Syllabus [Link]. Semester - IV E-Commerce Unit-I: Introduction: Introduction to E Commerce and definition, E-Commerce base activities, Goals of E-Commerce, Technical Components of E-Commerce, Functions, ‘Advantages and disadvantages of E-Commerce, Scope of E-commerce, Electronic Commerce applications, Framework of E-Commerce, Supply chain management, Electronic Commerce and Electronic Business Unit2:Planning Online Business: Nature and dynamics of the internet, Electronic Business Models: B2B, B2C, ©2C, C2B, Website Design: Website as market place. E-Commerce, pure online vs brick and click business: assessing requirement for an online business designing, developing and deploying the system. Unit-3 Technology for Online Business: Internet and its evolution, IT Infrastructures, Middleware, Domain names, Contents: Text and Integrating E Business applications, Components of Internet technology structure, Development of Internet, Extranet and their difference. ! Unit-4: Operations of E-Commerce Online-Payment mechanism, Electronic payment system, payment gateways, visitors to website, tools for promoting website, risk management options for e-payment systems Unit-5: Security and Legal Aspects of E-Commerce Threats in E-Commere, Security of Clients and service-Provider, Cyber laws -Relevant provisions of Information Technology Act 2000, offences, secure | electronic records and digital signature penalties and adjodicationintroduction to E-commerce Dr. Pooja Jain, Dr. Kamaldeep Kaur, & Ms Mansi Bansal « Introduction * Functions of E-Commerce » E-Commerce And Related + Nature And Scope Of E- Concepts Commerce + E-Commerce Based Activities * Applications of E-Commere * Goals of Ecommerce + Framework of E-Commerce 1.1 Introduction Electronic commerce (e-commerce) is a growing aspect of the business community. The internet has led to the birth and evolution of e-commerce. Simply defined, e-commerce is the use of internet to conduct business. E- commerce has now become a key component of many organizations in the daily running of their trade. Therefore, it is important to understand what e-commerce teally is, how it is different from e-business and what is driving e-commerce tevolution. The present chapter is an attempt to answer the above questions. In addition, it also explains the nature, related concepts, advantages, disadvantages and different models of e-commerce, Meaning Electronic commerce or e-commerce is the act of buying and selling of goods or Services over the internet. It means conducting any transaction involving the transfer of ownership or rights to use goods and services electronically. E- commerce allows consumers to electronically exchange goods and services with Tobarriers of time or distance.mation, maintaining business relationships ing business infor ines pues by means of telecommunications network commerceis a usiness transactions and conducting bi Commerce Figure 1.1: e-commerce (commerce conducted ‘lectroniealy via intemet) Figure 1.1 shows that e-commerce is a combination of prefix 'e' and the term ‘commerce, where 'e' stands for electronic and ‘commerce’ includes all those activities which facilitate the exchange of goods and services between buyer ang seller, Thus, e-commerce is a term for any type of business or commercial transaction that involves the transfer of goods, services or information between the buyer and seller electronically. It covers a range of businesses, from consumer based retail sites, auction, music sites, to business exchanges and trading of goods and services between corporations. Some of the important and popular definitions of e-commerce are given below: “E-commerce is the use of electronic transmission media (telecommunication) to engage in the exchange of products and services requiring transportation, either physically or digitally, from location to location.” -M. Greenstein and T. M. Feinman “E-commerce describes the process of buying and selling (or exchanging) of products, services and information via computer networks including the internet” -E. Turban and others “E-commerce can be defined as the technology mediated exchanges between the Parties (individuals, organizations or both) as well as the electronic based intra and inter organizational activities that facilitate such exchanges.” . - J. F. Rayport and B. J. Gaworski Itis clear from the above definitions that e-commerce is characterized by a wide range of business operations and transactions including: ° B2CandB2B transactions (discussed laterin this chapter) EDI (Electronic Data Interchange) Electronic Payment E-marketing and online services Customer Relationship Management The wide range of business activities related to e-commerce brought about 4 2cial om nd e of other new terms and phrases to describe ranthess sectors. Some of these foc Heeeretl Since transactions go through the interna commerce (Internet commerce) and even Web-commerce have bees suggested but gre now very rarely used. Other terms that are used for orcline x” jpeludee-tailing, virlual-stores or cyber stores, A collec Jometimesreferted to a virtual mall’ or 'cybermal the internet phenomenon in us on purchasing from on-line stores on the t and the web, the terms I- tail selling tion of these virtual stores is E-commerce is often thought simply to refer to bu internet. But e-commerce involves much more than electronically. mediated financial transactions between organizations and customers, Kalakota and Whinston (1997) refer to a range of different perspectives for e-commerce: + A communications perspective - The delivery services or payment by electronic means ying and selling using the of information, products, + A business process perspective - The application of technology towards theautomation of business transactions and workflows, + A service perspective ~ Enabling cost cutting at the same time increasing thespeed and quality of service delivery. + An interface perspective- Enabling the information and transaction exchanges (B2B, B2C, C2Cetc.) * An online perspective - The buying and selling of products and information online. + As a market, e-commerce is a global network bringing together customers, suppliers, competitors and bankers under one roof. 12E-commerce and Related Concepts Inthis section, we will discuss some ‘concepts and terms related to e-commerce. Traditional Commerce vs. E-Commerce Nowadays, 'e' is gaining momentum and most of the things (if not everything) are getting digitally enabled. This is happening in the world of commerce and business also. Thus, it becomes very important to clearly draw the line between traditional (physical) commerce and commerce integrated with the 'e' factor. In traditional commerce, transactions take place via contact between humans “ually in a physical outlet, For example, customer visiting mobile store Physically and buying a mobile phone from there. But,inane-commercesystem, rsactions take place via electronic means. Example, the customer ae a GperMobile store (website), orders it and gets it at his location after making “nline payment, E-commerce is changing our economy and affecting all oe & business. Today no company can afford to ignore e-commerce ne “plains the difference between traditional commerce and e-commere 3Table 1.1 Ss BASIS, TRADITIONAL COMMERCE. E-COMMERCE Interaction Direct interaction between buyer and seller is present in traditional commerce. Interaction between buyer and seller is indirect through internet or web. Suitability Tris suitable for the standard and physical products. It is suitable for the customized products, low value products, intangible products and digital products. Identity Verification In traditional commerce, customers can verify the identity of the seller and their physical location. In case of e-commerce, customer cannot identify the seller and his location Transaction processing Transactions are processed manually Business transactions are processed in an automated manner. Sope “The scope of business is generally | The scope of business is limited to particular region. worldwide across the globe. The level of competition is The level of competition is Level of competition | enerally low. = generally high because of the A high level of competition. Catalogue In traditional commerce, physical | In e-commerce, dynamic and catalogue system is followed. flexible digital catalogues are there which can be directly linked to the ordering process. Scary In traditional commerce, mass _—_| With e-commerce, customers marketing (one-to-many selling) | can receive a personalized is often used to convey a generic _| message according to their marketing message. profiles and buying behaviour. Methods of pricing Mosily fixed pricing system is | Different pricing models followed in traditional commerce. | such as dynamic pricing (by means of online auction) and customized pricing (e.g. Priceline) are follaved in &- commerce Organization structure | Taditional commerce has The internet, together with hierarchical organization other information structure, technologies, creates networked organizations, which are more effective and - productive. Paper work and cost Itinvolves a lot of paper work as_| The data is stored in idGeal the buyer and seller are required to make entries on papers with every transaction and thus the electronic form which is easy to share across the y organization without com it also very high in ose human beings, raditional commerce. thus it is cost-effective.ea E-business E-business (electronic business) is the conduct of business processes on the internet. These electronic business processes include buying and selling oducts, supplies, services, servicing customers, processing payments, Prnaging production control, collaborating with business partners, sharing information, running automated employee services and recruiting. E-business implies the use of web based technology to buy and sell goods and services, create value and strengthen relationship with the customers, suppliers, business partners, shareholders and employees. E-business comprises of a range of functions and services, ranging from the development of intranets and extranet to e-service. Today, as major corporations continuously rethink their businesses in terms of the internet, specifically its availability, wide reach and ever-changing capabilities, they are conducting e-business to buy parts and supplies from other companies, collaborate on sales promotions, and conductjoint research. E-business includes all processes that a business organization conducts over a computer mediated network. So, it includes production focussed processes, customer focussed processes and internal management focussed processes. * Production focussed processes: These include procurement, ordering, automated stock replenishment, payment processing, production control processes and other electronic links with the suppliers. * Customer focussed processes: These include promotional and marketing efforts, electronic selling, processing of customer's orders and payments, and customer management and support * Internal management focussed processes: These include automated employee services, training, information sharing, video conferencing, recruitmentete. E-commerce vs. E-business In practice, e-commerce and e-business are often used interchangeably. Just as the term business is the broader than e-commerce, e-business is a more elaborate term and comprises various business transactions and functions conducted electronically including the popular gamut of transactions called e-commerce. E-commerce E-business Figure 1.2Table 1.2: E-commerce vs. E-business E-commerce Ailelectronically mediated information — exchanges between an organization and its external stakeholders is called e-commerce E-business All electronically mediated ma —| exchanges, both within an organization and with external stakeholders supporting a range of business processes is called e-business E-commerce is a narrower term and restricted to buying and selling and thus, it is a subset of e-business. E-commerce is use of electronic transmission medium that caters tobuying and selling of products and services. E-business is a broader term that involves market surveying, supply chain and logistics ‘management and thus, itis a superset of e- commerce. 