UBA20E23T

E-COMMERCE
AND
DIGITAL
MARKETING
UNIT - 1
Contents
❖Introduction to E-Commerce ❖Customer service and service quality
❖E-Commerce Types ❖E-commerce models
❖E-Commerce Advantages and Disadvantages ❖B2B
❖E-Commerce Features ❖B2C
❖Introduction to E-Business ❖C2C
❖E-Business Concepts ❖P2P
❖E-Commerce Types, Features ❖E-Governance
❖E-Business Components ❖Objectives, Importance
❖Features of E-commerce
E-COMMERCE
• E-commerce is the buying and selling of goods or services via
the internet, and the transfer of money and data to complete the
sales.
• It’s also known as electronic commerce or internet commerce.
 HISTORY OF E-COMMERCE

The 1970s: Electronic Funds • Used by the banking industry to exchange account
Transfer (EFT) information over secured networks

Late1970s and early 1980s:

Electronic Data Interchange • Used by businesses to transmit data from one business
(EDI) for e-commerce within to another
companies

The 1990s: the World Wide Web

on the Internet provides easy-to- • Cheaper to do business (economies of scale)
use technology for information • Enable diverse business activities (economies of scope
publishing and dissemination
 DIFFERENCE BETWEEN TRADITIONAL COMMERCE AND E-COMMERCE

S.NO CRITERIA TRADITIONAL COMMERCE E-COMMERCE

1 Value creation Product/service Information
2 Strategy Classical Sense and respond
3 Competitive edge Quality/cost Speed
4 Competitive force Power of suppliers – product Power of customers – low barriers to entry
substitution
5 Resource focus Supply side Demand side
6 Customer interface Face to face Screen to face
7 Communication Personal Technology mediated channels
8 Accessibility Limited time 24x7
9 Customer interaction Seller influenced Self – service
10 Customer behaviour Standardization Personalization
11 Promotion Merchandising Word of mouth

12 Product Perishables, feel and touch Commodity

THE PROCESS OF E-COMMERCE
The consumer uses a Web browser to connect to the home page of a merchant's Web site on the Internet.

The consumer browses the catalog of products featured on the site and selects items to purchase - shopping
cart.

When the consumer is ready to complete the purchase of selected items, she provides a bill-to and ship-to
address for purchase and delivery

When the merchant's Web server receives this information, it computes the total cost of the order--
including tax, shipping, and handling charges-and then displays the total to the customer.

The customer can now provide payment information, such as a credit card number, and then submit the
order.

When the credit card number is validated and the order is completed at the Commerce Server site, the
merchant's site displays a receipt confirming the customer's purchase.

The Commerce Server site then forwards the order to a Processing Network for fulfillment.
 E-BUSINESS
❖E-business (electronic business) is the
conduct of business processes on the internet.
❖These e-business processes include buying
and selling goods and services, servicing
customers, processing payments, managing
production control, collaborating with
business partners, sharing information,
running automated employee services,
recruiting; and more.
❖While e-business emphasizes the overall
organizational functions that can occur using
electronic capabilities, E-commerce is just
one aspect of e-business.
 TRADITIONAL BUSINESS VS E-BUSINESS

BASIS TRADITIONAL BUSINESS E-BUSINESS

FORMATION DIFFICULT SIMPLE AND EASY
PHYSICAL PRESENCE NECESSARY NOT REQUIRED
COST OF SETTING UP HIGH COST INVOLVED LOW – NO REQUIREMENT OF
PHYSICAL FACILITIES

