BBA Semester I

Fundamental of Information Technology

Unit 4
BY
Dr. Rupali Taru (Assistant Professor)
Bharati Vidyapeeth (Deemed to be University) Department of Management Studies
(Off Campus)
Navi Mumbai, MH-IN
Course Objectives :

Describe IT as a discipline and discusses the history and future of computing as

well as the currently used infrastructure.
 To orient the students about the E-Commerce technology and its applications in
Business world.
 To help the students understand various Information Systems implemented in
organizations
 To acquaint the students with various current trends and concepts of computer
Technology.
Unit 4- Introduction to E-commerce
 Brief history of e-commerce, definitions of e-commerce, technical components and
their functions, e-commerce versus traditional business, requirements of e-
commerce. Advantages and disadvantages of e-commerce, Value chain in e-
commerce, current status of e-commerce in India. Types of business models (B2B,
B2C, C2B,C2C) with examples

 Competency : :Disciplinary knowledge & digital Literacy, Fostering Innovation

and Entrepreneurship Development

 Competency Indicators :Understands the concept of E-commerce and how to

apply the e-commerce concepts in real time.
Brief history of e-commerce

 The history of e-commerce can be traced back to the 1960s with the
development of the Electronic Data Interchange. It was supposed to replace
mail and fax because it made data exchange possible through digital transfer,
without the need for human intervention.
 E-commerce refers to all manners of conducting business online – so any form
of products or services bought or sold over an electronic medium qualifies.
For beginning just a short while ago, the history of e-commerce is dramatic.
In 1969, CompuServe was the first major e-commerce company to be formed
in the United States.
Definitions of e-commerce
 The term electronic commerce (ecommerce) refers to a business model that
allows companies and individuals to buy and sell goods and services over the
Internet
Technical components and their functions

E -Commerce or Electronics Commerce is a methodology of modern

business which addresses the need of business organizations, vendors and
customers to reduce cost and improve the quality of goods and services while
increasing the speed of delivery. E-commerce refers to paperless exchange of
business information using following ways.
•Electronic Data Exchange (EDI)
•Electronic Mail (e-mail)
•Electronic Bulletin Boards
•Electronic Fund Transfer (EFT)
•Other Network-based technologies
requirements of e-commerce
e-commerce versus traditional business
Sr. Traditional Commerce E-Commerce
No.

Heavy dependency on information Information sharing is made easy via electronic

exchange fromperson to person. communication channels making little dependency
1 on person toperson information exchange.

Communication/ transaction aredone in Communication or transaction can bedone in

synchronous way. asynchronous way.
Manual intervention is requiredfor each Electronics system automatically handles when to
2 communication or transaction. pass communicationto required person or do the
transactions.

It is difficult to establish and maintain A uniform strategy can be easilyestablished

standard practices intraditional commerce. and maintain in e- commerce.
3

4 Communications of business depends upon In e-Commerce or Electronic Market,there is no

individual skills. human intervention.

Unavailability of a uniform platform as E-Commerce website provides user aplatform

traditional commerce depends heavily on where al l information is available at one place.
5 personal communication.

No uniform platform for information E-Commerce provides a universal platform to

sharing as it depends heavily on support commercial / business activities across
6 personalcommunication. the globe.
Features
 Non-Cash Payment: E-Commerce enables use of credit cards, debit cards, smart cards,
electronic fund transfer via bank's website and other modes of electronics payment.
 24x7 Service availability: E-commerce automates business of enterprises and services
provided by them to customers are available anytime, anywhere. Here 24x7 refers to 24
hours of each seven days of a week.
 Advertising / Marketing: E-commerce increases the reach of advertising of products and
services of businesses. It helps in better marketing management of products / services.
 Improved Sales: Using E-Commerce, orders for the products can be generated anytime,
anywhere without any human intervention. By this way, dependencies to buy a product
reduce at large and sales increases.
 Support: E-Commerce provides various ways to provide pre sales and post sales assistance to
provide better services to customers.
 Inventory Management: Using E-Commerce, inventory management of products becomes
automated. Reports get generated instantly when required. Product inventory management
becomes very efficient and easy to maintain.
 Communication improvement: E-Commerce provides ways for faster, efficient, reliable
communication with customers and partners.
Advantages and disadvantages of e-
commerce
 E-Commerce advantages can be broadly classified in three major categories:
 Advantages to Organizations


 Advantages to Consumers


 Advantages to Society
Advantages to Organizations

 Using E-Commerce, organization can expand their market to national and international
markets with minimum capital investment. An organization can easily locate more customers,
best suppliers and suitable business partners across the globe.
 E-Commerce helps organization to reduce the cost to create process, distribute, retrieve and
manage the paper based information by digitizing the information.
 E-commerce improves the brand image of the company.
 E-commerce helps organization to provide better customer services.
 E-Commerce helps to simplify the business processes and make them faster and efficient.
 E-Commerce reduces paper work a lot.
 E-Commerce increased the productivity of the organization. It supports "pull" type supply
management. In "pull" type supply management, a business process starts when a request
comes from a customer and it uses just-in-time manufacturing way.
Advantages to Customers

