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Ecommerce
Ecommerce or electronic commerce, a subset of ebusiness, is the purchasing, selling, and
exchanging of goods and services over computer networks (such as the Internet) through
which transactions or terms of sale are performed electronically.
Contrary to popular belief, ecommerce is not just on the Web.
Types of Ecommerce
Ecommerce can be broken into four main categories: B2B, B2C, C2B, and C2C.
1. B2B (Business-to-Business)
Companies doing business with each other such as manufacturers selling to
distributors and wholesalers selling to retailers.
2. B2C (Business-to-Consumer)
typically through catalogues utilizing shopping cart software.
3. C2B (Consumer-to-Business)
A consumer posts his project with a set budget online and companies review the
consumer's requirements and bid on the project. The consumer reviews the bids and
selects the company that will complete the project. This is aka e-lancing.
4. C2C (Consumer-to-Consumer)
There are many sites offering free classifieds, auctions, and forums where individuals
can buy and sell thanks to online payment systems. E.g. ebay
NOTE –
• Companies using internal networks to offer their employees products and services
online are engaging in B2E (Business-to-Employee) ecommerce.
• G2G (Government-to-Government), G2E (Government-to-Employee), G2B
(Government-to-Business), B2G (Business-to-Government), G2C (Government-to-
Citizen), C2G (Citizen-to-Government) are other forms of ecommerce that involve
transactions with the government--from procurement to filing taxes to business
registrations to renewing licenses.
2. The cost of installing and maintaining a website is much cheaper than owning a
physical store.
4. The cost of advertising is cheaper and provides access to global market at low cost.
The information super highway may be defined as a high capacity, electronic pipeline to a
consumer or business premise that is capable of simultaneously supporting a large number
of e-commerce applications and providing interactive connectivity between users and
services.
The I-way has emerged as the basic network infrastructure for all types of e-commerce
activities due to its capability to provide integrate voice, data and video services.
2. Cable TV based
The cable TV network provides a popular media for pushing high speed data to
homes.
3. Wireless based
The wireless operators are typically radio. The rapid growth in technology has
impacted the wireless industry in a number of ways:
a. Apart from the voice calls, the cellular technology today has also
facilitated short messaging services (SMS) using alphanumeric display and
the multimedia services.
b. Internet connectivity using the cellular networks has been made possible.
c. The cellular networks using the analog technology are now upgrading to
digital networks to provide greater capacity at lower costs as well as
increase the quality and functionality of the cellular network.
d. Applications have been developed to facilitate mobile workers to
exchange messages and data from their offices while on the road.
4. The internet
The internet forms a well-known component of the global information
distribution network. It targets a wide range of e-commerce applications such as
video on demand, home shopping, e-mail, edi, information publishing,
information retrieval, video conferencing and many more.
All the components of the I-way together provide a network infrastructure for the e-
commerce activities. This requires the use of common standards and installing gateways
between various networks. A final requirement is the hardware and software to move huge
amounts of data effortlessly over the complex network.
E-Payment System –
E-payment systems are central to online business process as companies look for ways to
serve customers faster and at lower cost. Emerging innovations in the payment for goods
and services in ecommerce promise to offer a wide range of new business opportunities.
E-payment systems and e-commerce are highly linked given that online consumers must
pay for products and services. Clearly, payment is an integral part of the mercantile process
and prompt payment is crucial. If the claims and debits of the various participants
(consumers, companies and banks) are not balanced because of payment delay, then the
entire business chain is disrupted. Hence, an important aspect of e-commerce is prompt and
secure payment, clearing, and settlement of credit or debit claims.
• There are many ways that exist for implementing an e-cash system, all must
incorporate a few common features.
• E-cash is based on cryptographic systems called "digital signatures”.
• This method involves a pair of numeric keys: one for locking (encoding) and the other
for unlocking (decoding)
• E-cash must have the following four properties –
o Monetary value
o Inter-operability (i.e. ability of a system to work with or use the parts or
equipment of another system)
o Retrievability
o Security
E-cash Storage –
Two methods –
1. Online
a. Individual does not have possession personally of e-cash
b. Trusted third party, e.g., e-banking, bank holds customers' cash accounts
2. Offline
a. Customer holds cash on smart card or electronic wallet
b. Fraud and double spending require tamper-proof encryption
The purchase of e-cash from an online currency server (or bank) involves two steps:
o Establishment of an account
o Maintaining enough money in the account to bank the purchase.
Once the tokens are purchased, the e-cash software on the customer's PC stores digital
money undersigned by a bank.