DEALING TIME MORE TRANSACTIONS ARE

SETTLED IMMEDIATELY

OPPURTUNITY FOR MORE LESS

INTERPERSONAL TOUCH

GLOBAL REACH LESS MORE

TRANSACTION RISK LESS HIGH – DUE TO DISTANCE
AND ANONYMITY
 The Key Differences Between E-Commerce and E-
Business
❖E-Business is not limited to just buying and selling
products or services. Whereas E-Commerce is the name
of buying and selling products/services with the help of
the internet.
❖E-Commerce is a main part of E-Business
❖There is no need for an E-Business to have a physical
presence. If the company has physical offices along with
its online business activities then it can be referred to as
E-Commerce.
❖E-Commerce supports any kind of business transaction
related to money, but E-Business includes monetary and
allied activities.
❖E-Commerce needs the internet to be able to
communicate with their online customers from all over
the world. E-Businesses can use the internet, intranet,
and extranet to be able to connect with the parties.
 E-COMMERCE VS E-BUSINESS
E-COMMERCE E-BUSINESS
OPERATES ON INTERNET OPERATES ON INTRANET
INVOLVES COMMERCIAL INVOLVES BUSINESS TRANSACTIONS
TRANSACTIONS
EXTENSION OF TRADITIONAL BUSINESS ONLINE BUSINESS ONLY
MODEL
OPEN SYSTEM CLOSED SYSTEM
DEALS MORE WITH TECHNOLOGY DEALS WITH PROCESSES NEEDED TO
FACILITATE E-COMMERCE
DOES NOT INVOLVE THE USE OF EDI MAKES USE OF EDI
FOCUSSED ON BUSINESS TO CONSUMER FOCUSSED MORE ON BUSINESS TO
ACTIVITY BUSINESS ACTIVITY
USED FOR SMALL AND BULKY USED FOR BULKY TRANSACTION
TRANSACTION
 CUSTOMER SERVICE

❖Customer service is the assistance and guidance a company provides

to people before, during, and after they buy a product or service.
❖There’s a direct correlation between customer service, satisfied
customers, brand loyalty, and revenue growth.
 TYPES OF CUSTOMER SERVICE
Responding to questions, requests, and complaints on social media channels like Twitter,
Social media Facebook, and Instagram. Social media provides an immediate way for customers to contact
a brand at any time.
These online tools allow customers to get very quick answers to frequently asked questions
Chatbots or be directed to a customer service rep for assistance. They use AI to automate
conversations, providing 24×7, cost-effective service.

Self-service Users get questions answered on their own without a service representative. Examples
include chatbots, online, FAQs, and product tutorials.

SMS/mobile People love texting, so service via SMS has become commonplace. Brands text order,
shipping, and delivery confirmations, and can also answer questions via text.
It may no longer be the dominant type of service, but some customers prefer the option.
Phone Interactive Voice Response (IVR) and AI help answer common questions and route
customers to the right rep.

Email support Responding to customers via email has its downsides (slower), but gives customers a way to
clearly explain what they need.

In-person (traditional, And of course, there’s still on-site service: Talking to live a human being, in-person. This
type of service can make it easy for customers to learn about a product or service, and for
in-store)
 ELEMENTS OF CUSTOMER SERVICE
Responsiveness The quicker, the better

Listening Making sure the customer feels heard

While the circumstances for contacting a service rep are driven by a problem, positive outcomes
Positivity must be the goal of the interaction

Resolution Confirm that the customer is satisfied with the end result and that their issues were solved

Customer feedback can be especially useful for a company when it informs employees about
Feed back which areas of their business are most valuable to customers and which aspects might benefit
from improvement.
Employees who feel empowered might also help the customers they serve feel empowered,
Empowerment which can expand a company's returning customer base.

A business might encourage customers to post about their customer service interactions or leave a
Publicity public review about which engagements were especially helpful to them, which can inform the
public about their customer services and might bring in new customers.
Role of customer service

Customer Customer Customer Increased

service satisfaction loyalty revenue
 Service Quality
❖The delivery of excellent or superior service relative to customer
expectations.
❖Quality is behavior – an attitude – that says you will never settle for
anything less community, your stockholders, or colleagues with whom
you work every day.
❖When we want to be effective – delivering good quality to the customer
– we must produce services that meet “as much as possible” the needs of
the consumer.
❖Quality is providing a better service than the customer expects.
Dimensions of service quality
GAP MODEL OF SERVICE QUALITY
❖The Gap Model of Service Quality (aka the Customer Service Gap Model
or the 5 Gap Model) is a framework that can help us to understand customer
satisfaction.
❖The model shows the five major satisfaction gaps that organizations must
address when seeking to meet customer expectations. The model was first
proposed by A. Parasuraman, Valarie Zeithaml, and Leonard L. Berry in
1985.
❖In the Gap Model of Service Quality, customer satisfaction is largely a
function of perception. If the customer perceives that the service meets their
expectations then they will be satisfied. If not, they’ll be dissatisfied. If
they are dissatisfied then it will be because of one of the five customer
service “gaps”
 DIFFERENT GAPS
The Gap Model of Service Quality identifies five gaps:
1.Consumer expectation — Management Perception Gap / The Listening Gap
2.Management perception — Service Quality expectation gap / The Service
Design and Standards gap
3.Service quality specifications — Service Delivery gap / The Service
Performance gap
4.Service delivery — External communications to consumer’s gap / The
Communication gap
5.Expected service — Perceived service gap / The Customer GAP
FACTORS LEADING TO GAPS

