INFRASTRUCTURE UNIVERSITY

KUALA LUMPUR

HIMALAYAN COLLEGE OF
MANAGEMENT
Kamalpokhari, Kathmandu

Assignment: E-commerce and Information Technology

Lesson 1: Introduction to E-commerce
Assignment 1

SUBMITTED BY: SUBMITTED TO:

Samir Pradhan Er. Ayush Shrestha
(MBA September 2018 Intake)
1. Describe e-commerce in your own words?
Explain how does it differ from e-business? Where does it intersect with e-business?
Ans:
E-commerce is the buying and selling of goods or services over the internet, and the transfer
of money and data over the internet itself. It can also be described as any commercial
transaction that is facilitated through the internet. Ecommerce enables you to buy and sell
products on a global scale, twenty-four hours a day without incurring the same overheads as
you would with running a brick and mortar store. For the best marketing mix and the best
conversion rate, an Ecommerce venture should also have a physical presence; this is better
known as a click and mortar store.
While many people use e-commerce and e-business interchangeably, they aren't the same,
and the differences matter to businesses in today's economy. The letter "e" stands for
"electronic" and both words apply to business that utilizes electronic networks to conduct
their commerce and other business activities.
E-business refers to the use of electronic network to conduct businesses. E-Business is quite
similar to E-Commerce, but it is more than just a simple act of buying and selling products
and services online. E-business includes a wider kind of business processes, such as
electronic ordering processing, supply chain management, customer relationship
management, etc. So basically, e-commerce is a part of e-business.
The key differences between e-commerce and e-business are as follows:

a. Buying and Selling of goods and services through the internet is known as e-
commerce. Unlike e-business, which is an electronic presence of business, by which
all the business activities are conducted through the internet.
b. E-commerce is a major component of e-business.
c. E-commerce includes transactions which are related to money, but e-business
includes monetary as well as allied activities.
d. E-commerce has an extroverted approach that covers customers, suppliers,
distributors, etc. On the other hand, e-business has an ambivert approach that covers
internal as well as external processes.
e. E-commerce requires a website that can represent the business. Conversely, e-
business requires a website, Customer Relationship Management and Enterprise
Resource Planning for running the business over the internet.
f. E-commerce uses the internet to connect with the rest of the world. In contrast to e-
business, the internet, intranet and extranet are used for connecting with the parties.
The two intersect where e-business infrastructure does provide support for online e-commerce
exchanges. E-business applications turn into e-commerce when an exchange of value occurs.

2. What are some of the unique features of e-commerce technology?

Ans:
Not so long ago, it was uncommon for companies to have websites. Today, almost every big
and small companies have their websites promoting their business and has added another
dimension in their sales and marketing. Due to e-commerce, it has been easy for the
companies to grow in local and global scale and perform transactions almost anywhere in the
world. Some of the unique features of e-commerce technology are described below:
a. Ubiquity
Being web-based, e-commerce activities are available at anytime from anywhere in the world
where you can connect to the internet via mobile device or computer. E-commerce being
ubiquitous has created a marketplace and extended beyond the traditional boundaries and
removed from a geographical location. Because of this feature, shopping can take place
anywhere and reduced the shopping costs.
b. Global reach
E-commerce allows seamlessly stretching and reaching consumers across traditional, cultural
and national boundaries, and almost anywhere in the world. E-commerce creates a
marketplace for potentially billions of consumers and millions of businesses worldwide.
c. Universal standards
E-commerce has only one set of technological, media and internet standards that is shared by
all nations around the world which means websites operate on standard platforms with agreed
upon methods and systems. One study showed that 76 percent of consumers say the most
important characteristic of a website is its ease of use and universal standards help simplify
interactions. The objective of this to help the consumers to get their desired output without
getting into much hassle in their path to purchase.
d. Richness
Richness refers to the complexity and content of the message. A variety of video, audio,
picture and text message can be used to enhance the customer’s experience. Images make the
sale, not the text so a rich website is what is needed for a better marketing and sales of
products and services. A rich website with rich content makes better business than others do.
e. Interactivity
E-commerce allows two way communication between merchant and communication to make
the consumer feel as though he is an active participant in the transaction process. This feature
enables the merchant to connect with the consumer in an emotional level and merchant can
adjust to each individual’s experience which helps to create brand trust and loyalty. It is
similar to face to face experience but on a massive global scale.
f. Information density
Information density refers to the total amount and quality of the information available to all
the market participants. The technology reduces the cost to store, process and communicate
information and increases the quality, accuracy and timeliness. Thus the information becomes
plentiful, inexpensive and accurate.
g. Personalization and customization
Technology allows personalized messages to be delivered to individuals as well as groups.
Marketing messages can be personalized to a specific individual by adjusting the message to
a person’s name, interest and past purchases. The personalization of marketing messages and
customization of products and services are based on individual characteristics.
h. Social technology
The internet and e-commerce technologies have evolved to be much more social by allowing
users to create and share with their personal friends and larger worldwide community content
in the form of text, videos, music or photos. Using these forms of communication, users are
able to create new social networks and strengthen existing ones. The internet and e-commerce
empower users to create and distribute content on a large scale, and permit users to program
their own content consumption. The internet provides a unique many-to-many model of mass
communications.