7 ad E-business includes buying and selling of goods and servicesand also servicing customers and collaborating with the business partners through electronic means. ‘Bcommerce involves commercial transactions done over internet. Thus, those activities which essentially involve monetary transactions are termed as “e-commerce” E-business is conduct of business processes on the internet, In addition it includes activities like procurement of raw materials or goods, customer education, looking for suppliers ete. Ecommerce covers outward facing processes that touch customers, suppliers and external partners. E-business covers internal processes such as production, inventory management, product development, risk management, finance etc. E-commerce involves the mandatory use of _ internet. | Example- Buying ofa pen drive from ‘[Link] is considered Ecommerce. E-business involves the use of internet, intranet or extranet. Example- Using of internet by Dell, Samsung for maintaining business processes like Online customer support, email marketing, supply chain management. In fact, there is no one definitive meaning of e-commerce or e-business that is universally established. The different terms are used to illustrate different Perspectives and emphases of different people in different organisations and business sectors. Because of this trend, it is necessary when undertaking any electronic commerce, or electronic business, to clearly define any term in the contextand environment in which itis being used. Electronic Data Interchange (EDI) c EDI is a set of standards for structuring information that is to be electronically exchanged within and between business organisation, government entities and other groups. EDI is the computer to computer exchange of business data in standard formats, It is considered to be a technical representation of business conversation between two entities. Thus, EDI can be defined as “the exchange of documents in standardised electronic form between organizations in an automated manner directly from a computer application in one organisation to anapplication inanother.” EDI has become an integral part of most of the industries including retail, insurance, education, entertainment, governmentete. Ithelps in transmitting documents such as purchase orders, invoices, shipping notices etc. between trading partners, electronically. 6—— dards are developed and maintained by ANSI ASC X12 (American nal Standard Institute Abbreviation Standard Committee X12). These ead ensure that EDI follows an established set of rules and methods to stan makeitaccessible to everyone ‘The EDIstan Working of EDI Every company Tuns its own system which may or may not be compatible with he system of the company with whom the data has to be interchanged. EDI af 5 an important role here. To exchange information using EDI, document ia be translated into a format that complies with an EDI standard. The sender creates the application file using their own business application system. The file js then translated into an EDI standard format and transmitted through a VAN (Value added network) or direct connection. The receiver takes the transaction setand translates the file from EDI standard format to a file that is usable by his ownbusiness application system, and like this cycle of EDI continues. Figure: 1.3 EDI Process Direct Business ep! ireniilesten Dl Business Application | {i} | translation = translation Application system system a System System bis Advantages nt * Reduced cost of communication between partners. nd * Reduced handling cost of sorting, distributing, organizing and searching ny documents. the Improved accuracy asa result of reduced errors. Improved business relationships asit simplifies business processes. Betterinventory management. ly ° ty Reduced paperwork. i * Effective information management: system. = Reduced processing cycle times. = x Improved customer service and customerrelations. as isadvantages ; * Too : many standards which keeps onchanging. il : a ‘expensive to implement. Prosasse changes in existing business set-up to accommodate automated - 'g Of business. documents.1.3 E-commerce Based Activities efiniti -c e is characteri Itis clear from the above definitions that e-commerce is char terized by a yay range of business operations and transactions including: ¢ B2Band B2C transactions + EDI (Electronic Data Interchange) * Electronic Payment * Onlinemarketing * CustomerRelationship Management B2B and B2C: B2B implies that seller as well as buyer is business entity, Bog covers large number of applications which enables business to form relationships with their distributors, resellers, suppliers etc. Some of the leadin activities in B2B e-commerce include electronics, shipping and warehousing motor vehicles, petrochemicals, paper, office products, food and agriculture. B2C is a model where a consumer visits the website, selects an item from the catalogue, orders it and an email is sent to business organization. After receiving the order, goods would be dispatched to the customer. (B2B and B2C modelsare discussed in detail in chapter?) EDI: EDI stands for Electronic Data Interchange. EDI is an electronic way of transferring business documents in an organization internally between its vatious departments or externally with suppliers, customers or any other subsidiaries. In EDI, paper documents are replaced with electronic documents like word documents, spreadsheets etc. Following are few important documents used in EDI - * Invoices * Purchase orders * Shipping Requests * Acknowledgement * Business Correspondence letters * Financial information|etters Electronic Payment; E-commerce sites use electronic payment where electronic Payment refers to paperless monetary transactions, Electronic payment has revolutionized the business Processing by reducing paper work, transaction costsand labour costs, Being user friendly and less time consuming thanmanca! Processing, it helps business organization to expand its market reach. Some 0 the popular modes of electronic ‘Payments are following. ¢ Credit CardDebit Card Smart Card + E-Money * Electronic Fund Transfer (EFT) These are discussed in detail in the laterchapters in this book. Online marketing: Online marketing is advertising and marketing the products orservices of a business over internet. Online marketing relies upon websites or emails to reach to the users and it is combined with e-commerce to facilitate the business transactions. In online marketing, one can promote the products and services via websites, blogs, email, social media, forums, and mobile apps. It includes online advertising, mobile advertising, content marketing, e-mail marketing, as well as web analytics for online marketing. Customer Relationship Management (CRM): Customer Relationship Management is a comprehensive strategy and process of acquiring, retaining, and partnering with selective customers to create superior value for the company and the customer. It involves the integration of marketing, sales, customer service, and the supply-chain functions of the organization to achieve greater efficiencies and effectiveness in delivering customer value. vay of ‘Thus, e-commerce involves a wide spectrum of activities and this wide range of en-ats business activities related to e-commerce brought about a range of other new other terms and phrases to describe the internet phenomenon in business sectors. ments Some of these focus on purchasing from on-line stores on the internet. Since ortant transactions go through the internet and the web, the terms L-commerce {internet commerce) and even Web-commerce have been suggested butare now (ey tarely used. Other terms that are used for on-line retail selling include e- tailing, virtual-stores or cyber stores. A collection of these virtual stores is sometimes referred toa 'virtual mall’ or 'cybermall', 14Goals Of E-commerce Ny Ecommerce is an emerging concept that describes the process of buying and selling or exchanging of Products, services and information via computer ork including the internet, E-commerce is amodern business methodology onic that addresses the needs of organization merchant and consumers to cut cost has while improving the uality of goods and services and increasing the speed of tion Service delivery. It consists of electronic retailing, electronic data interchange a andelectronic fund transfer, The main goals of e-commerce are: e of a. Reduction in costs >. Lower product cycle time © Attract more customersdd, Fastercustomer response e._ Improved service quality f, Globalreach Reduction incosts : Lower Global, rene reach cle time Pay j _ GOALS OF response Fig 1.4 Goals of E-Commerce a. Reduction in costs: E-commerce is the most cost effective method compared to traditional commerce method. The cost of creating, processing, distributing storing and retrieving paper-based information has decreased. This has led to the savings of cost. E-commerce aims at reduced inventories and overheads, E-commerce firms need not stock large inventory. This is based on collecting the customer order and then delivering through JIT (just-in-time) manufacturing. It also aims at lowering telecommunications costs. The internets much cheaper than value added networks (VANs) which were based on leasing telephone lines for the exclusive use of the organisation and its authorised partne It is also cheaper to send a fax or e-mail via the internet than direct dialling. b, _ Lower product cycle time: E-commerce aims at reducing cycle time between supplier, intermediaries and customers. With the reduction of cycle time, the customer can receive products ordered in a faster time. E-commer? can reduce this cycle time by eliminating the time taken to process betwee" supplier, intermediaries and customers, which means when a customer 8 placing an order, he or she directly deals with the supplier website, thus eliminating the processing time between the intermediaries and supplier. 