IT1812

Introduction to E-Commerce
What is E-Commerce?
E-commerce (or electronic commerce) allows you to buy and sell products on a global scale, 24 hours a day,
without having the same overheads as you would with a brick and mortar store. It refers to the commercial
transactions of goods or services conducted over the Internet. Over the last few years, e-commerce has rapidly
evolved to become a combination of online and offline retail that is vertically integrated.
It involves the use of Information and Communication Technology (ICT) and Electronic Funds Transfer (EFT) in
making commerce between consumer and organization, organization and organization, or consumer and
consumer. Electronic Data Interchange (EDI) has also increased in humungous amounts with the growing use
of Internet worldwide, leading to Internet bazaars inside the digital world which is rightly termed as e-mails.
E-commerce can also be used for advertising goods and services and transacting one-off deals. Internet
commerce has application for both business-to-business to consumer transactions. You may advertise your
products or services on your Web site in two (2) ways:
• Use of a relatively simple Web site, consisting of a few pages where you tell potential customers who
you are, what you do, where you are, and how they can contact you (easiest done by giving them your
email address)
• Provide worldwide customers with an online catalog of your products which they can browse at their
leisure without having to go to your place of business.

Online Catalog
It is a catalog that people can access via the Internet. It is an integral part of a website, enabling customers to
do the following:
• Browse through the stock list
• Read about an item or service
• Look at the product images
• Select which items they want to purchase
• Drop them into a shopping cart as they go along
• Check out when they have completed their shopping.
The next step is to request the order by filling in their details and method of payment on a form. The form is
already partially completed with a breakdown of the items on their shopping cart, where prices may be
inclusive of tax and shipping and handling charges. If they choose to pay via a credit card, the form will include
a place for them to fill in their credit card number. Finally, with a press of a button, you can send the order to
them.

Electronic Commerce Under Different Perspectives

• Communications Perspective – E-commerce is the delivery of information, products or services, or
payments over the telephone lines, computer networks, or any other electronic means.
• Business Process Perspective – E-commerce is the application of technology toward the automation of
business transactions and work flow.
• Service Perspective – E-commerce 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.
• Online Perspective – E-commerce provides the capability of buying and selling products and
information on the Internet and other online services.

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Types of E-Commerce
Divulging the types of e-commerce requires throwing some light on the narrow line of distinction between e-
commerce and e-business on the first hand. While e-commerce uses ICT in making inter-business, inter-
organizational, and business-to-consumer transactions, e-business is a broader term and uses technology in
enhancing one’s business. It concentrates on adding customer value by using digital media.

E-commerce can be classified into the following categories:

• B2B E-Commerce – B2B or business-to-business is the type of e-commerce in which the trading takes
place between two (2) businesses or organizations/companies without the involvement of consumer.
The product may then be sold to the consumer by any of the organization under its brand name.
• B2C E-Commerce – In recent times, B2C or business-to-consumer has grown into the most popular and
prolific form of online trade. It is commerce between businesses and consumers. It is more commonly
known as online retailing and involves customers purchasing goods and services online.
• C2C E-Commerce – Consumer-to-consumer is the trade between two (2) consumers or private
individuals. C2C transactions bear an analogy with the traditional trading methods corresponding to
classified ads, auctions, and other vertical industries. Consumer commerce over online bazaar helps
buyers to negotiate and buy at a selective price.
• C2B E-Commerce – A consumer to the business model is a type of commerce where a consumer or
end user provides a product or service to an organization. It is the reverse model of the B2C or business
to consumer model, where businesses produce products and services for consumer consumption.
• B2A E-Commerce – Business to administration also referred to as the business to government (B2G)
commerce. It is a derivative of B2B e-commerce model. In this model, the businesses and government
agencies (administration) use central websites to exchange information and do business with each
other more efficiently than they usually can off the web.
• C2A E-Commerce – Consumer to administration or consumer to government e-commerce model helps
consumers to request information or post various feedbacks regarding public sectors directly to the
government authorities or administration.

The Drivers and Benefits of E-Commerce

These are the driving forces behind e-commerce:
• Global Customers – presence of customers of a product worldwide.
• Global Products – demand for foreign products by customers.
• Global Operations – development of transnational and multinational corporations.
• Global Resources – use of foreign raw materials, labor, and machines for production.
• Global Collaborations – joint ventures, mergers, and strategic alliances.
• Global Competition – race to capture market share in developing countries.

Advantages of E-Commerce Over Traditional Retail

Geographical limitations
Gaining new customers
Cost
Locating the product
Travel time and cost
E-Commerce Retail
Worldwide Limited geographical area
Driven by traffic from search engines Driven by branding and relationships
Lowered cost Higher cost
Navigate using search box for to look Roam around the place to find the
for a particular product desired product.
Allows customers to visit the same Travel long distances to reach their
store virtually preferred physical store

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Comparison shopping
Deals, bargains, coupons,
and group buying
E-Commerce Retail
Several online services allow Hard to compare products
customers to browse e-commerce specifically in price and specifications
merchants and find the best prices
Avail several discounts Infeasible to avail several discounts

Providing abundant
information
Target communication
Availability
Creating markets for niche
products
Can provide additional information Limited information about the
about the products to the customers products
Can access a lot of information about
Manual process in using the
its customers information of customers through
registration forms
E-commerce websites can run all the Some store are 24/7/365.
time.
Can locate parts online with great Buyers and sellers of niche products
ease can find it difficult to locate each
other in the physical world

