E-Commerce : An Introduction

Definition of E-Commerce

- E-commerce , short for electronic commerce, is trading in products or services using

computer networks, such as the Internet.

- Electronic commerce draws on technologies such as mobile commerce, electronic funds

transfer, supply chain management, Internet marketing, online transaction
processing, electronic data interchange (EDI), inventory management systems, and
automated data collection systems.

In other Words :

- E-commerce involves digitally enabled commercial transactions between and among

organizations and individuals:

Digitally enabled transactions include all transactions mediated by digital technology

that generates, stores, and processes data in terms of strings of 0 and 1

Commercial transactions involve the exchange of value across organizational or

individual boundaries in return for products or services
Evolution of the E-Commerce Industry
 What is a Business Model?
• A Business Model is a conceptual structure that supports
the viability of a product or company and explains how the
company operates, makes money, and how it intends to
achieve its goals. All the business processes and policies
that a company adopts and follows are part of the business
model.
• According to management guru Peter Drucker: A business
model is supposed to answer who your customer is, what
value you can create/add for the customer and how you
can do that at reasonable costs.
• Thus a business model is a description of the rationale of
how a company creates, delivers and captures value for
itself as well as the customer.
TypesBusiness - to - Business (B2B)
of E-Commerce Models : 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.

Example : Samsung processors

for iPhone etc
Types of E-Commerce Models : B2C 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

Example: Amazon, Flipkart etc

Types of E-Commerce Models : C2C

Consumer to Consumer
markets are innovative ways to
allow customers to interact with
each other. 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.

Example : Classified sites –

Quikr, OLX etc,
Types of E-Commerce Models : C2B

Consumer-to-business (C2B) is
a business model in which
consumers (individuals) create
value and businesses consume
that value. 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.

Other examples: Policybazar.com,

Naukri.com, monster.com
Types of E-Commerce Models : B2G

Business-to-government (B2G) is a derivative of B2B marketing and often referred to as a

market definition of "public sector marketing" which encompasses marketing products and
services to various government levels - including federal, state and local - through
integrated marketing communications techniques such as strategic public relations,
branding, marcom, advertising, and web-based communications.

B2G networks provide a platform for businesses to bid on government opportunities which
are presented as solicitations in the form of RFPs in a reverse auction fashion.

Public sector organizations (PSOs) post tenders in the form of RFPs, RFIs, RFQs, Sources
Sought, etc. and suppliers respond to them.
Types of E-Commerce Models : G2B

Government to Business : When a government entity sells products and services to

businesses providing surety guarantees, disaster assistance, etc to small businesses.

For example - Transportation Security Administration (TSA) holding auctions and selling
off confiscated items

- Selling survey data to businesses

- Selling of land and property to corporates
Types of E-Commerce Models : G2C

The goal of Government to Customer (G2C) e-Governance is to offer a variety of services

to citizens in an efficient and economical manner, and to strengthen the relationship between
government and citizens using technology.

There are several methods of Government to Customer e-Governance. Two-way

communication allows citizens to instant message directly with public administrators, and
cast remote electronic votes (electronic voting) and instant opinion voting.

Examples : Transactions such as payment of services, such as city utilities, can be completed
online or over the phone. Mundane services such as name or address changes, applying for
services or grants, or transferring existing services are more convenient and no longer have
to be completed face to face
Brokerage Model

• Auctions and exchanges are the modes of

transaction
• Global network of buyers and sellers, usually
industrial intermediates
• The broker typically charges the seller a transaction
fee based on the value of the sale
• Pricing mechanism can be a simple offer/buy,
offer/negotiated buy or an auction/bid approach
• Eg.- eBay, one of the most successful Auction Brokers
Aggregator Model

• One company brings various service providers in a

niche category and sell their services under its own
brand. The money is earned as commissions
• The company aggregates buyers to form a virtual
buying entity and/or aggregates suppliers to
constitute a virtual distributor
• Aggregator takes the responsibility for selection and
fulfillment, pricing, and marketing segmentation
• Examples – Uber, Airbnb, Oyo
Community Model

• a website which has gathered a group of users with a

common interest who work together on the site.
• users will share information and make contributions
in other ways. Since they have contributed to it
themselves, users feel highly loyal to the site and will
visit it regularly. This offers possibilities for
advertising.
• Eg.- Slashdot, Reddit
Manufacturer Model
• Suitable when organizations don’t have enough
investment to manufacture their own products. It
allows you to outsource the manufacturing and put
your name as a manufacturer on the label of the
product.
• It is profitable as you make use of the infrastructure
already set up by the outsourcing company.
• This business model suits businesses which:
– want every aspect of the product in their control
– deal in products which are similar to other competitors
• Examples – Ford, 3M, General Electric
Advertising Model
• It involves posting web ads onto websites. These ads are
targeted for consumers.
• The broadcaster, a web site, provides content (usually for
free) and services (like e-mail, chat, forums) mixed with
advertising messages in the form of banner ads. The banner
ads may be the major or sole source of revenue for the
broadcaster. The broadcaster may be a content creator or a
distributor of content created elsewhere.
• This model only works when the volume of viewer traffic is
large or highly specialized.
• Popular with media publishers like YouTube, where the
information is provided for free but, is accompanied
with advertisements which are paid for by identified sponsors.
Subscription Model

• This model aims for long-term commercial engagement

by offering customers incentives to shop again with the
same brand a set of products selected at regular
intervals.
• This is most evident in the areas of beauty, fashion,
health, and grooming.

• If customer acquisition costs are high, this business

model might be the most suitable option.
The subscription business model lets you keep customers
over a long-term contract and get recurring revenues
from them through repeat purchases. Examples –
Netflix, Dollar Shave Club.
Dropshipping Model

• When an e-commerce store buys the products from a

manufacturer or wholesale and sell it to the customers at
a commission.

• This eliminates the hassle of managing inventories, stock

or dealing with packaging. One just needs to set up a
storefront and handle payments and orders.

• If the product quality is not up to the mark, or the sellers

are slow, the drawbacks will be added to your website
reviews.