10.‘Attract more customers: To both the consumers and business, tivity plays an important partas itis the key factor determining the whole s, E-commerce provides better connectivity for its potential customer as spective website can be accessed virtually from anywhere through the This way, more potential customers can get in touch with the nd thus, eliminating the limits of geographical location connec! busines their res] internet. ‘ f company's business a 4. __ Faster customer response : E-commerce is much more convenient as * tomers can browse through a whole directories of catalogues without any custo ompare prices between products, buying from another country and on ee ae can do it while at home or at work, without any necessity to we easingleinch from their chair. e Improved service quality: Through e-commerce, operating efficiency of the business firm will definitely improve, which in turn, strengthen the value and service given to customers and provide a competitive edge over competitors. These improvements may result in more effective performance. The direct benefit accrue to an organization practicing e-commerce are better quality, greater customer satisfaction, better decision making, low cost, high speed and eal time interaction. & Global reach: The market for a Web based business is not bounded by any geographical boundaries. This means that various restrictions existing in different geographical regions in traditional business environment is avoided in e-commerce, Goods can be sold in new markets, especially geographically remote ones. Single physical marketplace located ina geographical area has now become a borderless marketplace including national and international markets. E- commerce enables business firms to have access to people all around the world. In effect, all e-commerce businesses have become virtual multinational corporates. me 15 Functions of E-commerce Ecommerce is a composite of technologies process and business strategies that {ester the instant exchange of information within between organization. mmerce strengthens relationship with buyers make it easier to attract new Bene fmproves customer responsiveness and open new markets on @ technolo eCommerce is the application of various communication in ea Provide the automated exchange of business information with important fan, external customer, suppliers and financial institutions. The & tions of e-commerce are as follows: comme E-Commerce provides ways for faster, efficient reliable Seveloping coup ith customers and partners, This also helps people in a formation ang ees oh Mural areas, to enjoy and access products, services ‘othe other people which otherwise would not be so easily availa - 3 Adi eee ee eee eee asE ates all activities and services which i, t: E-col dj Se cess managers ation oO and processes particularly in the ad available 28 eas / video products, has Jed to the improvement in busines, mi f products etucts, ha of software an rocesses als0 ‘ ‘ ia at: E-Commerce offers Vario‘! ways to provide pre sales ang Servicemanage nce to the customers 17 provide better services to them, f ic services. For example, public cay post sales assistan: commerce also facilit make use of health se with doctors ornurses; fil ates delivery of publ rvices available over the ing tax return over the Transaction management: Using E-Commerce, orders for the products can be generated any time, any where without any human intervention. By this wa) a roductreduceat large and sales increases. I, internet for on-line consultation internet through the website. dependencies to buy aP! Inventory Management — Using e-Commerce, inventory management of tomated. Reports get generated instantly when required products becomes aut Product inventory mana} Advertising/ Marketing - E-comm« products and services of businesses. products / services igementbecomes very efficient and easy to maintain erce increases the reach of advertising of Ithelps in better marketing managementof Fig 1.5 Functions of E-Commerce cee grit etioal aimed at the delivery of information and/or documents to facilitate business transactions. e.g. E-mail Process ee covers the automation and improvements of business Processes e.g. networking two computers together Service applicati Siphon ans of technology to improve the quality of service +8, Federal express website to trace shipments and schedule Transaction Mi i lanage provid ili gement | Prov the ability-to buy/sell on the internet or er online services. e.g, [Link] Inventor i ryMangement | application of technology f i Stocks and overheads Advertis rtising/Marketing advertising of products and and conducting Marketing activiti keting activities using internet4.6 Nature and Scope of E-Commerce Nature of E-Commerce The unique features of e-commerce include the following (Figure 1.6) . Ubiquity . Global Reach . Universal Standards Richness . Interactivity . Information Density . Personalization NOOPYNE Figure: 1.6 Nature of E Commerce 1, Ubiquity: Internet technology is available everywhere, at work, at home, and elsewhere, via mobile device, anytime, As a result, e-commerce is available everywhere at all time. This feature provides the following advantages: * Marketplace is created or extended beyond traditional boundaries and removed froma geographic location. Shopping can take place anywhere. Reduced shopping costs. Customer convenience enhanced. 132. Global Reach: onli «Marketplace i 3, Universal Standards: Universal worl standard, namely internet stan boundaries. Ith F 7 equal to the size of the i size is roughly equ * The potential marie echnolOgy reaches beyond national he worl jon of tt ; Hotinefollowingadvantages: as the foll z enabled across & ® ret without modification. lly billions of consumers and millions of line populati ¥ tural and national boundaries + Commerc ; seamlessly and wil includes potential rldwide. businesses worldwi | Standards are the standards shared by the sand government use only one set of technology i inesse Se ‘dard to use e-commerce features. It has the following benefits: Lowermarketentry costs. Reduced product search cost by creating a single, one world market place, where price discovery becomes simpler, faster and more accurate. Ease in finding the suppliers, prices, and delivery terms of a specific productanywherein the world 4. Richness: Richness is related to the complexity and content of a message. Through e-commerce, video, audio and text messages are possible. It provides thefol lowing advantages: Itfacilitates advertising and branding. The internet and web can deliver to an audience of millions rich marketing messages in a way not possible with traditional technologies likeradio, TV and magazines. 5. Interactivity: E-commerce allows two way communications between merchant and consumers. The Web which was not afforded throu; magazines, radio and television, offers a two way communication process igh traditional mediums such as newspapers, . The advantages of this feature are The Web allows consumers presented, inwhat order, to control what information will be and for how long. efficiently with formsand surveys,the nal ied cet se, on ss 5, be -ltl 7, Persom delivered itmakes information accurate, inexpensive and plentiful allows personalized messages to be coups. It has the following advantages: alization: E-commerce to individuals as well as gt marketing messages to a specific individual by Personalization of 1 : n’s name, interest and past purchases, adjusting the message to a person ization of products and services are based on individual Custon characteristics. scope of E-Commerce ‘The scope of e-commel and inter organizatio marketplace exchanges. ce is wide and it includes all electronically based intra nal activities that directly or indirectly support E-commerce has an impact on many areas of business ment. ‘These include the following: a. Marketing - This includes the issues related to on-line advertising, marketing strategies and consumer behaviour and cultures. One of the reas in which it impacts particularly is direct marketing, In the past this was mainly door-to door, home parties (like the Tupperware parties) and mail order using catalogues or leaflets. This moved to telemarketing and TV selling with the advances in telephone and television technology and finally developed into 'e-CRM' (customer relationship management) by creatingnew channels for directsales and promotion. . Computer sciences - This involves the development of different network and computing technologies and languages to support e-commerce and e- business, for example linking front and back office legacy systems with the'webbased' technology. Finance and accounting ~ E-commerce includes many financial aspects like on-line banking, issues of transaction costs, accounting and auditing issues, Economics - This includes the impact of e-commerce on local and global ¢conomies; understanding the concepts ofa digital and knowledge-based “conomy and how this fits into economic theory. pees ‘and operations management ~The impact of on-line processing and glo teluced cycle times, Itakes seconds to deliver digitized products rede {lectonically; similarly the time for processing orders can be bymore than 90 per cent from days to minutes. Advantages The benef; fit gaisaiong ecommerce can be seen to affect three major stakeholders: "consumers and society. 