FUNDAMENTAL OF E COMMERCE(BBA 606 N)

UNIT-I
ELECTRONICS COMMERCE

Introduction of e-commerce: The term "Electronic commerce" (or e-Commerce) refers to

the use of an electronic medium to carry out commercial transactions. Most of the time, it
refers to the sale of products via Internet, but the term e-Commerce also covers purchasing
mechanisms via Internet (for B-To-B).
OR
E-commerce (electronic commerce or EC) is the buying and selling of goods and services, or
the transmitting of funds or data, over an electronic network, primarily the internet. These
business transactions occur either as business-to-business, business-to-consumer, consumer-
to-consumer or consumer-to-business. The terms e-commerce and e-business are often used
interchangeably. The term e-tail is also sometimes used in reference to transactional
processes for online shopping.

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. E-
commerce refers to paperless exchange of business information using following ways.

 Electronic Data Interchange (EDI)

 Electronic Mail (e-mail)
 Electronic Bulletin Boards
 Electronic Fund Transfer (EFT)
 Other Network-based technologies
Features
E-Commerce provides following features

 Non-Cash Payment − E-Commerce enables 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 business of enterprises and

services provided by them to customers are available anytime, anywhere. Here 24x7
refers to 24 hours of each 7 days of a week.

 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 any
time, any where without any human intervention. By this way, dependencies to buy a
product reduce at large and sales increases.

 Support − E-Commerce provides various ways to provide pre sales and post sales
assistance to provide better services to customers.

 Inventory Management − Using E-Commerce, inventory management of products

becomes automated. 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.

Traditional Commerce v/s E-Commerce

BASIS FOR
TRADITIONAL COMMERCE E-COMMERCE
COMPARISON

Meaning Traditional commerce is a branch E-Commerce means

of business which focuses on the
exchange of products and services,
and includes all those activities
which encourages exchange, in
some way or the other.
carrying out commercial
transactions or exchange
of information,
electronically on the
internet.

Processing of Manual Automatic

Transactions

Accessibility Limited Time 24×7×365

Physical Goods can be inspected physically Goods cannot be

inspection before purchase. inspected physically
before purchase.

Customer Face-to-face Screen-to-face

interaction

Scope of business Limited to particular area. Worldwide reach

Information No uniform platform for exchange Provides a uniform

exchange of information. platform for information
exchange.

Resource focus Supply side Demand side

Payment Cash, cheque, credit card, etc. Credit card, fund transfer
etc.
Need of E Commerce
1) Competition in Market
2)Global Reach
3)Customer Service
4)Value Addition
5)Free and faster shipping
6)Consumer driven demand and personalization
7) 24 hours access
 APPLICATIONS OF E-COMMERCE:
The applications of E-commerce are used in various business areas such as retail and
wholesale and manufacturing. The most common E-commerce applications are as follows:

 Online marketing and purchasing

 Retail and wholesale
 Finance
 Manufacturing
 Online Auction
 E-Banking
 Online publishing
 Online booking (ticket, seat.etc)
 healthcare
 electronic trading
 insurance ex- lic,hdfc
 online searching
 e-learning

Impact of E Commerce in Business

1. Improved Productivity
2. Cost Savings
3. Streamlined Business Process
4. Better Customer Service
5. Opportunities for new Business
6. Local Proximity
7. Transparency and Openness
8. Implementation of New Technology

Basic requirements of E-Commerce

1)Client Personal Computer(PC)