• The customer gap is the difference between customers expectations and

perception.
• Today’s consumer has become increasingly demanding. They not only want high
quality products but they also expect high quality customer service.
• Even manufactured products such as cars, mobile phones and computers cannot
gain a strategic competitive advantage through the physical products alone.
• From a consumer’s point of view, customer service is considered very much part
of the product.
• Delivering superior value to the customer is an ongoing concern of Product
Managers.
• This not only includes the actual physical product but customer service as well.
Products that do not offer good quality customer service that meets the
expectations of consumers are difficult to sustain in a competitive market.
Consumer expectation — Management perception
gap / The listening gap
• An inadequate customer research orientation is one of
the critical factors.
• When the management does not acquire accurate
information about the customer’s expectations this gap
will increase.
• The first strategy is to listen to customers in multiple
ways through customer research and employee
upward communication.
• Such research includes the full range of traditional
marketing research methods such as surveys, focus
groups, and complaint handling. There have also been
research methods uniquely useful in service situations
such as SERVQUAL surveys, mystery shopping, and
critical incidents analysis. A distinguishing factor
between marketing research on goods and services is
that services research must capture human
performance.
Management perception — Service quality expectation
gap / The service design and standards gap
• According to Kasper et al, this gap reflects management’s incorrect
translation of the service policy into rules and guidelines for
employees.
• Some companies experience difficulties translating consumer
expectation into specific service quality delivery. This can include
poor service design, failure to maintain and continually update
their provision of good customer service or simply a lack of
standardization.
• This gap may see consumers seek a similar product with better service
elsewhere.
• Service design and standard gap exists in service organizations for
variety of reasons.
• Those people responsible for setting standard, typically management,
sometimes believe that customers expectations are unreasonable or
unrealistic.
Service quality specifications — Service
delivery gap / The service performance gap
• This gap exposes the weakness in employee
performance. Organizations with a Delivery
Gap may specify the service required to
support consumers but have subsequently
failed to train their employees, put good
processes and guidelines in action. As a
result, employees are ill equipped to
manage consumer’s needs. Some of the
problems experienced if there is a delivery
gap are:
• Employees lack of product knowledge and
have difficulty managing customer
questions and issues
• Organizations have poor human resource
policies
• Lack of cohesive teams and the inability to
deliver
Service delivery — External communications to
consumer’s gap / The communication gap

• In some cases, promises made by

companies through advertising
media and communication raise
customer expectations.
• When over-promising in
advertising does not match the
actual service delivery, it creates a
communication gap.
• Consumers are disappointed
because the promised service does
not match the expected service
and consequently may seek
alternative product sources.
REDUCING THE GAPS