The users can spend the digital money at any shop accepting e-cash, without having to open
an account there or having to transmit credit card numbers.
As soon as the customer wants to make a payment, the software collects the necessary
amount from the stored tokens.
Electronic Checks –
It is another form of electronic tokens. They are an alternative to paper checks, designed to
process payments digitally.
Buyers must register with third-party account server before they are able to write electronic
checks. The account server acts as a billing service.
eChecks typically take between 24 and 48 hours to verify and between 3-6 business days for
funds to be withdrawn and deposited into the respective accounts. The reason eChecks are
not processed instantaneously is that they use a third-party system (ACH) to initiate the EFT.
ACH conducts these transfers in batches, rather than one by one, so it can take a few days
to actually see money move.
E-banking
Electronic banking can be defined as the use of electronic delivery channels for banking
products and services.
It is a subset of electronic finance.
The most important electronic delivery channels are the Internet, wireless communication
networks, automatic teller machines (ATMs), and telephone banking.
The term transactional e-banking is also used to distinguish the use of banking services from
the mere provision of information
Electronic banking services are offered in two main ways:
1. Combination of traditional and electronic delivery channels
2. Banks offering their products and services predominantly through electronic
distribution channels without having a branch network are called “virtual banks”,
“branchless” or “Internet only” banks.
Advantages –
1. Reduction in inconvenience
2. Reduced time taken to do an operation
3. Reduced per transaction cost
4. Enhanced customer service
5. Raised long term returns by providing
anytime anywhere banking to customers
Concerns –
1. Govt access
2. Fraud
3. Lack of info security
Types of Internet banking
1. Web-based banking through internet
a) Informational Websites –
i. Such services are known as first level of e-banking.
ii. Through such services, bank provides marketing information
regarding banking products and services on a standalone server.
iii. It has very low degree of risk as there is no connection between
server and bank.
b) Communicative Websites –
i. In this system there is very less scope of communication between
banking system and e-banking users.
ii. This communication is only to the extent of e-mail, account
balance enquiry, loan application or static file updates.
iii. This system is not having fund transfer facility.
c) Advanced Transactional Websites –
i. This form of e-banking enables e-banking users to transfer their
fund electronically, make payment of utility bills and conduct other
banking transaction online.
2. Dial-up banking
i. consumer uses a modem to dial up to a bank's server to access bank
account.
ii. There is a special type of dial-up banking operated by private banks
between a banking institution and its corporate clients, known as
Extranet.
Debit Card
Debit card, like credit card, is a small plastic card with a unique number mapped with the
bank account number. The major difference between a debit card and a credit card is that in
case of payment through debit card, the amount gets deducted from the card's bank account
immediately and there should be sufficient balance in the bank account for the transaction
to get completed; whereas in case of a credit card transaction, there is no such compulsion.
Smart Card
Smart card is again similar to a credit card or a debit card in appearance, but it has a small
microprocessor chip embedded in it. It has the capacity to store a customer’s work-related
and/or personal information. Smart cards are also used to store money and the amount gets
deducted after every transaction.
Smart cards can only be accessed using a PIN that every customer is assigned with. Smart
cards are secure, as they store information in encrypted format and are less
expensive/provides faster processing. Mondex and Visa Cash cards are examples of smart
cards.
E-Money
E-Money transactions refer to situation where payment is done over the network and the
amount gets transferred from one financial body to another financial body without any
involvement of a middleman. E-money transactions are faster, convenient, and saves a lot
of time.
Online payments done via credit cards, debit cards, or smart cards are examples of e-money
transactions. Another popular example is e-cash. In case of e-cash, both customer and
merchant have to sign up with the bank or company issuing e-cash.
UNIT5 Intra-organizational Ecommerce
We define internal commerce as using methods and pertinent technologies for supporting
internal business processes between individuals, departments, and collaborating
organizations.
It is of two types – Public and Private Ecommerce
The term Information System (IS) refers to a system of people, data records and activities
that process the data and information in an organization, and it includes the organization's
manual and automated processes.
Information architecture (IA) is the art of expressing a model or concept of information
used in activities that require explicit details of complex systems.
Cross-functional management (CFM) manages business processes across the traditional
boundaries of the functional areas.
Global Markets
It is marketing on a worldwide scale reconciling or taking commercial advantage of global
operational differences, similarities and opportunities in order to meet global objectives.