3. Describe the three different stages in the evolution of e-commerce.

Ans:
The three different stages in the evolution of e-commerce are as follows:
a. Innovation
Innovation took place from 1995 and was characterized by excitement and idealistic visions
of markets in which quality information was equally available to both buyers and merchants.
However, e-commerce did not fulfill these visions during its early years.
b. Consolidation
 After 2000, consolidation stage started. In this stage, more traditional firms began to use the
Web to enhance their existing businesses. Less emphasis was placed on creating new brands.
c. Reinvention
In 2006, though, e-commerce entered its current stage, reinvention, as social networking and
Web 2.0 applications reinvigorated e-commerce and encouraged the development of new
business models.

4. How do we evaluate our current e-business capabilities? What are drivers of

business internet adoption?
Ans:
Any business capability is evaluated from the number of customers they hold and their
satisfaction level. The potential for increased revenue arises from an increased reach to a
larger customer base and encouraging loyalty and repeat purchases among existing
customers. Cost reduction is achieved through delivering services electronically. Reductions
include staff costs, transport costs and costs of materials such as paper etc.
The drivers of business internet adoption are:
a. Increasing speed with which supplies can be obtained. When we have e-business,
most of the operations will be carried out using computer and network. The inventory
management can be done in an efficient way and supplies will be received timely.
b. Increasing speed with which goods can be dispatched. As e-business enables us to
work 24*7 all 365 days, we can get orders any time. When the speed of our supplies is
increased and the order is increased accordingly, we can dispatch the goods in the same way
in an increased speed.
c. Reduced sales and purchasing cost. As the web based platform works as an marketing
tool for the e-business, we don’t need any other sales person to sell the product and the extra
cost can be saved there. Similarly, the purchasing cost decreases as we don’t need to travel to
the vendor to buy the products.
d. Reduced operating costs. The operating costs come from the employees, real estate
etc. E-business cuts off a big portion of any of these costs as lesser number of employees can
operate the business and a small office is enough for the operations.
e. Customer demand is a major driver for any business to adopt internet. As e-business
is spreading globally, people are looking forward to switching to e-commerce rather than
traditional commerce.
f. Improving the range and quality of services offered. As a business drives to internet
adoption, it can increase its range of service and simultaneously improve its quality offered. It
will be able to be more responsive and collect and store the review of customers.
g. Avoiding losing market share to businesses already using e-commerce. It is one of the
major drivers to business internet adoption as many businesses have already adopted e-
commerce. E-commerce makes consumers easy to do transactions and get the products easier,
so to remain in the market, one must adopt the internet.

5. Define disintermediation and explain the benefits to internet users of such a

phenomenon. How does disintermediation impact friction-free commerce?
Ans:
Disintermediation is the elimination of intermediaries or cutting out the market middlemen
such as distributor, wholesaler, broker or agent between the producers and consumers.
Businesses/consumers would not have to go traditional distribution channels, which had some
type of intermediate. With disintermediation, companies are able to deal with every customer
directly, for example via the Internet.
The advantage of disintermediation is obviously the greater efficiency and lower cost
achieved by reducing the number of transactions and processes involved. Disintermediation
can help producers in many ways this is because they are able to save money as organization
do need to pay the intermediation. Producers can benefit from increasing their profit margins
and passing a part of their savings to the consumers who thus enjoy lower prices and greater
choice. Further, where one producer can dominate on price or quality, direct sales reduces the
uncertainty of consumers and a “winner take all” market can emerge. Consumers are able to
get their products straight away with low cost as it does not have to go through the ‘middle
man’ where they have to pay and make deals at low prices. This can attract more customers
as businesses are able to sell at low prices which catch more attention making more customer
awareness and able to retain existing customers.
Disintermediation would allow people to consumers directly buy from the producers which
means they don’t need to go through a lot of process during the buy which is the concept of
friction-free commerce.