15Figure 1.7 Advantages of E Commerce nefits 0 SOCIETY aeniets 70 r ns nents 10 sewers oneantsaTIONS sivantPnac a Sines apt tetaenes eo valle Benefits of e-commerce to organisations International marketplace: Using e-commerce, organization can oe their market to national and international markets with pera ee investment. By becoming e-commerce enabled, businesses nas ve access to people all around the world. In effect, all e-commerce businesses have become virtual multinational corporations. An organization can easily locate more customers, best suppliers and suitable business partnersacross the globe. Operational cost savings: E-Commerce helps organization to reduce the cost to create, process, distribute, retrieve and manage the paper based information by digitizing the information. Mass customisation, E-commerce has revolutionised the way consumers buy goods and services, The pull-type processing allows for products and services to be customised to the customer's requirements. In the past when Ford firststarted making motor cars, “customers could have any colour so long 4s it was black” (reflecting a supplier side market and mindset). Now customers can configure a car according to their specifications within minutes on-line via the www. ford,com website, Improved productivity and reduced inve Productivity of the organization, management, In "pull" when a request comes ntories: E-Commerce increased the(mobile phones), and Dell (computers) gather customer orders for a product, transmit them electronically to the manufacturing plant where they are manufactured according to the customer's specifications (like colour and features) and then sent to the customer within afew days. Lower telecommunications cost. The internet is much cheaper than value added networks (VANs) which were based on leasing telephone lines for the sole use of the organisation and its authorised partners. It is also cheaper to senda fax or e-mail via internet than direct dialling. Digitisation of products and processes. Ecommerce is particularly popular in the case of software and music/video products, which can be downloaded or e-mailed directly to customers via internet in digital or electronic format. Improved brand image: E-commerce improves the brand image of the company. Brand image helps in lowering search costs, building trust and communicating quality. Simplify the business processes: E-Commerce helps in simplifying and making the business processes faster and efficient. Benefits of e-commerce to consumers 24/7 access. E-commerce enables customers to shop or conduct other transactions 24 hours a day, all year round from almost any location. For example, checking balances, making payments, obtaining travel and other important information can be retrieved anytime. More choices. Customers not only have a whole range of products that they can choose from and customise, but also an international selection of suppliers. Price comparisons. E-Commerce application provides user more options to compare and select the cheaper and better option. Readily available information. A customer can see the relevant detailed information within seconds rather than waiting for days or weeks. Improved delivery processes. E-commerce enables the immediate delivery of a ised or electronic goods such as software or audio-visual files by lownloading via internet, It also facilitates the on-line tracking of the Progress of packages being delivered by mail or courier. Prov i ie ee pane ie environment of competition: E-Commerce increases competition among the organizations and asa result organizations provides substantial discounts to customers Revie ee about products available: A customer can put review comments comma oduct and can see what others are buying or see the review tents of other customers before making a final buy. 17Benefits of e-commerce to society oe «Enables more flexible working practices, which ea pa at lite fy a whole host of people in society, enabling them to from home. provides happier and less stressful working asians and ae potentially reduces environmental pollution as fewer people have t, travel towork regularly. + Connects people. E-commerce has enabled access to services and produc toruralareas as well which are otherwise not available to them. + Facilitates delivery of public services. E-commerce helps government jg deliver public services like health care, education, social services aj reduced cost and in improved way. Limitations of E-Commerce The limitations of e-commerce can be broadly classified into two categorieg Technical limitations and non-technical limitations. Figure 1.8 Limitations of ECommerce High setup and maintenance costs system scalability sLackof skilled personnel “High cost of training slack of security ‘High cost of technical solutions *Compatibilty issues NON TECHNICAL UMITATIONS ‘*Absence of personal touch *Resistanca to change Privacyissues Fraudulent practices sinternet accessinremote areas Technical Limitations Costs: High Start-up Costs, up costs, customized hardware and software costs ‘osts a upanonline business. connection costs, set- ire involved in setting + System scalability: Scalability refers to the ability of a comput ig \puter system to—— ew standards. Sometimes, it becomes difficult to integrate e- wpe nerce software or website with the existing a pplication or databases. A wrebsite must be scalable or upgraciable on a regular basis with respect to performance, speed and response time. It is required to update and maintain the websites re} Lack of skilled personnel: Its very difficult to find skilled WWW developers, and knowledgeable professionals to manage and upgraded to ni gularly which further adds to the cost content providers maintain customers online «High cost of training: t is imperative to have trained and qualified workers Fgh Mand maintain e-commerce businesses, Thus, the cost of trainingand mnaintaining skilled personnel is very high. Lack of security: There can be lack of system security, reliability or standards owing to poor implementation of e-commerce. Data protection, system integrity that handles the data, computer viruses, hacking issues are serious concerns in e-commerce. «High costs of technical solutions: In many countries, network bandwidth might cause an issue as there is insufficient telecommunication bandwidth available. Special types of web server or other software might be required by the vendor setting the e-commerce environment apart fromnetwork servers. « Compatibility issues: There could be software/hardware compatibility issue as some e-commerce software may be incompatible with some operating system or any other component. Non-Technical Limitations Non-technical limitations are due to reasons other than poor functionality of system. These are difficult to change since they involve factors which are very difficult, to be altered like people's attitude, resistance to change, faceless transactions etc. These include the following: Absence of personal touch: E-commerce enables screen-to face and not face-to-face transactions. There is lack of touch or feel of products during oie shopping, The customers would like to touch the product to check quality of the product, like in case of clothes, jewellery and furniture. ae aa ‘change: Customers are used to traditional models of ee ai) faceless, paperless and non-physical transactions will pile aire ecome an integral part of their life, User may not trust the tomake an unknown faceless seller. Such mistrust makes it difficult 3 user switch from physical stores to online/’ ‘virtual stores. Privacy i, ea e G cy issues: It is difficult to ensure security or privacy on online eee 5 Seen: Customers are apprehensive in sharing their personal ionon the web, Unauthorized entry of hackers into the websites 19cancreate problems. + Fraudulent practices: Some dishonest businessmen operate fq websites, receive advance payments but don't supply the goods. 7}, even misuse the confidential information about customers. ey + Intemet access in remote areas: Internet access is still not cheap ang inconvenient to use for many potential customers like the ones living a remote villages. 1.7 APPLICATIONS OF E-COMMERC] ‘The applications of E-commerce are used in various business areas such as rey and wholesale and manufacturing. The most common E-commerce application, areas follow: a Cres one PEI ES Commerce Applications4, _ Retail and wholesale: E-commerce has a number of applications in vetail and wholesale. E-retailing or on-line retailing is the selling of goods from Business-to-Consumer through electronic stores that are designed using the electronic catalog and shopping cart model. Cybermall is a single Website that Offers different products and services at one Internet location. 2, Marketing: Data collection about customer behavior, preferences, needs and buying patterns is possible through Web and E-commerce. This helps marketing activities such as price fixation, negotiation, product feature enhancementand relationship with the customer. 3. Banking and Finance: E-banking is an electronic payment system that enables customers of a bank to conduct a range of financial transactions through secured internet application. E-Banking has increased tremendously not only among young internet-savvy people but also among other age groups. The banks provide their customers, 24 hours online banking services - anytime, anywhere with internet Banking. All the banking transactions can be performed by the customer from the comfort of their home or office. E-banking makes use of electronic currency. Credit cards, debit cards, smart cards or stored-value cards, digital cash are the different types of electronic currency used in e-banking, 4, Financial companies are also using E-commerce to a large extent. The customers can check the balances of their savings and loan accounts, transfer money to their other account and pay their bill through on-line banking or E- banking. Another application of E-commerce is on-line stock trading. Many Websites provide access to news, charts, information about company profile and analyst rating on the stocks. 5. Online Insurance: E-insurance involves the advertisement, recommendation, negotiation, and purchase and claim settlement of insurance policies through the internet. The consumers can search from different insurance companies for products that they are willing to purchase. They evaluate the products from different companies to determine the one which best suits their needs, The terms of the insurance policy are then conveyed to the customer by the insurance company and the customer responds with details Sane description of the entity being insured, the terms and the duration of eee policy, The buyer then pays the initial premium to the insurance pees the policy certificate is sent to the buyer. At present, most of these butthece son not automated. Some e-insurance sites offer web-based policies ese are little more than passive catalogs of alternatives available to buyers. 6. Websit Banks E Brokerage: E Brokerage is one of the fields where the online financial mea Bing a tough competition to the traditional service providers. and the NBFCs have tie-up with these e-brokers to expand their customer 21- jon. Banks have recorded the E- trang acquisition. he customer can buy or sel faders so that # 7 base and gain more on clcit 00f" business and have sourced the e-HA° 7 stocks onlineand canalso pay is also used in the supply chain s facturing: E-commerce es eset an electronic exchange Manu 5: anie 4 7. ations of a company. Some comPan information and run back pera * e! ss i providing together buy and sel Goode PE TT ced up the flow of i Prfce information such as inverttory CO! bers of the business commun sei and finished goods among, the ‘ghd competitive isoties: limit the material 2 strategic i naterial a fated to the ¢ ies may not trust the, Various issues ‘Of the business models. Compan ts if ae partici fe Teeter may fear that they will lose trade secrets pate in competitors and may mass electronic exchanges. Auctions: Customer-to-Customer E-commerce is direct selling o¢ uctions: 8. i les electronic auctions 4 eer geet) See ee that allows prose parity que ne pice ok SE specific route on the specified dst. and time. 9. __ Payment of Utility Bills: The utility bills can be paid electronically by online, mobile and telephone banking. The customer can transfer money from their bank account to a creditor or vendor such as a public utility, department store or an individual to be credited against a specific account. These payments are typically executed electronically as a direct deposit through a national Paymentsystem, operated by the banks orin Conjunction with the government. 