Unit 4

E-Business, E-Commerce, and M-Commerce

This unit explains the concepts of e-business, e-commerce, and m-commerce and their
relevance to business organizations and consumers. It also includes real-world examples
to demonstrate concepts clearly.

4.1 Introduction to E-Business

4.2 E-Commerce Fundamentals
4.3 Basics of M-Commerce
4.4 Differences between E-Business and E-Commerce
4.5 Differences between E-Commerce and M-Commerce
4.6 Guidelines and Laws Governing E-Commerce
4.7 Real-world Examples of E-Commerce and M-Commerce

LEARNING OBJECTIVES

At the end of this unit, the student should be able to:

1. define -business and its contributions to business organizations;
2. differentiate e-commerce from m-commerce;
3. understand and apply -business models in designing e-commerce websites for
business organizations; and
4. describe the challenges, barriers, and ethical implications involved in the adoption
of e-business in business organizations.

4.1 INTRODUCTION TO E-BUSINESS

The Internet (International network) is a large network used by business organizations to

establish -business and e-commerce websites. Computers connect to each other through
the Internet. It provides business organizations with opportunities to build relationships
with their customers and suppliers to help improve services and customer retention.
Customers and suppliers are encouraged to use -business services as a new and
convenient channel to do business transactions online.

The World Wide Web (WWW) provides unrestricted access to and publishing information
over the Internet using web browsers.

E-Business

E-business refers to any online-run business. It is also considered as a technique used

by business organizations to improve business strategy and be more productive and
profitable using IT.

Computer Networks

A computer network refers to the connection between computers to share information

and resources. The different types of computer networks are as follows:

a. Personal Area Network (PAN). This refers to a computer network that is used to allow
communication between devices close to each other. Examples of devices that use PAN
are printers, scanners (e.g.. barcode scanners), personal digital assistants (PDAs), and
game console. The allowable distance for these devices to connect ranges from 20 to 30
feet of approximately six to nine meters away from each other.

b. Local Area Network (LAN). This is one of the most commonly used computer networks
that cover a small area such as a house, room, or building.

C. Campus Area Network (CAN). This type

computer network is specifically used for academic institutions where LANs are
interconnected in a limited geographical area.
d. Metropolitan Area Network (MAN). This type of computer network is within the area of
a town or city where it connects two or more LANs or CANs.

e. Wide Area Network (WAN). This type of computer network is used within regional or
national areas.

f. International Network (Internet). This is considered as the largest computer network that
allows users to access without restrictions.

Networks Used For E-Business

a. Intranet. It refers to the internal network of a business organization, meaning only

authorized users can access the network through the Internet. It uses web browsers and
file transfer applications, which are under the supervision and control of the business
organization.

b. Extranet. It refers to the network of a business organization that has a limited scope,
giving access only to trusted entities. For example, a business organization may build an
extranet by letting its customers gain access to a portion of their intranet.

c. Internet. It is the largest network consisting of interconnected government, private,

public, academic, and business entities linked by various technologies ranging from
electronic and wireless to fiber optic. This connection is offered and managed by service
providers.

E-Business Opportunities

At the present, almost everyone uses the Internet. With the use of e-business, small and
large business organizations are provided with great opportunities to compete in the
global market. E-business has the ability to transmit and transform business information
and use it to achieve competitive advantage. Furthermore, it is designed to meet the
needs of a business organization's customers.

According to a research study conducted by Evans and Wurster entitled Strategies and
the New Economics of Information (1997), there are three basic characteristics of
information when combined with internet technologies, namely, reach, richness, and
affiliation.

1. Reach. It refers to the potential number of local and international customers of a

business organization that can interact with each other through the use of the
Internet. Reach can also be defined as the number of categories and products that
can be covered in a consumer interface. This includes catalogues, websites, and
so on.

2. Richness. It refers to the information that business organizations can share to their
consumers. This may include detailed information about a certain product which
includes the product name, description, price, and availability. Business
organizations should maintain the accuracy, reliability, and security of the
information transmitted through communication channels to prevent issues in the
future.