2)Transaction Server
3) Database Server
4)Router
5)Internet Communication

Advantages of E-Commerce
1. 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.
2. E-Commerce helps organization to reduce the cost to create process, distribute,
retrieve and manage the paper based information by digitizing the information.
3. E-commerce improves the brand image of the company.
4. E-commerce helps organization to provide better customer services.
5. E-Commerce helps to simplify the business processes and make them faster and
efficient.
6. E-Commerce reduces paper work a lot.
7. 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.
8. 24x7 support. Customer can do transactions for the product or enquiry about any
product/services provided by a company any time, any where from any location. Here
24x7 refers to 24 hours of each seven days of a week.
9. E-Commerce application provides user more options and quicker delivery of
products.
10. E-Commerce application provides user more options to compare and select the
cheaper and better option.
11. 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 buy.
12. E-Commerce provides option of virtual auctions.
13. Readily available information. A customer can see the relevant detailed
information within seconds rather than waiting for days or weeks.
14. E-Commerce increases competition among the organizations and as result
organizations provides substantial discounts to customers.
15. Customers need not to travel to shop a product thus less traffic on road and low air
pollution.
16. E-Commerce helps reducing cost of products so less affluent people can also afford
the products.
17. E-Commerce has enabled access to services and products to rural areas as well which
are otherwise not available to
 them.
18. E-Commerce helps government to deliver public services like health care, education,
social services at reduced cost and in improved way.

Disadvantages of e-commerce.
E -Commerce disadvantages can be broadly classified in two major categories:
1. Technical disadvantages
2. Non-Technical disadvantages
3. There can be lack of system security, reliability or standards owing to poor
implementation of e-Commerce.
4. Software development industry is still evolving and keeps changing rapidly.
5. In many countries, network bandwidth might cause an issue as there is insufficient
telecommunication bandwidth available.
6. Special types of web server or other software might be required by the vendor setting
the e-commerce environment apart from network servers.
7. Sometimes, it becomes difficult to integrate E-Commerce software or website with
the existing application or databases.

Types of E-Commerce

E-Commerce or Electronics Commerce business models can generally categorized in

following categories.

1. Business - to - Business (B2B)

2. Business - to - Consumer (B2C)

3. Consumer - to - Consumer (C2C)

4. Consumer - to - Business (C2B)

5. Business - to - Government (B2G)

6. Government - to - Business (G2B)

7. Government - to - Citizen (G2C)

Business - to - Business (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.
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.

Consumer - to - Consumer (C2C)

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.
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 website showing multiple business organizations for a
particular service. 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. Business organization that
fulfills the consumer's requirement within specified budget approaches the customer and
provides its services.

Business - to - Government (B2G)

B2G model is a variant of B2B model. Such websites are used by government to trade and
exchange information with various business organizations. Such websites are accredited by
the government and provide a medium to businesses to submit application forms to the
government.

Government - to - Business (G2B)

Government uses B2G model website to approach business organizations. Such websites
support auctions, tenders, and application submission functionalities.

Government - to - Citizen (G2C)

Government uses G2C model website 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. Main
objectives of G2C website are to reduce average time for fulfilling people requests for
various government services.
Consumer Shopping Procedure
Following are the steps used in B2C e-commerce:
A consumer determines the requirement
1. searches available items on the website meeting the requirement.
2. compares similar items for price, delivery date or any other terms.
3. gives the order.
4. pays the bill.
5. receives the delivered item and review/inspect them.
6. consults the vendor to get after service support or returns the product if not satisfied
with the delivered product.
 UNIT-II
INTERNET
What is INTERNET?
• The Internet is a global wide area network that connects computer systems
across the world. It includes several high-bandwidth data lines that comprise
the Internet "backbone." These lines are connected to major Internet hubs that
distribute data to other locations, such as web servers and ISPs.
• Internet means International Network, a network of all the computer, network
above the globe. So, Internet is a network of networks, made by joining
computer networks together with telephone lines.
Characteristics of Internet:-
• Internet is Networks of Networks.
• global nature;
• interactivity;
• Complex network
• accessibility;
• Disorganized
• International Scope
• Dynamic
• Decentralized System
• Composed of billions of Files
• Widely used
Components of Internet:-
• Components of the Internet include- DSL Modem, DSL filter, NAT router and
Firewall, Firewall of computer and Internet Connection Sharing. DSL Modem:
This modem converts the signals from digital to analog used for telephone lines.
• Client PC
• Server Computer
• Network
• Nodes (Collection of Computers)
• Bandwidth
• TCP/IP(Transmission Control Protocol / Internet Protocol)