Similarities of E-Commerce and Retail Store

E-Commerce Retail
Homepage Storefront
Online store Floor layout
Information on the website Sales associate

E-Commerce Major Applications

Electronic commerce is the general concept covering any form of business transaction or information
exchange executed using ICTs. E-commerce takes place between companies, between companies and their
customers, or between companies and public administrations. It includes electronic trading of goods, services,
and electronic material.
E-commerce systems include commercial transactions on the Internet, but their scope is much wider than this.
They can also be classified by the following application types:
• Electronic Market’s principal function is to facilitate the search for the required product or service.
Airline booking systems are an example of an electronic market.
• Electronic Data Interchange (EDI) is the electronic exchange of business documents in a standard,
computer-processed, universally accepted format between-trading partners. It is quite different from
sending electronic mail or messages and sharing files through a network. In EDI, the computer
application of both the sender and the receiver, referred to as trading partners (TPs), have to agree
upon the format of the business document which is sent as a data file over electronic messaging
services.

The development of e-commerce has fueled growth in the following industries as well:
• E-banking or Internet banking is a sophisticated form of banking which facilitates consumers to make
monetary transactions online using their existing bank accounts, credit cards, debit cards, ATM cards
or stored-value cards. One can view his/her account details, transfer funds, make payments, and take
mini statements for account history.

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o The Electronic Payment System (EPS) via e-banking completes the loop of e-commerce by
making payments, thereby assuring sellers of the buyers and vice versa. It facilitates a secure
and swift payment gateway for any online transaction. The huge and public response for e-
commerce has prompted almost every public and private bank to be also visibly active in the
online market.
• Shipping Industry – E-commerce has instigated the establishment and growth of international and
national shipping firms. FedEx (FDS) and United Parcel Services (UPS) are two (2) of the major shipping
companies responsible for shipping a large sector of online purchase. In the Philippines, there are eight
(8) trusted couriers. Refer to the list below:
o LBC
o GrabExpress
o 2GO
o Xend Business Solutions
o JRS Express
o DHL Express
o Ninja Van
o Lalamove
• Electronic Media – Visibly present as newspaper and news channels around the globe for years, the
print media has steadily but beautifully occupied the digital world with the growth of Internet users
and Internet economy. In comparison to the on-paper news, electronic newspapers can publish latest
news readily available in one (1) click.
• Electronic Auctions – The brick and mortar trading stores have witnessed an innovative approach for
making goods available at a market-negotiated price called auction. The Internet has added a new
dimension to this area, called e-auction, where buyers and sellers can bid online and trade in a wide
range of products. eBay and OLX are some of the popular e-auction websites.

Latest trends and future scope

1. The social media buzz is a seraphic area for maximizing e-commerce. More and more businesses are
available on social network sites to build, as well as promote, their brand names on the e-bazaar.
Integrating Facebook features such as “like” and “share” is the e-commerce websites’ favorite
customization these days.
2. Search engine optimization for an e-commerce website.
3. With the integration of the Internet on mobile handsets, it is a good idea to develop and promote m-
commerce to mobile-specific websites.

Limitations and Impacts of E-Commerce

• Security – People are hesitant to provide their personal and financial details in spite of advanced data
encryption security systems in place. Moreover, some websites do not have the capability and
features installed to authenticate transactions.
• Lack of privacy – To some extent, the privacy of a customer is compromised in e-commerce. You need
to provide your personal details, such as address and telephone number, to the seller.
• Tax issue – In the case of different geographical locations, sales tax becomes an issue. Many times,
sellers have faced problems in the computation of sales tax. Moreover, physical stores have a risk of
losing business if online transactions are exempted from taxation.

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• Fear – Despite its popularity, there still resides an element of doubt in the mind of people when it
comes to online shopping. This is because the customer cannot physically examine the product and
cannot be sure of the features and attributes. Hence, some people still prefer physical stores.
• Product suitability – It is not possible for people to physically examine the product in e-commerce. In
many cases, the original product may not match the picture or specifications in the e-commerce site.
This absence of touch and feel creates a discouraging effect.
• Cultural obstacles – As the process of e-commerce encompasses customers across the globe, the
habits, traditions, and culture differ. There may also be linguistic problems which may lead to issues
between the seller and the buyer.
• High labor cost – In order to get the whole e-commerce and delivery process right, a specialized
workforce is required. To get all these in the right shape, companies have to shed a good amount of
money and employ a talented pool of people.
• Legal issues – There is a lot of legal compliances and cyber laws that need to be taken care of in an e-
commerce business. These regulations may vary from country to country. All these reasons deter
businesses from going electronic.
• Technical limitations – E-commerce requires advanced technology platforms for better performance.
Some limitations, such as lack of proper domain or network and software issues, can affect the
seamless performance of an e-commerce site.
• Huge technological cost – A lot of money needs to be invested to build up the technical infrastructure
needed of an e-commerce business. Moreover, they need to be upgraded to keep abreast with the
changing technology.

References:
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limitations/ on January 9, 2019.
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commerce-introduction/ on January 9, 2019.
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electronic-commerce on January 24, 2018.
Khurana, A. (2019). Advantages of e-commerce over traditional retail. Retrieved from
https://www.thebalancesmb.com/advantages-of-ecommerce-1141610 on January 9, 2019.
List of trusted couriers in the Philippines. (2016). Retrieved from http://primer.com.ph/business/2016/09/16/list-
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design-articles/how-ecommerce-is-like-a-retail-store on February 18, 2019.

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