When a company becomes a global marketer, it views the world as one market and creates
products that will only require weeks to fit into any regional marketplace. Marketing decisions
are made by consulting with marketers in all the countries that will be affected. The goal is to
sell the same thing the same way everywhere.
The Four elements of global marketing of marketing –
1. Product: create a single product and only have to tweak elements for different
markets.
2. Price: Price will always vary from market to market.
3. Placement: How the product is distributed is also a country-by-country decision
influenced by how the competition is being offered to the target market.
4. Promotion: Integrated marketing is the goal.
Advantages –
1) Scale in production and distribution
2) Power and scope
3) Consistency in brand image
4) Ability to leverage good ideas quickly and efficiently
5) Uniformity of marketing practices
6) Helps to establish relationships outside of the "political arena“
Disadvantages –
1) Differences in consumer needs, wants, and usage patterns for products
2) Differences in consumer response to marketing mix elements.
3) Differences in brand and product development and the competitive environment.
4) Differences in administrative procedures
5) Differences in product placement.
Market Research –
It involves the identification, collection, analysis, and dissemination of information. It is
conducted to assist management in decision making.
Characteristics –
1) It is systematic and objective
2) Methodologically sound, well documented, and, as much as possible, planned in
advance.
3) Uses the scientific method in that data are collected and analysed to test prior
notions or hypotheses.
Organisational Structure
It is a mostly hierarchical concept of subordination of entities that collaborate and contribute
to serve one common aim.
The structure of an organization is usually set up in one of a variety of styles, dependent on
their objectives and ambience. It allows the expressed allocation of responsibilities for
different functions and processes to different entities.
Common success criteria for organizational structures are –
1) Decentralized reporting
2) Flat hierarchy
3) High transient speed
4) High transparency
Mass customization
Mass customization, in marketing, manufacturing, and management, is the use of flexible
computer-aided manufacturing systems to produce custom output. It is the new frontier in
business competition for both manufacturing and service industries.
Four types of mass customization –
1. Collaborative customization - Firms talk to individual customers to determine the
precise product offering that best serves the customer's needs.
2. Adaptive customization - Firms produce a standardized product, but this product is
customizable in the hands of the end-user.
3. Transparent customization - Firms provide individual customers with unique
products, without explicitly telling them that the products are customized.
4. Cosmetic customization - Firms produce a standardized physical product, but
market it to different customers in unique ways.
1. Physical Flows - it involves the transformation, movement, and storage of goods and
materials.
2. Information Flows – it allows the various supply chain partners to coordinate their
long-term plans, and to control the day-to-day flow of goods and materials up and
down the supply chain.
Management Components –
Reverse Supply Chain - Reverse logistics is the process of planning, implementing and
controlling the efficient, effective inbound flow and storage of secondary goods and related
information opposite to the traditional supply chain direction for the purpose of recovering
Functions –
1. Management of supplies
2. Management of raw material
3. Transport management
4. Cost management
5. Inventory management
6. Distributing and Return management
7. Customer Satisfaction
Failing to understand the importance of CRM for your e-commerce site could result in the
loss of a multitude of benefits, including but not limited to:
• Mobile communication
• Mobile hardware
• Mobile software
Following is a list of some significant fields in which mobile computing is generally applied:
The WAP standard describes the following protocol stack for interoperability of WAP devices,
equipment, software and other technologies, including:
• Wireless Transaction Protocol (WTP), which manages transaction support for requests and
responses to servers.
• Wireless Transport Layer Security (WTLS) for managing privacy, authentication and data
integrity through public key cryptography.
• Wireless Datagram Protocol (WDP), which is an adaptation layer for consistent data
formats in the other layers, and it defines how data flows to the sender, from the receiver.
The application programs using the client-server model should follow the given below
strategies:
Web Security –
E-commerce security is the guidelines that ensure safe transaction through the internet. It
consists of protocols that safeguard people who engage in online selling and buying of goods
and services.
Network Security
Network Security protects your network and data from breaches, intrusions and other
threats.
Network Security involves access control, virus and antivirus software, application security,
network analytics, types of network-related security (endpoint, web, wireless), firewalls,
VPN encryption and more.
• Email Security
Final Exam –
2.5marks 4 out of 6
Technical Disadvantages of Ecomm
Ecomm vs traditional comms
Features of Ecomm
Advantages to society of Ecomm
Types of Business Model
5marks 4 out of 6
EDI and its components
Ways and means of Website Security
How to handle Abandoned Shopping Cart
Virtual Auction vs Reverse Auction
SCM role in B2B
B2B story example