10. Online Travel Agencies: Web-based Travel Agencies Hotel booking, been simplified with the world wide web, while doing business online é tL Online Career Servi ervi 3 Wii il eae eee tees: With the growth In technology, availability ; paeereeie PRAY SOEs Of recruit nn has become one of the important and ent. “Recruitment ig done online by posting job being increasin, y used by bot Jb fairs ete, prov BOVE Baditional sources like i ‘Sanumber, of benefits,hich addresses the need of business organizations, vendors and customers to which a {customers to re cost ancl improve the quality of goods and services while increasing the = commerce refers to paperless exchange of business delivery. speed of y. B information using following ways. Blectronic Data Exchange (EDI) Flectronic Mail (e-mail) Flectronic Bulletin Boards * _ ElectronieFund Transfer (EET) + OtherNetwork-based technologies Electronic Document Interchange Etecronic ff electronic ata FunaTranster fl Interenange (ern) (eo) Marketing, Information Sharing Advertsing onic Publishing Cottaborative Seles, Customer ‘Work Suppor. Electronic Messaging Fig 1.10 E-Commerce Framework Evolution of E-commerce The beginnin, Started using’ with other 185 of e-commerce can be traced t ‘ ‘0 the 1960s, when businesses eens Data Interchange (EDI) to share business documents Kanes: In 1979, the American National Standards Institute ctronic di i a eee with each other grew in the 1980s, in the 1990s the an pean ‘razon revolutionized the e-commerce industry. Consumers orlarstores ie amounts of items online, both from typical brick and “commerce capabilities and with each other.es my a mentation Of E-commerce 1 Imple! ee es the following resources quired For Suce mmerce requir ources Re Rest ti entation of € . guccessfulimplementation eins entre rust devel Well designed Website: 7 stfectively Wit oor pages wit 3 ive website t ‘a website consis it oe ean "The basic infras fa The entry point is called the business 4 i inks to other pages. cis webeit Se caeeent ae eel to inked to the homepage. The website mu homepage an ot its history, its products, their mation about the company, ; pes Deableto provide nr techrical details. The west pee ae have ae en it Ros the system, forinstance, filling outa form, gane. ao tecape tothecompany orsending feedDas to thec ck about the website. ‘mailmessage toth 7d ter hardware consists of iter Hardware: The comput 2 Aaa es, printer etc. For smooth e-commerce its monitor, servers, back up devic 2 Peeters 4 Prince feeds « computer with a lot of memory, 4 powerful Contra Processing Unit (CPU), and a fast link to the internet. A large storage space will give a quicker access to! stored data. A processor with good speed will ead toquicker download. 3, Adequate Computer Software: Computer software consists of operating systems like Windows, Linux etc. In addition to an operating system, the company needs a browser such as Internet Explorer which allows surfing on thenet. Some basic software like File Transfer Protocol (FTP), Telnet, Archie etc. Ei arealso required. $ 4 cue tettive Telecommunication System: E-commerce requires an in the form of telephone lines, optic fibre indle the traffic on the internet. E-commerce et H stomers to Be Adequate information 73 exce ‘0 know their bi Payments and refunds roca mount is received should eo secured thro, e created. ugh banks and credit 24process Of E-commerce cess of online shopping, that is, e-commer i Customer logon to a Website aces Selected items are placed in a shopping cart ce is discussed below in the Figure. (Orders placed by the user Payment instructions and total cost of order is sent by the merchant Customer provides payment information ‘Orderis completed Az E-mailis sent to the customer and merchant ‘Order is sent to warehouse for fulfillment Shipping carrier picks up shipment Shipment sent to the customer Figure 1.11 Process of ECommerce TEST YOUR UNDERSTANDING Ql. Whatis e-commerce? Discuss itsnature and scope. Q2 Define Electronic Data Interchange. What are the components of ElectronicData Interchange? — &. Compare and contrast the traditional business with electronic commerce ina book shop business. tort @, 6, Listtheadvantages and disadvantages of e-commerce. Pe d pasties 'scuss technical and non-technical limitations of e-commerce. What i : eet San EDI? Explain how business transaction can take place in an y, Briefly di one lefly discuss the various: types of e-commerce based activities. __ Whatarethe goals of E-Commerce, How ' does e-commerce differ from traditional commerce? Mo. p; es thefanctions performed by E-Commerce. 25.—— ll Planning Online Business Dr. Pooja Jain and Dr. Kamaldeep Kaur Chapter Objectives | « Introduction and meaning of * Modes Of Doing Business | Internet © Assessing Requirment for « E-Business Models online Business © Website as a Marketplace 2.1 Introduction and Meaning of Internet The internet is a worldwide network of networks. When one computer is connected to two or more computers, it becomes a network. There can be a number of such different networks. Internet is thus a huge network which is comprised of hundreds or thousands of networks all around the world creating worldwide supernetwork. Using the internet, you can communicate with other people throughout the world by means of electronic mail, read online versions of newspapers, magazines, academic journals and books and join discussion groups on almost any topic. Characteristics of the Internet Internetis characterized by following features: A. Globalised coverage: Internets used by every country across the world. B. Cost sav; effective tools sharing, ing: Internet offers far greater cost savings and promotes cost for managing critical transactions such as ordering, information Payment processing and inventory control. C ae pesca access to information: Internet offers access to large volume of trine.'s: Sound, text and people through a variety of services and tools for commas munication and data exchange. 2m» Characteristics of Internet Figure 2.1 acessto Informatt complex network D. Complex network: It is a complex network in which various applications are residing at multiple locations. E. 24/7 Availability: Anyone can see any information from anywhere at any time. F. Dynamic technology: Technologies used for Internet keep on changing Many organizations are currently working on the next generation of internet. Latest technology in the networking is updated frequently to secure transactions. G. Improve efficiency in dealings: Internet enhances the buying process by providing an interactive environment in which each buyer can customize his or her purchases, 2.2E-Business Models strate i ’By to be successful in e-commerce. A business model that aims to use and leverage the unique qualities of, the int “ . called E-commercebusinesayoae ng emetand the World Wide Web (WWW) E-C i ene business models are 8enerally classified into the following 1. Business -to-Business B2B) 2. Business -to-Consumey (B2¢) 3. Consuimer-to-Consumer(C2¢) " Consumer-to-Business (C2B) Mobilecommerce (M-commerce) 28ications eat any inging. iternet. secure y can cute 2 e and yw) 36 wing Figure 2.2 Types of Business Models 1, Business-to-Business (B2B): B2B model is simply defined as e-commerce ~ hetween companies. It refers to the full spectrum of e-commerce activities that occur between the two business organisations. It involves companies doing business with each other such as manufacturers selling to distributors and wholesalers selling toretailers. Figure 2.3 B2B Business Business Organization » Website © Organization (seller) (buyer) B2Bactivities include Purchasingand procurement, Supply management, * Inventory management, * Channelmanagement, Sales activities, Paymentactivities, Payment managementand Service support, Many companies like Dell, GE, IBM, TCS, Maruti Udyog etc are following B2B e- ommerce in some way or the other. {1228 transactions, business firms use a network for placing orders with the Suppl sa Leslee tf mn business pecct®, receiving invoices and making payments. Mode 1 liers, “Presents complex web of relationships between a large number of supple 29They can be connectey etailers etc. bankers, manufacturers, wholesalers, retailers through an arrangement called extranet. ; erce with in a large busing An extranet is a shared internet deploying ¢ pee patie, ae Fe z on community including vendors, contractors, manufacturer, Suppliers and ky customers, When their operations are integrated, they form a supply chain a ; mbers of the supply chain having ther Extranet is accessible only to the me! distinctive passwords. Supply Chain Management (SCM) : Supply chain consists of all parties involved, directly pee in fling customer request. Supply chain management Ce i 1c oe es ae of trade relationships between manufacturers, suppliers, w! lesa lers, retailers and the logistics infrastructure providers that link them together. Figure 2.4 Supply Chain Management SCMis the management of a network of interconnected business involved in the ultimate provision of product and service packages required by end customers. It implies integrating the network and communication infrastructure between business firms and suppliers to ensure having the right product at the right Place, time, price and condition. SCM spans all movements and storage of raw materials, work-in-progress inventory and finished goods from the point of ecustomer service. SCMisa game of 4 Cs; It facilitates collab business firms and : Collaboration, Co-operation, Co-ordination and Connectivity ee among business partners, co-operation among Tyee 8 9 ensure timely execution of orders, co-ordination ely delivery of goods and connectivity through networking infrastructure to ensure quick response al] the ti—_—_— mer. ersin the organization. Intranetacts as a product information centre and is Hse withvin company” type of information exchange. It reduces paper strictly © ‘acilitates communication of messages, order acknowledgements and work and ied other forms of correspondence within a firm. It provides the approvals “iow development and maintenance costs and timely and easy benefit dissemination of information. 