• The diagram above shows a clear message to

managers wishing to improve their services:
the key to closing the customer gap is to
close provider gaps 1 through 4 and keep
them closed.
• To the extent that one or more of provider
gaps 1 through 4 exist, customers perceive
service quality shortfall.
• The gaps model of service quality serves as
framework for service organizations
attempting to improve quality service and
services marketing.
Customer Retention Through Quality
Improvement
❖The focus of the modern marketers has shifted away from a one-time sale
to making repeated sales to the same customer. Increasing attention is being
paid to medium and long term perspectives, rather than just the short-term
perspective. This has been a major revolution in thinking in the field of
marketing. Customer retention usually pays dividends by way of:
❖Lifetime value of the customer. If the customer remains loyal to the
company, naturally, the repeated purchases represent a cumulative value
which is quite substantial compared to any single transaction.
❖Reduced costs. It costs much more to acquire a new customer than to
retain an old customer. Therefore, the focus of marketing has shifted away
from the goal of mere customer acquisition to customer retention in order to
substantially reduce marketing costs.
Unique Features of E-commerce
Ubiquity
Global reach
Universal standards
Richness
Interactivity
Information density
Personalization
Social technology
 E-Commerce Business models
❖Every business operates on a business model of its own.
❖Business model defines how a company runs its operations & generates
revenue.
❖Every viable organization is built on a sound business model. Selecting an
e-commerce business model is a challenge, especially for beginners who
have little to no experience in the industry.
❖If a business model is successfully executed, an e-commerce venture can
become a significant source of income.
B 2 B BUSINESS MODEL
• A website following the B2B business model sells its products to an
intermediate buyer who then sells the product to the final customer. As
an example, a wholesaler places an order from a company's website
and after receiving the consignment, sells the end product to the final
customer who comes to buy the product at one of its retail outlets.
Example for B2B model
❖Indiamart is one of the best examples of a B2B e-commerce business.
❖Founded in 1999, the company’s mission is ‘to make doing business
easy’.
❖It is India’s largest B2B marketplace. With a 60% market share of the
online B2B Classified space in India, the channel focuses on providing a
platform to Small & Medium Enterprises (SMEs), Large enterprises as
well as individuals.
B2C business model
• A website following B2C business model sells its products directly
to a customer, the end user.
• A customer can choose the products shown on the website and place
an order for them.
• They may use banking channels or payment on delivery options.
There are two broad categories under this model
• Direct selling
• Market place model.
• I. Direct selling refers to the manufacturer or wholesaler of the
product/brand selling their goods directly to the customers on their
own website.
• Market place model refers to an intermediary website where several
sellers list their products.
• The businesses use this as their marketplace instead of having their
own website.
• The customers may buy a wide range of heterogeneous products at
comparative rates under this model.
Examples
❖Flipkart: Flipkart started off with a direct-to-consumer model selling books and
some other products, before turning to a marketplace model which connects sellers
and buyers and expanding its catalog. The sources of income for Flipkart include
seller commission, advertisements, logistics, and convenience fees.
❖ Just dial: Justdial is India’s search engine for the local search market which
initially started as a classified website but soon transformed into a local search
engine. They used a word-of-mouth strategy to advertise themselves. Focussing on
local brands and small businesses, the company became famous among the
masses.
❖ Urban Company: Urban Company is an organization that provides a variety of
services to professionals and blue-collar workers at the convenience of customers’
homes. One can hire electricians, yoga trainers, lawyers, engineers, chartered
accountants, beauticians, photographers, interior designers, etc.
C2C business model
A website following the C2C business model helps consumers to sell
their assets by publishing their information on the website. The website
may or may not charge the consumer for its services. Another consumer
may opt to buy the product of the first customer by viewing the
post/advertisement on the website.
Examples
• ebay is a website that caters to both
B2C and C2C transactions.
• In C2C e-bay has a varied feature
of auction where buyers bid for the
product.
• Such a feature helps both the
buyers and sellers to sell and buy
the used goods at their best and
reasonable prices.
• eBay is the most suitable example
for C2C transactions.
• OLX is another best example of
the C2C e-commerce business
model which works according to
the above-mentioned process but
does not involve auctions.
• Rather they collect nominal fees
to list the sellers’ products on the
home page to attract the
prospective buyer of that product.
• These websites even rate the
sellers and buyers on basis of their
past transactions, from which a
new buyer can easily identify the
genuine sellers.
C2C Model
P2P business model
• Peer-to-Peer (P2P) E-commerce
• Use of peer-to-peer technology, which enables Internet users to share
files and computer resources directly without having to go through a
central Web server, in e-commerce
• There have been very few successful commercial applications of P2P
e-commerce with the notable exception of illegal downloading of
copyrighted music.
Advantages of e-commerce
Customers Business
• Reduced Prices • Low Barriers to Entries
• Global Marketplace • Increased Potential Market
• Anytime Access Share
• More Choices • Low-Cost Advertising
• Quicker Delivery • Strategic Benefit
• Relevant Information • Global Reach
Disadvantages of e-commerce
Technical Non-Technical
• Lack of Security • Initial Cost
• Low Bandwidth • Security and Privacy
• Difficulty in Integrating E- • Lack of Trust and User
Commerce Resistance
• Not All Customers have Access • Lack of Touch and Feel
to the Internet • Customers Relation Problems
• Corporate Vulnerability
• Legal Issues
 E - GOVERNANCE
❖E-Governance is the application of Information and Communication
Technology (ICT) for delivering government services, exchange of
information communication transactions, integration of various stand-
one systems and services between Government-to-citizens (G2C),
Government-to-Business(G2B), Government-to-Government(
G2G) as well as back-office processes and interactions within the
entire government framework.
❖Through e-Governance, government services will be made available
to the citizens in a convenient, efficient, and transparent manner.
 Objectives of E-Governance
❖One of the basic objectives of e-governance is to make every information of the government available to
all in the public interest.

❖One of its goals is to create a cooperative structure between the government and the people and to seek
help and advice from the people, to make the government aware of the problems of the people.

❖To increase and encourage people’s participation in the governance process.

❖e-Governance improves the country’s information and communication technology and electronic media,
with the aim of strengthening the country’s economy by keeping governments, people, and businesses in
tune with the modern world.

❖One of its main objectives is to establish transparency and accountability in the governance process.

❖To reduce government spending on information and services

FEATURES OF E-GOVERNANCE
De bureaucratization

E –services

International services

Right to express

Economic development

Reduce inequality

Relevant information at the minimal time, cost and price