for enabling people with disabilities to gain access to equal opportunity.

▪ Agrimarket App: This mobile application aims to keep farmers abreast with the crop prices and avoid distress sale.

▪ Beti Bachao Beti Padhao: This aims to provide equal opportunity to a girl child, a chance to be born and be educated.

▪ BHIM (Bharat Interface For Money): This makes payment easy and quick using UPI.

▪ Crime and Criminal Tracking Network & Systems (CCTNS): This aims for nationwide networking infrastructure for the evolution of an IT-enabled state-of-the-art tracking system around ‘Investigation of crime and detection of criminals.’

▪ Crop Insurance Mobile App: This app can be used to compute the insurance premium for notified crops based on the area of coverage, amount, and loan amount in the case of loanee farmers.

▪ Digital AIIMS: A distinctive health identification number for every patient visiting AIIMS was generated on an Aadhar platform.

▪ E-Granthalaya, E-Panchayat, E-Hospital, E-Pathshala, E- prison: All of these provide digitalization of services like libraries, hospitals, schools, and prisons.

References :

• Difference between E-Commerce and E-Business - GeeksforGeeks

• International Ecommerce Issues: How to Diagnose through Data

• https://www.tutorialspoint.com/e_commerce/e_commerce_advantages.htm