3. Affiliation. It refers to the effectiveness of the linkages between business

organizations. In terms of online partnerships, the business organizations with
more linkages to other organizations are able to gain more influence and reach.
For example, Google, Yahoo!, and eBay have tremendously and successfully
formed partnerships that provide them diverse information, thus making them the
leading online businesses today.

In addition, business organizations have the opportunity to build a strong and closer
relationship with their existing customers online to achieve customer retention. To
promote better customer service, business organizations are encouraged to use online
platforms, such as e-business and e-commerce, in offering high- quality services to
customers and giving them a convenient channel to purchase products and services.

Risks and Barriers to E-Business Adoption

E-business services open a lot of opportunities to business organizations. However, these

opportunities need to be balanced against the risks that may arise when conducting e-
business. These risks may include strategic and practical risks. An example of a strategic
risk is when a business makes a wrong decision to invest in e-business. Many companies
gain a competitive advantage, but others invest too much and fail which may possibly be
caused by inappropriate approaches and execution.

On the other hand, there are also practical risks associated with e-business which, if not
addressed, could hurt a business. For example, poor customer service manifested
through slow or no connection, unsecured systems, issues on privacy and data
protection, problems with online orders, and neglected customer emails.

4.2 E-COMMERCE FUNDAMENTALS

Electronic commerce, also known as e-commerce, refers to commercial transactions

executed online using the Internet. E-commerce is displayed through technologies such
as:

 Automated data collection systems

 Electronic funds transfer
 Electronic data interchange
 Internet marketing
 Inventory systems
 Online transaction processing
 Mobile commerce
 Supply chain management

E-commerce uses the World Wide Web (WWW) for its transactions. Examples of using
e-commerce are the sharing of business information, supporting of business
relationships, and managing and monitoring of business transactions using computers
that are connected to a telecommunication network.

However, using e-commerce has its advantages, disadvantages, and threats.

Buy-Side and Sell-Side E-Commerce

The difference between buy-side e-commerce and sell-side e-commerce is that the
former focuses on suppliers, and the latter focuses on the consumers or customers.

Sell-side e-commerce has four types of online presence, and each type has its own
objective and market. These types of online presence include transactional and e-
commerce websites, portal or media websites, brand building websites, and service
oriented websites. Many of the business organizations today combine one or more types
to capture the real market and audience.

Advantages of E-Commerce
 Efficient transactions done anytime and anywhere
 Quick electronic funds transfer
 Convenient buying or selling from home or place of business
 Reduced cost and time of order processing
 Simpler, faster, and cheaper supply chain management
 Quick reaching of target customers for small- and medium- sized enterprises
(SMEs)
 User-friendly ordering systems
Disadvantages of E-Commerce

 Lack of privacy of e-transactions

 Unsecured use of the Internet (presence of viruses, hackers, and so on)
 Depersonalized shopping

Threats of E-Commerce

 Servers containing important files and customer information being stolen

 Impostors duplicating e-commerce sites to steal customers' money
 Hackers attempting to steal customer information or mess up the site
 Authorized users with hidden motives attacking e-commerce systems and/or
selling information to competitors

Features of E-Commerce

The following are the features of e-commerce that must be checked and considered when
managing such type of business or company:

1. Ubiquity.
This means that the marketable transaction or activity is accessible at any time,
anywhere in the world.

2. Global Reach and Security.

E-commerce allows a company to get customers anywhere in the world. Global
reach, also known as worldwide access, is the maximum number of possible
consumers a business can reach. Security is essential when working globally;
therefore, customer information and privacy must be protected and ensured when
using an e-commerce platform.

3. Universal Standards.
This refers to a website that can be operated on a standard platform which follows
identified methods and systems. This employs an easy-to-use e-commerce
website with a simple design and content.

4. Richness.
This refers to the volume of the content of the website and the way it is used by
consumers. Ensuring a site's richness, by providing a combination of messages
and means to improve customer experience, is essential for businesses. Videos,
pictures, texts, sounds, and links can be used to improve customer experience.