2, Business-to-Consumer (B2C): B2C e-commerce, or commerce between companiesand consumers, involves selling products directly to acustomer over confjectronic network. It is the second largest and the earliest form of e- an merce. A customer can view products shown on the company's website. The Ctstomer can choose a product and order the same. Website will send a rotification to the company via email and organization will dispatch the product/goods to the customer. Snapdeal, Yepme, Yebhi, Myntra etc. are all examples of B2C e-commerce. the ust Figure 2.5 B2C Business Organization » Website => {seller} 3, Consumer-to-Consumer (C2C): C2C is simply commerce between private individuals or consumers. 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. There are many sites offering free classifieds, auctions, and forums where individuals can buy and sell thanks to online payment systems like PayPal where people can send and receive money online with ease. EBay's auction service is a great example where person-to- person transactions take place every day since 1995. Figure 2.6 C2C ones B Consumer Website » (seller) (han 4, vebsig nstmer- to - Business (C2B): In this model, a consumer approaches Consigee w"E Multiple business organizations for a particular service. service 4a eS an estimate of amount he/she wants to spend for a particular Specied fan OrBanization which fulfils the consumer's requirement within comm t8et approaches the customer and provides its services. Thus, in C2B servion. Customers set their prices and companies bid to offer their products - Eg, Priceline and Reverse auction are some examples of C2B model. 31Figure 2.7C2B Business Organization Consumer ® | Website (processorder accordingto customer (placesrequirement for particular service) requirement) 5, M-CCOMMERCE (Mobile Commerce): Buying and selling products ang services through mobile devices is a new trend. A housewife can purchase her Kitchen appliances from the comfort of her living room, a businessman can order alaptop sitting athis office, and one can order food, snacks, fruits, vegetables etc sitting at home only -all with a few clicks using their mobile phones. Mobile commerce, commonly known as M-commerce,refers to doing commercial transactions online. M -commerce includes online banking, paying bills or purchasing something with the help of wireless devices like mobile phones or tablets. It is very similar to e-commerce. The only difference is that users do not require a laptop or PC for this purpose. They can use portable devices like smartphones and tablets. This way, users can access online shopping sites as ‘well as other online services anywhere and anytime. Meaning: M-Commerce means conducting online transactions through the wireless handheld devices such as mobile phone, palmtop, tablet, or any other personal digital assistant. The technology behind the M-commerce is WAP ie. Wireless Application Protocol that enables users to make use of the internet anytime and anywhere. By using M-commerce, a customer can get a huge variety of products delivered to their doorstep. They even get several discounts and offers. Also, a wide range of payment modes like UPI, debit card, credit card, cash on delivery makes it easier and more convenient for the users to use M-commerce. Through M-Commerce, people can perform several functions such as pay bills, buy and sell goods and services, access emails, book movie tickets, make railway reservati kets, ions, order books, rea ete Senate ay d and watch the news, E-Commerce Vs M-Commerce ECommerce defines all forms of business transactions undertaken throug? ceerenc PaOS eeeine ane exchange of data including text, sound, video, images aaa apon other hand, M-Commerce implies the trading of goods a ervices through wireless handheld devices, uch as mobile phones abletsa"¢ ther fac online shopping pla ping platfo; i a of compte non Beams gems tat ing we ol 32 a ir m-commerce, is a subcategory of e-commerce that focuses on ing through wireless devices. However, M-commerce requires designing, commerce applicatior (commonly known as mobile apps) as against e- Websites thus, the service provider may end up incurring an xpenditure with usage of m-commerce. online, while 1 tran’ new mm commerce additional & M-Commerce is a rapidly expanding sub-segment of E-Commerce that has shown, unprecedented growth during the last decade. It is increasingly occupying more and more space under the umbrella called E- Commerce. The primary catalysts for this spiraling growth have been: 1, Rapid advances in mobile technology, with most devices becoming smart andhandy. 2, Regular upgrade and expansion of Mobile Internetiinfrastructure, 3, Increased reach owing to increased affordability and value for money. 4. Government focus on digital economy. With growth of M- Commerce, security threats have also increased. Mobile Internet Security and Data Security on Mobile devices are the primary concerns which need to be addressed continuously to ensure the reliability of the platform. Advancement in Technology ‘Affordability of Smart Devices and intemet Increased focuson Technology Increased Penetration Increased Revenues Expanded Customer base Fig- 2.8: Growth cycle of M-Commerce 33ti f M-Commerce Advantages e live. Nowadays, there is alot swale ee us, M-commerce provide Mobile technology has ape Se phones, Th work which we do with the help o the following advantages: : II help yo Fa tsa ren aRiellng Cree ct ip you incre i reat aa iT ear easly gel YOUL POS UC en ey Rea a (5 our business, M-commerce 1s very eneficial as you wiy PRAT esSrhile app and users can easily get to kno, i jon in your 1 ee Sa eecat ‘Any discount, scheme, pay back benefits can everythit ha message to their mob the customers throug} ile be SE stop, Madame, Stanmax ef. always sends, ones. Eg. eerceto tie members (customers) about the season Se M-Commerce enables local business ty i tential customer and sharing the ow by tracking the location of the pot P nd si Fe econ their mobile phones. Eig. The educational institutes tra sore local students and give information about the courses offered} them. 2. Itenables local business to grow 3. It provides convenience to customers- With the help of M-commerce, the users can pay their mobile bills, electricity bills etc without standing in the Jong queues. Mobile applications such as Paytm, Google Pay etc are the online payment platforms. M-commerce enables the customers to book movie tickets, railway tickets, air tickets, event tickets thereby saving alot of time. E.g. Book My Show, IRCTC mobile applications offers the online reservation services. 4, It provides easy access to information- Through M-commerce, customers can easily access the complete information about the product or service provider before availing its services. E.g. one can access the information Tequired about new restaurants, hotels in detail through mobile. This will save your time and reduce your efforts. ae cost eduction and produetivity- M-commerce is costeffective yourcustomer secre cee ambaign expenses because it enables toreah tohave a wider reach of wee aPP. M-Commerce helps the market=! them peony aot Potential customers than he an have by visits potential customers residing mh cefeent at the Mobile phones of mary i *s Fesiding in different parts of the country. Make #Y amplesiin this context. Disadvantages ofM-Commerce M I-commerce provides the following disadvant, 1. Small Screen: a : Du © to small screen of mobile phones as compared 34 tc ii iatcomputers, the display of cellular gadgets m, make the purchase.E.g. Through Flipk can see several products, but the user may not because of the smaller image of the product ie. computers fora better view to makea purchase decision ‘ay Not influence the user to ‘art mobile application,a customer decide on the purchase and rather rely on e-commerce 2, Costly:M-Commerce software is costly as comp Many retailers may not go fo fewer options. ared to the e-commerce t, and hence the mobile users may have 3, Graphical issues:M-commerce, being the latest technology is struggling with its applications in terms of its graphics and the content that result in more reliance on the e-commerce applications, 4, Connectivity issue- The massive obstacle for M-commerce is the internet connection [Link] net connection is poor then you will face an issue and also getirritated in m-commerce. 5, Absence of services in rural areas- In rural areas, there is still a dearth of availability of mobile phones and internet connection. M-commerce is still unknown to several people in remote areas.. 6. Fraud risks and security concerns- Similar to E-commerce, M-commerce is also prone to risk of fraudulent practices and security issues. Information shared through the wireless medium have higher chances of getting hacked. Therefore, one should be very cautious while doing any online transaction through mobile phones. 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 tofiling taxes to business registrations to renewing licenses. Business-to-government (B2G) is a business model that refers to businesses selling products, services or information to governments or government agencies.B2G networks or models provide a way for businesses to bid on government projects or products that government might purchase or need for their organizations, This can encompass public sector organizations that Propose the bids, B2G activities are increasingly being conducted via the Internet through real-time bidding. B2Gis also referred to as public sector marketing. Government uses G2B model website to approach business organizations. Such Websites support auctions, tenders and application submission functionalities. Government to Citizen (G2C) model is also a part of e-governance. The objective of this model is to provide good and effective services to each citizen, dee Covernment provides information of all government departments an Tent welfare schemes to the citizens through the website 35Gome Companies Using e-Commerce ides acc prescript 5 to books music CDS, electronics, softy, ate, Fon drags, and much more electronica” | y, ‘[Link] provi toys, video games, [Link] ‘American Express successfull ns. WWW. | ly uses e-commerce for credit cary | ard transact americanexpress com [Apple Computersells comp uters online. [Link] or the Web. [Link] | Auto-by-Tel sells cars ove Cisco Systems sells data communications components over the Wes www. [Link] s Dell Computer and Gateway sell computers through their web sites a allow customers to configure their systems on the Web and then es them. [Link], www. [Link] = Dassen and [Link] refill and sell new drugs and vitamins and | other health and beauty products online. : Ww [Link] i hg oro. Epicurious 5 i | = z ele exotic foods over the Web. [Link] com sells i pod sells groceries over the Web. [Link] Proctor & Gamble and IBM conduct order placement: tre e ments electronically. 