Architecture of Internet:-
• The architecture of the Internet is ever-changing due to continuous changes in
the technologies as well as the nature of the service provided. The heterogeneity
and vastness of the Internet make it difficult to describe every aspect of its
architecture.
• The overall architecture can be described in three levels −
• Backbone ISP (Internet Service Provider)
• Regional ISPs
• Clients
• The following diagram shows the three levels −

• Backbone ISP (Internet Service Provider) − Backbone ISPs are large

international backbone networks. They are equipped with thousands of routers
and store enormous amounts of information in data centers, connected through
 high bandwidth fiber optic links. Everyone needs to connect with a backbone ISP
to access the entire Internet.
• There are different ways through which a client can connect to the ISP. A
commonly used way is DSL (Digital Subscriber Line) which reuses the telephone
connection of the user for transmission of digital data. The user uses a dial-up
connection instead of the telephone call. Connectivity is also done by sending
signals over cable TV system that reuses unused cable TV channels for data
transmission.
• For high-speed Internet access, the connectivity can be done through FTTH
(Fiber to the Home), that uses optical fibers for transmitting data. Nowadays,
most Internet access is done through the wireless connection to mobile phones
from fixed subscribers, who transmit data within their coverage area.

Types of Internet  Connections:

(i) Dial-up Connection

(ii) Leased Connection

(iii) DSL (Digital Subscriber Line or Dedicated Service Line)

(iv) Cable Modem Connection

(v) ISDN ((Integrated Services Digital Network)

(a) Dial-up This is the most common basic type of connection available from ISPs (Internet
Server Providers). In Dial-up connection, you use your computer, dial a phone number
(provider by ISP) to get connected to server at Providers end through which you access
Internet. It means you are not directly connected to Internet; you access the Internet through
an Internet Service Provider.
(b) ISDN (Integrated Services Digital Network)

The process of connecting to server to access Internet is almost same as Dial-up, but it offers
connectivity through the use of Introduction to Internet :: 245  digital phone lines instead of
Analog. It offers Internet connectivity at speeds of up to 128 Kbps, allows the user to receive
or make calls simultaneously on the same line. ISDN comes through a regular telephone wire
from the telephone pole on the street. The line combines two 64 Kbps channels to offer 128
Kbps bandwidth broken into three bands: One band for the ringing signal of your phone, one
band for your telephone   conversation, and one band  for data transfer.

(c) Leased Line Connection (Direct Internet Access)

A “permanent connection” between a computer system (single  CPU or LAN, and the
Internet). It is generally used by larger institutions, corporate and government agencies. It
involves establishing your own Internet gateway (connection) and payment  to have a direct
full time line with the network. Your computers, in effect, become part of the Net. The main
advantage of this connection is that: it is on line – 24 hrs a day, seven days a week, (24×7)
and provides faster access. Dedicated links are established through an internet service
provider who places a computer-controlled router (message
director) at your site. A router is used to connect your local network to the Internet, allow all
the members of network to have complete access to Internet.

(d) DSL (Digital Subscriber Line or Dedicated Service Line)

Broadband Connection DSL, an “always-on’ data connection is becoming widely available

these days. It can provide an excellent Internet connection. It connects your home or office to
the Internet through the same telephone wire that comes from telephone pole on the street.
Like ISDN, with DSL, user can make and receive telephone calls while connected to the
Internet. The difference between DSL and dialup / ISDN is that a DSL Internet connection
uses a high-speed dedicated circuit filtering out standard phone calls and Internet signals

Computer Network
The term “computer network” is used to mean an interconnected collection of autonomous
computers. Two computers are said to be interconnected if they are able to exchange
information. The connection needs not to be via a copper wire; fiber optics, microwaves and
communication satellite can also be used. By requiring the computers to be autonomous, we
wish to exclude from our definition system in which there is a clear master/slave relation. The
fundamental purpose of a computer network is the exchange of data and information between
two parties (devices).
 Simple Network
The above diagram shows a LAN inside an organization - a small office LAN, for example -
connected to the outside world of the public internet. Between private and public are the two
gateway devices: the protective firewall and the ADSL (Asymmetric Digital Subscribe Line)
router. The outward facing (ADSL) interface of the router will have a public IP address and
the inward facing (Ethernet) interface of the firewall will have a private LAN address. ADSL
is the Link layer protocol that runs on the telephone wires from your home. It connects you to
the big routers and servers maintained by your Internet Service Provider (ISP).
Network Devices:
Computer network devices also known as communication devices and they comprise a data
communication network. These devices
are routers, switches, hubs, LAN cards, gateway, modems, hardware firewall, CSU/DSU,
ISDN terminals and transceivers. In an Ethernet or WAN network, the data communication
cannot be performed without these devices