5. Interactivity.
This feature refers to the relationship between a consumer and an e-commerce
website. It provides face-to-face customer meetings when conducting business
transactions. Increased interactivity allows for the establishment of an emotional
connection between consumers and the business, thus helping build brand trust
and loyalty.

6. Information Density.
This refers to the amount of products that can fit on a computer screen. There is
no given standard for an e-commerce website's information density.

Business Models of E-Commerce

The following are the general classifications of e commerce business models:

1. Business-to-Business (B2B)

B2B is a marketing type of business wherein businesses provide products or

services to other businesses for the production of goods, business operations, or
reselling of products. An example of a B2B transaction is a wholesaler selling
products to a retailer.
 B2B simply refers to e-commerce between different business organizations, which
could result in the establishment of good relationships between them. Experts
predict that this type of e-commerce will continue to grow in the future and could
possibly surpass the business-to-consumer model.

Examples of B2B websites in the Philippines are:

a. Philippine Companies - Filipino Business Directory

It was launched in 2007 by EACOMM Corporation. Its main objective is to help

people get answers for daily life questions such as a list of all coffee shops in
Manila or a list of all schools in Intramuros.

This business constructs its database from various public directories. One of
its features include daily updates of new data entries. Their growing database
makes them one of the largest business directories in the Philippines.

b. Pinoy Listing

This website provides a free listing of Filipino businesses ranging from markets
and restaurants to embassies and organizations, including businesses that
deliver products and services to homes. During 2017, Piny Listing reached
1,300 visitors and earned 10,660 views per day.

c. Yalwa

Founded in 2006, it is a global website that provides a descriptive directory for

businesses of varying industries. It can be accessed using two
websites: http://www.yalwa.com (for international access)
and http://www.yalwa.ph (for Philippine access).

Yalwa also provides a platform for customer ratings. These user ratings help
future buyers choose what products/services to avail.

2. Business-to-Consumer(B2C)

B2C is the type of commercial transaction in which businesses sell products or

services directly to consumers.

B2C is considered the most popular form of e-commerce. It is the second largest
model of e-commerce. B2C originated in e-retail wherein a customer visits a
website and purchases products online. It reduces transaction costs, increases the
number of consumers, and allows consumers to find the most competitive price of
a certain product.

One of the most popular websites for the B2C model is Amazon.com. B2C includes
the purchasing of both physical and information goods. Examples of physical
goods are tangible products such as books, laptops, mobile phones, and car
accessories, whereas examples of information goods are -books and software.

In the Philippines, the following are the top e-commerce websites:

 Lazada Philippines
 Shopee Philippines
 Zalora Philippines
 Metrodeal
 Globe Online Shop
 eBay Philippines

3. Consumer-to-Consumer (C2C)
 C2C is used similarly as the classified advertising section of a local newspaper or
an auction page. C2C is a convenient way for consumers to buy and sell goods
without physically going to a store.

4. Business-to-Government(B2G)

B2G is a business model that refers to a business that sells products, services, or
information to governments and/or government agencies. This B2G model
provides a means for businesses to bid on government projects or products that
are needed for their organizations, such as the Land Transportation Office (LTO)
with their license cards and plate numbers, Commission on Elections (COMELEC)
with their PCOS machines used during elections, and so on.

5. Government-to-Business(G2B)
This business model refers to government agencies that provide services or
information to a business organization. A B2G model website is used by the
government to approach and communicate with business organizations. Examples
of B2G model websites are those that support auctions, as well as bender and
application submissions.

6. Government-to-Citizen(G2C)
This model is being used by the government to approach and communicate with
citizens in general. The type of website this model implements provides services
such as birth registration, the acquisition of marriage and death certificates from
the Philippine Statistics Authority (PSA), or car registration from the Land
Transportation Office (LTO), and others.

The main purpose of the G2C model is to reduce the average time needed for
fulfilling citizens' requests for various government services.