2.3WebsiteasaMarketplace erat, vendor is dealing with Remarketplace avoids holding stocks, : . This kind of supply chainSe Wee ducers ell on thesame platform, thereisa broader diversity than ina regular cally Pine store with a small set of brands. Marketplaces are also used by small usinesses with second-hand products, so prices are also expected to be lower. There is, extremely high competition between vendors in a marketplace as all Sarg oducts are sold on the same platform, with the same design, and are usually fanked under categories. . Interms of revenue, the marketplace takes a percentage of sales on any product sold onits platform. There are many e-commerce businesses that have succeeded with this Wep innovative strategy... Here'sa list of top online marketplaces in India. ij 1 Flipkart S and 2, [Link] Chase 3, eBay 4, [Link] s and 5. ShopClues com, 6. [Link] 7 7. India Times 8 PayTM™Marketplace 9. Jabong ically. 10. Myntra a Fig 2.9 Brief Comparison 13% as Bs 100,000+ 46,000+ 30,000+ 13 30+ 500 Departments (Structured) (Unstructured) (Structured) 5000 1) (Unstructured). marketplaces-in-india-compared/ a la NP Tetowntape-com/ top-5-online- 37Ww des of Doing Business 5 undergoin} ping bel 2.4 Mo! g dramatic change Consumers tog, § aviour. They will research online, vvok for product reviews onlin tore each service ot upgrades. Notice that neithe r onvironments play acentral role. Togethe, terience for the customer. ; shopping be demonstrate No! their commun tina then test the produc! want to use anearby store a Ae i e brick-and-n the digital nor the bric 1 they, nildoutamore convenient EXP _ : aviour is placing greater emphasis on tight integratcy {sand brick-and-mortar stores. The focus of the integration shoulj is pec contact. This contact should result in richer custome, e cus improve the overall shopping/ brand experienc Emerging shopping beh: between channel be on enriching the data - which can then be used t te it is interesting to examine the characteristics of both shopping ta brick-and-mortar store they generally teng relaxed and open to being informed and entertained. This means bringing more focus to store locations and store formats that can help build stronger customer relationships. A digital presence of astore on the other hand caters to shoppers who are pressed for time, look for convenience and bargains and, strangely enough, are more susceptible to impulse shopping. Digital interactions with customers present the opportunity to make them instant champions of the brand, by ensuring they share their views and experience with others in their community. Digital interactions also present the opportunity to understand customers better and personalize offers makingit more likely that they will stop by and make a purchase. However, xa environments. When shoppers Visi tospend more timein the store, they are Acdece above, there are three main modes of doing business which are as follows: 1. Brickand Mortar 2. Pureonline 3. Brick and Click BRICK AND MoRral R iis methods of selling and, is used to describe the traditional retail stores and distributing goods and services, line [Link], Presence for the customers. E.g, [Link] BRICK AND CLIC K refers t . the web as well as 0 the busine, the pacie, Bi es treat the intemet ago raitonal retail outlet, aa offers online services vt with the existing been el to reach the con rick and click companies Reliance etc, els in the retail nj osU™ETS and then integrate NY. 8. Nike, Nokia, Airte 38a BY EEE PIELER BoE OK for Table 2.1 gives business and tab! Figure 2.10 BRICK AND MORTAR BRICK AND CLICK the difference between brick and mortar and pure online and click business. Table 2.1: Brick and Mortar vs. le 2.2. explains the difference between pure online and brick Pure Online 39 Basis I ‘Brick and Mortar Pure online ‘Meaning The business has only offline Tris the business model where the presence in Brick and mortar. _| business has only online presence Technology Tt doesn’t use the modern Tt is enabled through internet and business technology EDL technologies. Interface “There is only face to face contact | It allows interface with the between sellers and buyers. customers online i. through the visits on the company’s websites, e-mails etc. Organizational Hierarchical. A traditional Network organization. An online structure company has a tall organizational | company operates through work structure with several layers of | teams. management. Entry barriers ‘There are entry barriers, i.e., “There are no entry barriers with TTluates prvolved in starting a | veapect iiapacey me = capital. business on traditional lines because of unavailability of space in market for opening a physical Accessibi outlet : ole NT. River Tt is not accessible 24X7. Tris accessible 24X7. ain B Teentails mass advertising Teallows mass personalization ‘through media like newspapers, | and advertisements can radio, television, window through emails. "————___| displays ete. a aeSecurity technologies Products Geograpl barriers i 1 the Security techniques includes vise of covert cameras, Security se 0 i m systems, locks, guards, alarm safes Tis suit physical products. and ‘ble for the standard fi aaa ac Geographical barriers are there and ithas a very limited reach to its customers Table 2.2: Pure Online vs. Brick and Click ~ Data is protected wih heh passwords, encryption ang. > cryptography in case of pure online business, Mit is suitable for the customize products, low value products intangible products and digit | products. Tedoes not Rave any geoph barrier and has a wider reach | its customers. | ses ee| PURE ONLINE BRICK AND CLICK ae BASIS Fusiness exists only online, soit | Business combines the physic uses the capability of internet to | presence with online presence create a new business. This business model uss interme | to supplement its existing busines Papas The sole purpose is selling The purpose is fo create more through web. Therefore, it is product exposure, provide imperative for them to get the _| schemes for both offline and customers to buy from them. online purchase, updating the valued customers with the latest product introductions and finally selling the product online and offline. Suitability Pare online business is not tis more suitable for the suitable for the products that products that need personal need touch and feel like experience, touch and feel. 2 furniture, clothes ete, Delivery problems | In pure business models, It provides the facility of ordering paras pst Soune a the Products online and taking to Tesiye the delivery of 2 products ordered, Sales Return issues) The problem of sales retui different to tackle fn ie is In case the consumer wants to customers as well as sina Teturn the goods, he can return the presence is Peay eine them to the nearest store which issue is even more Sa a hhe | would either resell it to some &xpensive for bulky items, other customer or return it back 5 to the organization along with the P| other things that are sentin the Pe reel trl cotrse ot basing)‘Acquisition cost of custome higher as compared to brick and click modet because pure online business model may continue incurring cost to acquire the jomers which may go waste if Ly Bit. | It is higher as customers tend to have less loyalty towards online stores which they have not seen on cost of customers is er because of established | brand names, marketing arrangements with the supplier etc Itis lower as the physical presence provides the power of face to face selling whereby salesmen can help the consumers by answering product related queries, providing feedback about the suitability of products. The conversion rate of visitors into actu al customers is higher The conversion rate of visitors Conversion Rate of into actual customers is low in | vistors 0 pure online business model. because of the physical presence L of business also. 25 Assessing requirement for an online business: designing developing and deploying the system 1) Anonline business cannot be launched overnight. It is a complex task which requires a systematic approach. 2) The traders nods to assess requirment before launching a business online. The system needs to be carefully designed, developed and deployed. The most important task for launching a business on internet is to build an e-commerce site. Site development process needs information about online business competitors, technology and target market, social and legal issues. Itinvolves the following aspects: * Planning about the website + Knowledge about hardware and software requirements for designing a website * Fulfilment of product * Maintenance and enhancement of website. tife cycle approach for launching an online business (WDLC- Website evelopment Life ‘Cycle Approach) A website may be developed following different approaches. The life cycle Tpeoachis the oldest and most widely used approach of website development. aces! 8 divided into various phases and each phase has its specific the nese at functions produced from these activities. Before moving ahead to corent ase tt should be ensured that all the activities and functions of the viebsitee a8 ate completed. Its the phased approach to analyse and design a ensure that the site is well designed and user friendly. 41business, life cycle approach comprises , business, For establishing an online following phases: ment Life Cycle Approach i - Website Develop! Figure 2.11 WDLC- We The above mentioned phases of launching online business are discussed below: A. Phase: Planning and Strategizing phase ‘This the first phase of setting up of web site. A comprehensive business planisol utmost importance if any business is to succeed online. Careful planning particularly in the early stages of website development is necessary '0 coordinate activities and managing all risks effectively. pee, aun cualeye Pane 1 step by step process with definite objectives and action Lae epee and evaluated. Itis a process of looking into tt’ is : : aes of current trends and influences the forces that will affet Mjorareas considered under this phase are: 4Figure 2.12 Planning Considerations res Technologial Threats ee potential customers: The Company has to define its target audience ie ‘ho will buy the products and services, their age, qualifications, browsing habits, specificneeds, income group etc. y) ») Products: Starting an online business gives you the benefit of having | access to millions of customers, but you also have a lot more competition, No matter what you're trying to sell, you can bet that hundreds of more online retailers have a similar idea. Selection of the product is very important especially in online business. Ine commerce, products can only d Delon be seen but cannot be felt or touched by the customer. So display of | producton the screen is very important. 