 24x7 support. Customer can do transactions for the product or enquiry about any
product/services provided by a company any time, any where from any location. Here 24x7
refers to 24 hours of each seven days of a week.
 E-Commerce application provides user more options and quicker delivery of products.
 E-Commerce application provides user more options to compare and select the cheaper and
better option.
 A customer can put review comments about a product and can see what others are buying or
see the review comments of other customers before making a final buy.
 E-Commerce provides option of virtual auctions.
 Readily available information. A customer can see the relevant detailed information within
seconds rather than waiting for days or weeks.
 E-Commerce increases competition among the organizations and as result organizations
provides substantial discounts to customers.
Advantages to Society

 Customers need not to travel to shop a product thus less traffic on road and
low air pollution.
 E-Commerce helps reducing cost of products so less affluent people can also
afford the products.
 E-Commerce has enabled access to services and products to rural areas as
well which are otherwise not available to them.
 E-Commerce helps government to deliver public services like health care,
education, social services at reduced cost and in improved way.
E-Commerce disadvantages

 can be broadly classified in two major categories:

 Technical disadvantages
 Non-Technical disadvantages
Technical Disadvantages

 There can be lack of system security, reliability or standards owing to poor

implementation of e-Commerce.
 Software development industry is still evolving and keeps changing rapidly.
 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 from network servers.
 Sometimes, it becomes difficult to integrate E-Commerce software or website
with the existing application or databases.
 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 Disadvantages

 Initial cost: The cost of creating / building E-Commerce application in-house may
be very high. There could be delay in launching the E-Commerce application due
to mistakes, lack of experience.
 User resistance: User may not trust the site being unknown faceless seller. Such
mistrust makes it difficult to make user switch from physical stores to
online/virtual stores.
 Security / Privacy: Difficult to ensure security or privacy on online transactions.
 Lack of touch or feel of products during online shopping.
 E-Commerce applications are still evolving and changing rapidly.
 Internet access is still not cheaper and is inconvenient to use for many potential
customers like one living in remote villages.
Value chain in e-commerce

 A value chain for a product is the chain of actions that are performed by the
business to add value in creating and delivering the product. The support
activities include procurement, technology development, human resource
management, and firm infrastructure.
 The primary activities of the value chain include inbound logistics, operation
outbound logistics, marketing and sales, and service. Secondary activities or
the support activities include firm infrastructure, human resources
management, and procurement.
 “The value chain describes the full range of activities that firms and workers
do to bring a product from its conception to its end use and beyond. This
includes activities such as design, production, marketing, distribution and
support to the final consumer.
The major elements of value chain

 “The value chain describes the full range of activities that firms and workers
do to bring a product from its conception to its end use and beyond. This
includes activities such as design, production, marketing, distribution and
support to the final consumer.
Purpose of value chain

 A value chain is a business term describing the full range of iterative activities
a company uses to create a product or a service. The purpose of value-chain
analysis is to increase production efficiency so that a company can deliver
maximum value for the least possible cost.
Importance of value chain

 Value chains help increase a business’s efficiency so the business can deliver
the most value for the least possible cost. The end goal of a value chain is to
create a competitive advantage for a company by increasing productivity
while keeping costs reasonable.
Current status of e-commerce in India
 For any ecommerce brand aiming for rapid growth or considering a region for expansion, India
is hard to ignore.
 India is one of the world’s largest consumer markets, ranking sixth in the World Bank’s survey
of global consumer markets. It is also a market with huge future potential.
 The country has seen strong economic growth over the past decade and the World Economic
Forum predicts it will become the world’s third largest consumer economy by 2030. Between
2014 and 2018, its ecommerce market more than tripled from $14 billion to $50 billion.
 It also has a young population and is on track to become the world’s most populous nation by
2026.
 In this article, we’ll take a look at:
 eCommerce in India pre-pandemic
 India’s major ecommerce sites
 eCommerce in India during the pandemic
 What to expect in the future
eCommerce sites in India

 The biggest players in Indian ecommerce landscape are:

 Flipkart
 Walmart-owned Flipkart is currently the biggest ecommerce site in India by market share. As of October 2020 its market share
sat at 31.9%, significantly less than the 39.5% it boasted less than four years earlier.
 Just like Amazon, Flipkart started out selling books, after which it switched to the universal online marketplace model.
 Amazon India
 Flipkart’s main competitor is Amazon India. As of October 2020, Amazon India had a market share of 31.2%, putting it just 0.5%
behind Flipkart. Amazon has invested heavily in its Indian arm, which began operations back in 2013.
 Amazon India is another universal online marketplace, which sells products from thousands of local vendors and other
businesses.
 Myntra
 Unlike the rest of the major ecommerce sites in India, Myntra specializes in one vertical - fashion & homewares. The vast
majority of Myntra’s sales come via its app. Myntra is actually majority-owned by Flipkart, which acquired it in 2014 for $280
million.
 Snapdeal
 Snapdeal is another general marketplace ecommerce site that sells products from a variety of different categories. Snapdeal is
the third largest ecommerce site in India in terms of monthly visitors. Its popularity is partly due to its focus on value products,
as opposed to branded products.
eCommerce loyalty programs in India

 With major ecommerce brands vying for their share of the Indian consumer
market, many of them have turned to customer loyalty initiatives.
 Amazon is a market leader in ecommerce customer loyalty thanks to Amazon
Prime. It’s offered in India for ₹329 per month, or ₹999 for the entire year. In
return, customers get priority shipping, plus access to Amazon Prime Music and
Amazon Prime Video. In 2020, Amazon Prime had 10 million subscribers in India.
 Flipkart’s competitor service, Flipkart Plus, approaches customer loyalty in a
different way. It’s based around Flipkart’s coin system, which rewards customers
with ‘supercoins’ for every item they buy.
 There’s no fee to take advantage of Flipkart Plus membership, customers just have
to earn 200 supercoins within the space of 12 months. They then get double the
standard 2 supercoin reward for every ₹100 they spend. Flipkart Plus offers free,
fast delivery.
 Snapdeal did have a subscription service, Snapdeal Gold, which offered free
delivery on items. But it has been discontinued.
The online marketplace model

 Under Indian law, foreign ecommerce businesses are only allowed to operate as third-party marketplaces.
This means they can only connect buyers and sellers, and can’t hold or sell their own inventory. This
regulation was enacted to protect India’s local businesses from large foreign competitors. As a result,
foreign ecommerce brands primarily list products from Indian sellers.
 This has been a bit of a headache for the big ecommerce sites, as many smaller, traditional Indian
businesses are still wary of ecommerce and online sales. As a result, the major ecommerce brands have
invested heavily in initiatives to encourage local vendors to sell online.
 Amazon Chai Cart program:
 Amazon launched its Chai Cart initiative in 2015 to help spread word about the benefits of ecommerce for
small businesses and goods producers. Amazon representatives traveled around 31 Indian cities, handing out
tea and other drinks, while talking to local businesses.
 After this, Amazon launched its Amazon Tatkal service, which provided mobile photography, cataloguing and
listing services to help vendors set up their online stores.
 Flipkart OneStop:
 Flipkart also launched its own outreach initiative called Flipkart OneStop. Just like Chai Cart, it aimed to
educate local businesses and vendors about selling online. Flipkart also launched Flipkart Spotlist, which,
just like Amazon Tatkal, provided photography and product listing services to get businesses ready to sell
online.
Types of business models (B2B, B2C, C2B,C2C)
with examples

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

in following categories.
 Business - to - Business (B2B)
 Business - to - Consumer (B2C)
 Consumer - to - Consumer (C2C)
 Consumer - to - Business (C2B)
 Business - to - Government (B2G)
 Government - to - Business (G2B)
 Government - to - Citizen (G2C)
 Business - to - Business (B2B)
 Website following B2B business model sells its product to an intermediate
buyer who then sells the product to the final customer. As an example, a
wholesaler places an order from a company's website and after receiving the
consignment, sells the end product to final customer who comes to buy the
product at wholesaler's retail outlet.
Business - to - Consumer (B2C)

 Website following B2C business model sells its product directly to a customer.
A customer can view products shown on the website of business organization.
The customer can choose a product and order the same. Website will send a
notification to the business organization via email and organization will
dispatch the product/goods to the customer.

Consumer - to - Consumer (C2C)
 Website following C2C business model helps consumer to sell their assets like
residential property, cars, motorcycles etc. or rent a room by publishing their
information on the website. Website may or may not charge the consumer for
its services. Another consumer may opt to buy the product of the first
customer by viewing the post/advertisement on the website.
Consumer - to - Business (C2B)
 In this model, a consumer approaches website showing multiple business
organizations for a particular service. Consumer places an estimate of amount
he/she wants to spend for a particular service. For example, comparison of
interest rates of personal loan/ car loan provided by various banks via
website. Business organization that fulfills the consumer's requirement within
specified budget approaches the customer and provides its services.
Business - to - Government (B2G)

 B2G model is a variant of B2B model. Such websites are used by government
to trade and exchange information with various business organizations. Such
websites are accredited by the government and provide a medium to
businesses to submit application forms to the government.
Government - to - Business (G2B)