E-Commerce Security Systems

Security is a fundamental part of any operation taking place over the Internet. Customers
will lose their faith in e-business if its security is breached. The following are indispensable
conditions for safe e-payments and/or transactions:

1. Auditability - data should be documented in such a way that it can be audited for
the real requirements.

2. Authenticity - there should be procedures to authenticate a user before giving

him/her access to the required information.

3. Availability - it is a requirement that information must be available anytime and

anywhere, and it must be bound by a time limit.

4. Confidentiality - information should be kept and not be accessible by an

unauthorized user. It should not be interrupted during the transmission.

5. Encryption - information must be secured through the encryption and decryption

of an authorized user.

6. Integrity - information must not be modified during its transmission over a network.
Honesty and strong moral principles must be applied.

7. Non-reputation - there should be assurance that someone cannot rebuff on

something. It is to certify that a person involved in the contract or in communication
cannot refute the authenticity of their signature on a document.
4.3 BASICS OF M-COMMERCE

Mobile commerce, also known as m-commerce, refers to the use of wireless handheld
devices, such as mobile phones, to conduct business-related transactions online. M-
commerce transactions conquer online business transactions, which include the
purchasing and selling of a wide range of products and services, online banking, bills
payment, and information delivery.

The capabilities of a mobile phone have enormously evolved since it was introduced in
the 1980s. Data transfer range has also progressed from analog cell phones with 1G to
the 4G of today's mobile phones. Many consumers still use the GSM technology (2nd
generation), which does not allow any Internet access. However, there are consumers
who use the 2.5G web access and 3G or 4G phones that allow access to even broadband
speed Internet access.

In today's generation, mobile technologies are widely used to access the Internet and do
online transactions using mobile phones. For several years, mobile phones are designed
primarily for sending text messages as a means of communication.
However, through time, many features were added, including video calls, access to
mobile apps, and so on.

The following are the benefits of mobile technologies:

1. Ubiquity. They allow users access anywhere.

2. Reachability. Users are easy to reach.
3. Convenience. There is no need for users to have fixed-line connections.
4. Security. They ensure that user information is free from the risk of loss or theft
through authentication.
5. Privacy. The degree of privacy is higher compared to a desktop PC.
6. Availability. Users can freely access them at any time of the day.

Many business organizations have converted their e-commerce portals into m-commerce
For example, Facebook (www.facebook.com/can be accessed; through mobile devices
because of the Wireless Application Protocol (WAP).

M-Commerce Forces
The following are the four (4) main forces that support m-commerce:

1. Fourth (4th) and Third (3rd) Generation Technologies

Fourth (4th) generation technologies, developed in 2012-2015, with a maximum

data transfer rate of 24 Mbit/s, adopted m-commerce. However, third (3rd)
generation technologies were introduced in 2004, with a rate of 14.4 Mbit/s of
maximum data transfer, and had the adoption rate of 28% in both Europe and the
US according to Comscore.

2. Wireless Application Protocol (WAP)

This is a technical standard used for the transfer of information to specific wireless
devices, such as mobile phones. It was introduced in 2000, and it displays
information and content in small screens like that of mobile devices.

3. iMode Access Platforms

This is another form of mobile access that was introduced by the Japanese. Its so-
called Japanese ¡Mode standard displays content using HTML. The most Popular
iMode downloads are ringtones, music, and dating services.

4. Personalized Services
 Mobile phone users have increased tremendously over the past years. Consumers
can gain access to wireless service whenever there is an available network. Mobile
operators are able to detect a user’s specific location and identification.
Personalized services that can be used anytime are offered to mobile users.

Top M-Commerce Applications in the Philippines

Kemp and Moey (2019), in an article about e-commerce in the Philippines, state that "the
Philippines has the smallest internet economy " among six primary markets in Southeast
Asia. Furthermore, the amount Filipinos spend on online purchases is $4.7 billion, and
they spend $3.5 billion on travel purchases and $840 million on electronics and physical
media.