LAN Cards
LAN cards or network adapters are the building blocks of a computer network. No computer
can communicate without a properly installed and configured LAN card. Every LAN card is
provided with a unique IP address, subnet mask, gateway and DNS (if applicable). An
UTP/STP cable connects a computer with the hub or switch. Both ends of the cable have the
RJ-45 connectors one is inserted into the LAN card and one in the hub/switch. LAN cards
are inserted into the expansion slots inside the computer.  Different
LAN cards support different speed from 10/100 to 10/1000.

Hubs
The central connecting device in a computer network is known as a hub. There are two types
of a hub i.e. active hub and passive hub. Every computer is directly connected with the hub.
When data packets arrive at hub, it broadcast them to all the LAN cards in a network and the
destined recipient picks them and all other computers discard the data packets. Hub has five,
eight, sixteen, thirtytwo and more ports and one port is known as uplink port, which is used to
connect with the next hub.
Switches
A switch is an intelligent device that maps the IP address with the MAC address of the LAN
card. Unlike the hubs, a switch does not broadcast the data to all the computers, it sends the
data packets only to the destined computer. These are used in the LAN, MAN and WAN. In
an Ethernet network, computers are directly connected with the switch via twisted pair
cables. In a network, switches use the three methods to transmit the data i.e. store and
forward, cut through and fragment free.

Routers
A router is a communication device that is used to connect two logically and physically
different networks, two LANs, two WANs and a LAN with WAN. The main function of the
router is to sorting and the distribution of the data packets to their destinations based on their
IP addresses. Routers provides the connectivity between the enterprise businesses, ISPs and
in the internet infrastructure, router is a main
device.  Cisco routers are widely used in the world.  Every router has routing software, which 
is known as IOS. Router operates
at the network layer of the OSI model.  Router does not broadcast the data packets.
Modems
A modem is a communication device that is used to provide the connectivity with the
internet. Modem works in two ways i.e. modulation and demodulation. It converts the digital
data into the analog and analog to digital.
Modem comes in two shapes: Internal Modem (which is a card, installed in a slot, inside the
computer), and External Modem (which is a hardware device, found outside the case of
computer).

a. Internal modems
Internal modems are in the form of circuit boards, fitted in expansion slots of the
motherboard. An internal modem is a device installed inside desktop or laptop computer,
allowing the computer to communicate over a network with other connected computers.
There are two types of internal modems: dial-up and Wife (wireless). Dial-up operates over a
telephone line and requires a network
access phone number and logon ID to make a connection. WIFI connect wirelessly and
without identification in certain cases.
b. External modems
External modems are enclosed in separate cases and not inside the system units. The modem
is connected to the computer and telephone line by means of two separate cables, as shown in
figure.
Why We Need Computer Network:
Computer networks help users on the network to share the resources and in communication.
some of the popular application emails, online news papers, blogs, chat and the other services
offered by the internet? The following are the important benefits of a computer network.

File sharing: Networking of computers helps the users to share data files. User can sharing
any information via networks.
Hardware sharing: Users can share devices such as printers, scanners, CD-ROM drives,
hard drives etc.
Application sharing: Applications can be shared over the network, and this allows
implementing client/server applications
User communication: Networks allow users to communicate/ exchange using e-mail,
newsgroups, and video conferencing etc.
Network gaming: Lot of games are available, which are supports multi-users.
Benefits of an office network: An office network enables a host of other benefits: Storing
data on one central networked server frees up local storage space on individual computers. It
also makes backups of your company data easier and simpler as long as everyone is storing
their data to the storage server, you have one back up machine. A network also makes
printing much less complicated
because you don’t have to purchase extra printers and connect one to each computer. Just
connect your printer to the network, and all machines will be able to print to it.