6. What are the major limitations on the growth of e-commerce? Which is

potentially the toughest to overcome?
Ans:
While there are several advantages to using e-commerce, there are certain limitations on the
growth of e-commerce, some of which are as follows:
a. For operating an e-commerce, computers are required by the merchants as well as the
consumers. Thus, the price of personal computers plays as a limitation on the growth of e-
commerce.
b. People need to learn complicated operating systems to use e-commerce sites which
can be a limitation as people don’t feel comfortable with the operating systems.
c. Persistent global income inequality will exclude most of the world’s population, who
do not have access to telephones or PCs.
d. Shopping gives a great experience to some people. The unlikelihood that the digital
shopping experience will ever replace the social and cultural experience that many seek from
the traditional shopping environment is a major limitation on the growth of e-commerce.
Cost of computers can be taken care of. The operating systems can be taught to people and
train to use the e-commerce sites. The technological limitations can be overcome but the
social and cultural limitations are likely to be toughest to overcome as it is hard to convince
people to switch to something new from the things they have always been doing and which
gives them a socio-cultural experience.

7. State five advantage of electronic commerce over traditional commerce.

Ans:

The invention of faster internet connectivity and powerful online tools has resulted in a new
commerce arena – Ecommerce. People now prefer e-commerce over the traditional
commerce. Anyone connected to the internet has access to the e-commerce. The advantages
of electronic commerce over traditional commerce are as below:

a. Lower cost

One of the most tangible positives of e-commerce is the lowered cost. A part of these lowered
costs could be passed on to customers in the form of discounted prices. Here are some of the
ways that costs can be reduced with e-commerce:
i. Advertising and Marketing: Organic search engine traffic, pay-per-click, and social
media traffic are some of the advertising channels that can be cost-effective.
ii. Personnel: The automation of checkout, billing, payments, inventory management,
and other operational processes lowers the number of employees required to run an e-
commerce setup.
iii. Real Estate: This one is a no-brainer. An e-commerce merchant does not need a
prominent physical location.
iv. Employees: The most particular difference is that an E-commerce business doesn’t
need to have many employees to function as opposed to the traditional business. The E-
commerce website sells your products or services, an auto-responder to automatically send
out e-mails to targeted markets and forums to facilitate consumer and staff feedbacks.

b. Business Hours

Most of traditional business operates only at business hours. But an E-commerce business can
be “productive” as they can run all the time i.e. 24 X 7 X 365 days a year unless their hosting
server’s go down for unforeseeable circumstances. From the merchant's point of view, this
increases the number of orders they receive. From the customer's point of view, an "always
open" store is more convenient.

c. Market

E-Commerce is fast becoming a place where people buy and sell their respective products
and services. If you have a physical store, you are limited by the geographical area that you
can service. With an e-commerce website, the whole world is your playground. E-commerce
is integrated with credit card processors; it has become imperative that any business, if it
wants to survive, has to acquire a web presence if they want to continue surviving because,
rest assured if you don’t, your competitors will.

d. Income

The benefits of E-commerce is there is a system in place which  will help your customers
make their payments easily each and every time their payment is due and allows you to earn a
residual income without any effort. The basis of a traditional business depends on the
frequency of new and old customers buying from them to keep the business running.

e. Provide Comparison Shopping

E-commerce facilitates comparison shopping. There are several online services that allow
customers to browse multiple e-commerce merchants and find the best prices.

8. Describe buy side and sell side ecommerce along with the disadvantage of each of
them.
Ans:
Buy side e- commerce refers to transactions to procure resources needed by an organization
from its suppliers. They basically indicate using communications technology to support the
upstream supply chain from procurement to inbound logistics. They are e-commerce
transactions between a purchasing organization and it suppliers, possibly through
intermediaries. The disadvantages of buy side ecommerce are as follows:

a. Security is an area of concern. Credit card theft, identity theft, etc. remain big concern with
the customers.
b. There may be fraud cases where the seller fakes its identity and doesn’t deliver the
product.
c. As there is lack of personal touch, the buyer may don’t be satisfied with the product they
bought.
d. There is no guarantee of the product’s quality.
e. The delivery of the products is late.

Sell side e-commerce refers to transactions involved with selling products to an organization’s
customer. They don’t only involve selling products, but also involves using internet
technologies to market services using a range of techniques. The disadvantages of sell side e-
commerce are as follows:
a. As e-commerce is highly competitive, one has to learn more about the strategy and make
their visibility in the global market.
b. There are site crash issues sometimes which have a huge impact on the sales.
c. There may be undelivered goods sometimes due to fake orders which may be a loss when
payment on delivery option is provided.