In May 2019, it is reported that Shopee and Lazada were the dominating m-commerce
applications in the country. The following are the top m-commerce applications in the
Philippines:

1. Lazada
2. Shopee
3. Zalora
4. Amazon
5. AliExpress
6. BeautyMnl
7. eBay
8. Sephora
9. Alibaba
10. Althea

4.4 DIFFERENCES BETWEEN E-BUSINESS AND E-COMMERCE

E-commerce and e-business are two evolving methods of conducting business that are
gaining importance with the passage of time. IBM defined e-business as "the
transformation of key business processes through the use of Internet technologies."
These key business processes involve marketing, research, logistics, manufacturing, and
supply chain management. On the other hand, e-commerce is best described as the
buying and selling of goods around the web, which is commonly known as online
transactions.

E-commerce is a subset of e-business because the majority of the transactions done in

e-commerce are also part of e-business, such as ordering, paying, purchasing, and so
on. The main differences between the two are the end-user and integration. E-business
refers to the conduct of business using Internet technologies. It does not focus on buying
and selling alone but providing services to customers and collaborating effectively with
business partners.

Basis for comparison E-Commerce E-Business

Definition Trading of merchandise Running a business using
over the Internet the internet
Focus on monetary Yes No
transactions
Type of transactions Commercial transactions Business transactions
carried out
Requirements Website or mobile app Website, customer
relationship management,
enterprise resource
planning, supply chain
management
Required Work Internet Internet, intranet, and
extranet
4.5 DIFFERENCES BETWEEN E-COMMERCE AND M-COMMERCE

Technology has helped make people's lives better. With the use of the Internet, everything
is available at one's fingertips. Purchasing products no longer requires physical
appearances in stores owing to technologies such as e-commerce and m-commerce.

M-commerce refers to the operation of business transactions through the Internet using
mobile devices, such as smartphones, while e-commerce makes use of computer
desktops or laptops.

Accessing online shops using smartphones can be done anytime and anywhere as long
as the WiFi, 3G, or 4G signal is available.

Web World (E-Commerce) Mobile World (M-Commerce)

Internet Access through a laptop or
desktop is necessary for e-commerce
The buying and selling of products and
services are done with the use of the
Internet
It requires devices such as computers
and laptops.
The platforms used are webstores
Mobility is limited as you cannot carry
computers everywhere. Even with the use offers more mobility, accessibility, and
of laptops, one needs enough space, and convenience.
although it is portable, it is not as light as
mobile phones.
It is less costly as the store is created on
the web and can be accessed using the
internet.
As it is applicable to a broader area,
customization for each user is not
possible.
Its interface is more complicated, and
more functions are available.
M-commerce is done through wireless
connectivity using mobile devices
The buying and selling of products and
services are done with the use of mobile
phones that have access to the internet
or cellular data.
It requires devices such as cellphones,
iPads and tablets.
The platforms used are web stores
(mobile version/web app), hybrid app,
and native app.
As mobile devise are easy to carry, it
It is costly as a mobile app is required,
and cellular data or Internet use is
necessary.
Mobile devices are usually owned by an
individual, so anyone can use the
customized app to fulfill their business or
personal needs.
It promotes easy use because all the
functions are simplified.

4.6 GUIDELINES AND LAWS GOVERNING E-COMMERCE

Having a plan is essential for building an online store. There are limitations and guidelines
to be followed when implementing e-commerce, and planning beforehand saves a
company time and resources.

The following are challenges that may interfere with starting an online business:

1. Taxes.

Every state and/or country has different rules and laws regarding taxes. Therefore,
conducting research and understanding your target market are necessary to avoid
problems about taxation.

2. Trademarks, Patents, and Copyrights

There are misconceptions about the definitions of the three above-mentioned

words, especially with each one of them having different legal implications. The
 United States Patent and Trademark Office provides the following definitions for
the three words:
• Trademark. It is a distinguishing word, phrase, symbol, and/or design that
identifies the uniqueness of a product or service of one party from the
others.
• Patent. It is a property right granted by the US Patent and Trademark Office
to an invention for its public disclosure for a limited period of time.
• Copyright. It protects works of authorship, such as writings, music, and
works of art, that have been tangibly expressed.