Protocol Architecture
In a computer network, there must be a connection between the two computers, terminals
and/or other data processing devices to exchange data, information or files. For
communication or exchanging data items, the typical tasks to be performed include the
following:
(a) The source system must either activate the direct data communication path or inform the
communication network of the identity of the desired destination system.
(b) The source system must ascertain that the destination system is prepared to receive data.
(c) The file transfer application on the source system must ascertain that the file management
program on the destination system is prepared to accept and store the file for this particular
user.
(d) If the file formats used on the two systems are incompatible, one or the other system must
perform a format translation function.
 Client- Server Communication Structure
Types of Network
One way to categorize the different types of computer network designs is by their scope or
scale. For historical reasons, the networking industry refers to nearly every type of design as
some kind of area network. Common examples of area network types are:
(i) Local Area Network (LAN)
(ii) Wide Area Network (WAN)
(iii) Metropolitan Area Network (MAN)
1. Local Area Network (LAN):
LAN is mostly privately owned and links the devices in a single office building or campus. It
can be as simple as two PCs and a printer in a person’s home office but also can be extended
throughout a company that includes audio and video peripherals. LAN is limited to a few
kilometers. Most of the time, one of the PCs will be allocated with a large capacity disk drive
that acts as the server to the client. This allows software can be shared by the whole group
when the software installed in this central server. The size of the LAN may be determined by
licensing restrictions on the number of users per copy of software or restrictions on the
number of users licensed to access the OS. LAN can be distinguished from other types of
networks by their transmission media and topology and usually use one type of transmission
medium. The most common topologies are bus, ring and star.
 Local Area Network
Advantages
Each application needs only be installed once and installed applications on the file
server can be shared to all workstations.
Peripheral devices can be networked and shared by any workstation which minimizes
the number of peripheral devices required.
Software management is easier on a LAN.
Network security can be established by restricting the network users to have access to
certain files and applications.
Centralized backups which allow the data backup done over a network can be centrally
managed and scheduled.
Disadvantages
Some sites will cause the cabling work difficult to be done and also costly especially if
large distances are involved.
Require additional maintenance or additional system administrator as the system grows.
Area of coverage is limited. If the central server experiences failure, other networked
users may not be able to run the application programs.
Network failure can causes data loss to the networked user.
2. Wide Area Network (WAN):
A WAN is a geographically-dispersed collection of LANs. A network device called a router
connects LANs to a WAN. In IP networking, the router maintains both a LAN address and a
WAN address. A wide area network (WAN) provides long-distance transmission of data,
image, audio, and video information over large geographic areas that may comprise a
country, a continent, or even the whole world. An example of simple WAN is a dial-up line
that connects a home computer to the Internet is refer as point-to-point
WAN, whereas a complex WAN such as the backbones that connect the Internet is refer as
switched WAN.
The differences between switched WAN and point-to-point WAN is switched WAN connects
to the end systems that usually involves of a router that connects to another LAN or WAN
whereas point-to-point WAN is just a line leased from a telephone or cable TV provider that
connects a home PC or a small LAN to an ISP. Example of a switched WAN is X.25 which is
being gradually replaced by a high-speed and more efficient network called Frame Relay.
Another example of a switched WAN is the asynchronous transfer mode
(ATM) network (network with fixed-size data unit packets called cells).

Wide Area Network

Advantages
Large geographical area coverage.
Disadvantages
Expensive.
Complicated setup.
helpless to hackers.
3. Metropolitan Area Network (MAN):
MAN is a network size between a LAN and a WAN which usually covers the area inside a
town or a city. A MAN is typically owned and operated by a single entity such as a
government body or large corporation. This network designed for those that need high-speed
connectivity, normally to the Internet, and have endpoints spread over a city or part of city.
Common examples for MAN is cable TV network that originally was designed for cable TV
but now also can be used for high-speed data connection to the Internet. Another
example will be the telephone company network that can provide a high-speed DSL line to
the customer.