 Government uses B2G model website to approach business organizations. Such

websites support auctions, tenders, and application submission
functionalities.
Government - to - Citizen (G2C)

 Government uses G2C model website to approach citizen in general. Such

websites support auctions of vehicles, machinery or any other material. Such
website also provides services like registration for birth, marriage or death
certificates. Main objectives of G2C website are to reduce average time for
fulfilling people requests for various government services.
Payment Systems
E-Commerce or Electronics 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 costs, labour cost. Being user friendly and less time consuming than
manual processing, helps business organization to expand its market reach /
expansion. Some of the modes of electronic payments are following.
 Credit Card
 Debit Card
 Smart Card
 E-Money
 Electronic Fund Transfer (EFT)
Security Systems
 Confidential - Information should not be accessible to unauthorized person. It
should not be intercepted during transmission.
 Integrity - Information should not be altered during its transmission over the
network.
 Availability - Information should be available wherever and whenever requirement
within time limit specified.
 Authenticity - There should be a mechanism to authenticate user before giving
him/her access to required information.
 Non-Repudiabiity - It is protection against denial of order or denial of payment.
Once a sender sends a message, the sender should not able to deny sending the
message. Similarly the recipient of message should not be able to deny receipt.
 Encryption - Information should be encrypted and decrypted only by authorized
user.
 Auditability - Data should be recorded in such a way that it can be audited for
integrity requirements.
Measures to ensure Security
 Major security measures are following:
 Encryption - It is a very effective and practical way to safeguard the data
being transmitted over the network. Sender of the information encrypts the
 data using a secret code and specified receiver only can decrypt the data
using the same or different secret code.
 Digital Signature -Digital signature ensures the authenticity of the
information. A digital signature is a e-signature authentic authenticated
through encryption and password.
 Security Certificates - Security certificate is unique digital id used to verify
identity of an individual website or user.
Security Protocols in Internet
 Following are the popular protocols used over the internet which ensures security of
transactions made over the internet.
 Secure Socket Layer (SSL)
 It is the most commonly used protocol and is widely used across the industry. It meets
following security requirements:
 Authentication
 Encryption
 Integrity
 Non-reputability
 "https://" is to be used for HTTP urls with SSL, where as "http:/" is to be used for HTTP urls
without SSL.
 Secure Hypertext Transfer Protocol (SHTTP)
 SHTTP extends the HTTP internet protocol with public key encryption, authentication and
digital signature over the internet. Secure HTTP supports multiple security mechanism
providing security to end users. SHTTP works by negotiating encryption scheme types used
between client and server.
Secure Electronic Transaction

 It is a secure protocol developed by MasterCard and Visa in collaboration.

Thereoritically, it is the best security protocol. It has following components:
 Card Holder's Digital Wallet Software - Digital Wallet allows card holder to
make secure purchases online via point and click interface.
 Merchant Software - This software helps merchants to communicate with
potential customers and financial institutions in secure manner.
 Payment Gateway Server Software - Payment gateway provides automatic
and standard payment process. It supports the process for merchant's
certificate request.
 Certificate Authority Software -This software is used by financial institutions
to issue digital certificates to card holders and merchants and to enable them
to register their account agreements for secure electronic commerce.
EDI
 EDI stands for Electronic Data Exchange. EDI is an electronic way of
transferring business documents in an organization internally between its
various departments or externally with suppliers, customers or any
subsidiaries etc. In EDI, paper documents are replaced with electronic
documents like word documents, spreadsheets etc.
EDI Documents

 Following are few important documents used in EDI:

 Invoices
 Purchase orders
 Shipping Requests
 Acknowledgement
 Business Correspondence letters
 Financial information letters
Steps in an EDI System

 Following are the steps in an EDI System.

 A program generates the file which contains the processed document.
 The document is converted into an agreed standard format.
 The file containing the document is send electronically on network.
 The trading partner receives the file.
 An acknowledgement document is generated and sent to the originating
organization.
Advantages of an EDI System
 Following are the advantages of an EDI System.
 Reduction in data entry errors. - Chances of errors are much less being use
of computer in data entry.
 Shorter processing life cycle - As orders can be processed as soon as they are
entered into the system. This reduced the processing time of the transfer
documents.
 Electronic form of data - It is quite easy to transfer or share data being in
electronic format.
 Reduction in paperwork - As lot of paper documents are replaced with
electronic documents there is huge reduction in paperwork.
 Cost Effective - As time is saved and orders are processed very effectively,
EDI proves to be higly cost effective.
 Standard Means of communication - EDI enforces standards on the content of
data and its format which leads to clearer communication.
Learning Outcomes : After successful completion of
the course you will be able to :

 Understand the E-commerce technology and its applications

 Understand the implementation of Information Systems in organizations

 Get familiarity with new terms and trends of computer technology