3) Market size: It indicates that whether the potential market has capacity to plan ist supportthe additional supply of the product. eas 4) Pricing of the product: Before finalizing the price, first figure out the costof Bas operation which includes the study of the following factors: | a Production costs, whether you're creating the product yourself or ae | contracting some manufacturer to produce the same. int fate 11 affect | b. Shipping costs, ©. Taxes, d. Employee ‘wages, if applicable, Fees for reserving the domain nameand web hosting service: Priciy canoer ut Zflect cost of the product or service, but also the valu Places on the product offered. 5) Competi em mpetitors: The business must study the competitors! objectives, e that the 43provide the products at better terms ha, roduct lines, prices etc. to e P P ‘of competitors in any particular fielg te Sale competitors. Non-existence evaluated. J agg success of any business lies in 6) People planning: ‘The key to success © 0% n ee ~ iouree / personnel planning. Which means right people on right olka ne at right time? So proper plans should be made for recruitment, trainin, com and placementof the people. ', Si 7) Technological threats: These should also be analysed in terms of. changing and expensive technology: B. Phase I: Infrastructure, phase Tt includes all hardware and software components which are used in « ‘commerce business: 1) Hardware: Hardware includes the tangible and physical parts of thy computer thatcan be seen and touched. Itincludes: a, Input devices such as keyboard, mouse, scanners, digital camera, P¢ cameraetc. b. Output devices like printer, monitor, speakers etc. c. Processing devices like CPU, memory etc. d. Storage devices suchas CD, ROM. e. Internetconnection devices like modem, cable etc. For doing an online business one would need computer with lot of memory, powerful CPU, large storage space, a processor with good speed, and lot of RAM, monitor, amouse and amodem. 1 ¢ 2) Software: Software is a set of programs that governs the operations ofthe z computer system and make the hardware run. Various programs thatar® a needed to perform basic functions. ; 4. PIP; File'Transfer protocol, whichallows you to transfer files 6. Telnet: A program that allows user to log on to a computer and access: its contents from a remote situation ©. Archie: A progra: aa " i petiied! program that finds files on net according to a search W' 4. SLIP (Serial Li : aie ee Interface Protocol): It is a process that connects J" ¢. HTTP (Hyper‘Text Transfer Protocol): a It connects you with v: 44websites on internet. f, Browser Itallows you to surfthe internet basic software and hardware which are needed for surfing and using In addition to these, there are some hardware and software ically required for conducting e-commerce business ‘These are basi internet facilities components which are spe Whichare discussed as below: Figure 2.13 Application Server Transaction Server 1. Web Server: A powerful computer that receives requests from many different web clients and responds by sending html files back to those webclient computers. A web client is a user PC attached to internet that is capable of making http requests and displaying html pages. A web server computer should have more memory, larger or faster hard disk drive and faster processing than typical desktop or notebook PC's. Companies that sell web server hardware include Dell, Gateway, HP, HewlettPackard etc. 2. Application Server: An application server is any machine on which an application server program runs. It is a software program that performs some functions like creating invoice, calculating payroll or processing payments Feceived from customers. It handles all application operations between company's backend databases. So application server computer takes the Seanests received by the web server and runs application program that perform Actions based on such requests. The actions that the application server software Performs ‘according to the rules used in business. The rules are knownas business 45Wy meas rule is a customer Tog in where the pac ess Med against the password stored in the data’ soc oe ava Server (JSP), Microsoft Actives. Ve ponent Object Model (COM) logic. An example of busi entered by the customer's cl Common application server Ine’ Pages (ASP), Microsoft Com| 3, Transaction Server: These servers ticks checkout button. It performs many neces a -s when the customer ¢} Bos s discounts, sales tax, shipping costs etc. moon The server computer on which database managem, et perform transaction processing wh; ch a occur calculationssucha 4, Database Se software runs. 5. Mainframe and system having large RAL businesslike high resolution monitor, 6. Proxy Server. It serves as a proxy between web server and web client acts as an agent for both. Itaccepts informationand requests from web client: a passes it to web server and takes responses from web server and webclient. Pass testy high end Computing Systems: It is a strong com M, high speed processor and various corncrene ae high bandwidth modemete. . 7. — Security: It is the protection of data, software, : y ; \ >, and hardware agai accidental or intentional damage from a defined threat. The website ae absolutely secure. Three types of risks need to be addressed. : a. pecaet Security: Tt ‘demands that no one should be able to corrupt the nee of lie site. It is to protect proprietary information and cane Re eee and changing the web pages. So it is required to *p the information and content of website intact. 2 b. Customer Privacy: It Catt nana hing nd pot of ee Pema viduals provide in the course of everyday . System Security: 4 the ecommene aaa With the way the network, the web serve and ; rc farppegg ane eet na anauorized aces a C. Phase III: Web Site Design 46Figure 2.14 Website Design Considerations ‘complete information ‘as per customer’sneeds | Consistentand pleasantlook Selection of DomainName Inhouse website design or outsourcing, 1) Provide complete information: The website should provide complete information regarding the company, its objectives, its background, products and services, various terms and condition regarding purchase, mode of payment and delivery, after sales services and the complete contact details. There should beno ambiguity onany issue. 2) Designed as per customer's needs: Website's layout and organization is designed as per customer's needs and preferences. It should not be designed as per owners’ or designers! whims, tastes and preferences. Layout, content and organization should meet the customer's requirements. It should be informative, direct and to the point. It should not include big graphics which common browser do not support. 3) Consistent and pleasant look of the website: Website should be designed in such a way that it should be consistent all through the website. There should beno inconsistency in information given on different pages. It should be simple, complete, professional and aesthetically designed. %) Easy to navigate: A well designed website should give full freedom and “ontrol to the customer while navigating. The customer should have the options te ‘oredo, undo, and get back to original path or page. Customer Services: Every website should have a help-desk which gives advice to customers regarding products, services, modes of payment, ter and conditions, method of ordering etc It should also give help to customer ze simplelanguage. 47> Customer feedback should be taken aft after * important method to improve the S increase customer loyalty, Tela 6) Customer Feedback: n, It can be used as ar ¢ and customers and to transaction rection of Domain Name: In case the isin between the busines i nding the sel 7) Decision regarding Domain Ne ex vaeeeisemine andl online, aa fer as poeeble, te website should be regia ' ot ykphysical counterpart. On the other hand, in ster iArcag of me should reflect the core activity a : yess. €.g. [Link], [Link] ete. of 8) Decision regarding building in-house oF outsourcing of website: the designing phase is whether the website shou,” be cisions of hhether this job should be given to some i g Outside agency, with the samename as pure online compar the ., chosen nar [Link], busin the important de designed in-house or WI house website development has following advantages: In] a. Itensures thecontrol over the entire project. b. The changes required due to change in business conditions incorporated easily and cheaply ifitis developed in-house. il ¢ Ikalsoensures ownership of copyright to the business. But there are certain disadvantages associated with i sociated - ae ge ed with in-house development a. Itisatime consuming process which devi ee ig process which deviates the focus from corebusines b. Thewebsit website may not havea professional appearance. © Lack ofskilled and experienced manpower, On the other hand, follow i, foll externally, 6 the advantages of developing the website a. Theservices of hi jali canteen ighly specialized, skilled and experienced professionals b. Iti very suitable for new businesses in terms of time money, suit sinesses, and Th e Drawbacks of Web Design Outso a. Maintenance = and updati designingisoutsoune a es Co8ty and time consuminggafaitt b. Ownershiy mership and copyright j designed externally * issues generally ari j arise in case website ® ing are: *jons. $0 this decision is taken after evaluating following f poth the oP factors: ‘availability ofskilled resources Availability of time Whether the business is new or old; how was the website designed previously. «Availability of budget. « Ownership and copyrightissues etc. Testing: Testing is also a very important task in the development of web site. peforeactually launching of website everything has to be checked with regard to its working, usability and downloading, Following things are to be tested for this purpose: + Pagequality check, grammar and spellings. * Scriptcheck + Linktesting * Checking the whole system under heavy load condition + Cross browser compatibility testing etc. [Link] IV: Marketing Marketing starts from the point where we conceive an idea to start a business and ends when the final delivery is made. In this phase people are made aware of the web presence. The objective is to bring the right kind of people to visit the siteand motivate the customer to try the products and services offered. This step is very crucial as in online business customer initially visits the site and sees the offerings only fora few seconds. There are various methods of promoting online ness. Some important ones are discussed below: Figure 2,15 Methods of Online Promotion Domain name Registration Banners, pop- Content Publicity with search upsand Marketing engine sponsored links ee Reputation Influence Email list Facebook anagement outreach and Building advertising networking | Soro) 49