3. Shipping Restrictions.

Shipping companies have different restrictions on products or goods. Doing

research will help identify which shipping companies could best serve a business.
The following are products typically restricted for shipping:
a. Air bags
b. Animals
c. Perishable materials, such as fresh fruits and vegetables and alcohol
d. Hazardous materials, such as aerosols, ammunition, cigarettes, dry ice,
explosives, nail polish, perfumes, and poisons.

Some companies allow the shipment of the aforementioned items but require
additional fees and documents.

4. Inventory

There are certain rules and prohibitions that align with lease, deed, or zoning codes
when it comes to stock inventory for businesses.

5. Business Restrictions

Different types of insurance exist for small businesses such as general, product,
professional, and commercial liability insurances and home-based insurance. The
insurance depends on the location and nature of a business.

For example, the product liability insurance is meant for companies that are liable
for the safety of the products they manufacture, wholesale, distribute, and retail.

6. Licenses and Permits

A license is needed to sell products or services. Licenses are dependent on the

location of a business and are distributed by a local licensing department.

7. Payment Card Industry (PCI) Compliance

PCI compliance serves as protection for online businesses, especially software-

as-a-service(Saas) e-commerce platforms, from problems such as data theft.

Being PCI compliant also means having to avoid the storage of oral and written
information regarding purchases. For example, keeping the card number of a
customer recorded on a phone call is prohibited.

Many business organizations face challenges in dealing with security in e-commerce.

Security is a fundamental part of an e-commerce website that prioritizes the protection of
data regarding customers, finance, marketing, employees, and internal business
operations. Furthermore, the most important concern of business managers in -business
or e-commerce is security because it affects the quality of their service.

The Philippines has established laws and legal requirements regarding the security of
customer information. The following are some of the relevant laws and legal requirements
in the country concerning customer security.
 1. Republic Act 8792 - Electronic: Commerce Act of 2000
This covers the mandates of the Philippine government in terms of
executing online transactions locally or internationally.

2. Republic Act 10173 - Data Privacy Act of 2012

This prohibits the communication and sharing of written, electronic, and
recorded information by an individual to another. Information can be from
documents, e-books, electronic data messages, and so on. The law
involves the following three (3) main individuals:

a. Data Subject. This refers to an individual whose personal information

is being processed
b. Personal Information Controller. This refers to an individual, person,
or business organization that controls, holds, and processes
personal information and instructs another individual, person, or
business organization to control, hold, and process the personal
information on his/her behalf.
c. Personal Information Processor. This refers to a juridical person
qualified to take action under the act.

3. Consumer Protection Regulation – Transactions through E-Commerce

The Department of Trade and Industry (DTI), with the participation of other
government agencies, issued a consumer protection regulation that
provides protection to consumers when buying and selling products and
services through the use of e-commerce.

5. Tax Guidelines for E-Commerce Transactions in the Philippines

On August 5, 2013, the Bureau of Internal Revenue issued Revenue Memorandum
Circular No. 55-2013, Reiterating Taxpayers' Obligations in Relation to Online
Business Transactions. The main purpose of this circular is to remind individuals
and business organizations to handle sales and taxes properly when conducting
online transactions.

4.7 REAL-WORLD EXAMPLES OF E-COMMERCE AND M-COMMERCE

E-Commerce Websites

1. Amazon
It is an American e-commerce website that gives users an opportunity to
buy products online worldwide.

2. eBay
It is an American e-commerce website that provides various services to
consumers such as auctions, online payments, and online shopping.

3. Alibaba
It is a well-known Chinese company that is now part of the global market of
e-commerce. It specializes in retail, the Internet, and technology.

Examples of M-commerce

1. Mobile vouchers

2. eToro mobile app. It is a platform that can be used to invest in stocks or trading.