Unit- 3

E-COMMERCE INFRASTRUCTURE
Overview:

This unit provides an overview of the key components and concepts of e-commerce infrastructure.
It covers the technology concepts that underpin e-commerce, such as the internet, web browsers,
and security protocols. The unit also discusses the enablers of e-commerce, such as online payment
systems, electronic data interchange (EDI), and supply chain management systems. Furthermore,
the unit delves into the concept of digital signatures and how they are used to verify the
authenticity of electronic documents and transactions. It also covers the components of the
distribution system. Finally, the unit explores the concept of collaborative commerce, which
involves the use of technology to facilitate collaboration and communication between businesses
and their partners, suppliers, and customers. This includes concepts such as electronic
marketplaces, business-to-business (B2B) exchanges, and online communities. Overall, this unit
aims to provide a comprehensive understanding of the various components and concepts that
make up the e-commerce infrastructure.

Course Outcome:

ODM- 2007.3 Analyse the opportunities and risk factors involved in conducting e-Business.

Topics to be covered:
3.1 Key Technology Concepts
3.2 Enablers of E-commerce
3.3 Digital signature
3.4 Components of distribution system
3.5 Collaborative Commerce

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

3.1 Key Technology Concepts

Packet Switching:

Packet switching is a method of transmitting data over a network. It involves breaking down data into small
units called packets, which are then transmitted individually over the network. Each packet contains the
source and destination addresses, as well as the actual data being transmitted.

When a packet is sent, it is routed through the network to its destination based on the destination address in
the packet header. The packet may take different paths through the network, depending on the current
state of the network and the availability of different routes. This allows for more efficient use of network
resources and helps to ensure that data gets delivered even if there are network failures or congestion.

Packet switching is used in many different types of networks, including the Internet. It is an important part of
how data is transmitted over the Internet, as it allows data to be sent and received quickly and efficiently
between different locations.

One example of packet switching in action is when you browse the internet. When you enter a website
address into your web browser, your computer sends a request for that website to a server. The request is
broken down into packets, which are sent over the Internet to the server. The server receives the packets
and reassembles them into the original request, then sends the requested webpage back to your computer
in the form of packets. Your computer receives the packets and reassembles them into the webpage that
you see in your browser. This entire process is facilitated by packet switching.

TCP/IP: TCP/IP (Transmission Control Protocol/Internet Protocol)

TCP/IP stands for Transmission Control Protocol/Internet Protocol. It is a set of networking protocols used
for communicating over the Internet or other networks.

TCP is a connection-oriented protocol that is responsible for establishing a reliable data transmission
between two devices. It breaks data into packets and sends them over the network, keeping track of each

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

packet and retransmitting any that are lost or corrupted. TCP ensures that packets are delivered in the
correct order and without errors.

IP is a protocol responsible for routing data packets from one network to another. It provides a way for data
to be sent from one device on a network to another device on a different network. IP is responsible for
addressing packets and routing them through the network to their intended destination.

TCP/IP has four layers:

I. Application layer: This is the layer that contains the protocols and interfaces used by applications to
communicate with the network. Examples include HTTP for web browsing, SMTP for email, and FTP
for file transfer.

II. Transport layer: This layer is responsible for end-to-end communication between devices. TCP and
User Datagram Protocol (UDP) are the most commonly used protocols in this layer.

III. Internet layer: This layer is responsible for routing packets across different networks. The Internet
Protocol (IP) is the primary protocol used in this layer.

IV. Network interface layer: This layer is responsible for transmitting packets between devices on the
same network. It includes protocols for accessing the physical network, such as Ethernet.

TCP/IP is used extensively in the Internet and many other networks. It provides a standard set of protocols
for data communication and has contributed to the growth and widespread adoption of the Internet.

A hierarchical distributed naming system for computers, services, and other resources linked to the internet
or a private network is called DNS (Domain Name System). It is used to convert IP addresses into human-
readable domain names.

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

URLs (Uniform Resource Locators)

URL stands for Uniform Resource Locator. It is a string of characters that provides a web address or a link to
a specific resource on the Internet. A URL consists of several parts, including:

I. Protocol: This is the method used to access the resource, such as HTTP (HyperText Transfer Protocol)
or HTTPS (HTTP Secure).

II. Domain Name: This is the unique name given to a website, such as google.com or facebook.com.

III. Port: This is a number used to identify a specific process to which data is being sent, such as port 80
for HTTP or port 443 for HTTPS.

IV. Path: This is the location of the specific resource on the server, such as /about or /contact-us.

V. Query Parameters: These are optional parameters that can be used to pass data to a server or
application, such as ?search=term or ?id=123.

For example, the URL for the Google search engine is:

https://www.google.com/search?q=search+engine&oq=search+engine&aqs=chrome.0.35i39l2j0l4j46j69i60.
3196j1j7&sourceid=chrome&ie=UTF-8

In this URL, the protocol is HTTPS, the domain name is google.com, and the path is /search. The query
parameter is ?q=search+engine, which tells the server to search for the term "search engine".

URLs are used to access resources on the Internet, such as websites, images, videos, or documents. They are
an essential part of web browsing and communication on the Internet.

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

HTTP (Hypertext Transfer Protocol)

HTTP stands for Hypertext Transfer Protocol. It is the primary protocol used for communication on the World
Wide Web. When a user requests a webpage or resource from a server, the server responds with the
requested information using HTTP.

HTTP is a stateless protocol, which means that each request and response is independent of any previous
request or response. This allows for faster and more efficient communication between clients and servers.

HTTP requests and responses consist of several parts, including:

I. Method: This is the type of request being made, such as GET, POST, PUT, DELETE, or HEAD.

II. URL: This is the web address or link to the resource being requested.

III. Headers: These are additional pieces of information included in the request or response, such as
cookies, authentication credentials, or caching instructions.

IV. Body: This is the data being sent with the request or response, such as form data or the content of a
webpage.

For example, when a user types a URL into their web browser, the browser sends an HTTP request to the
server asking for the webpage. The server responds with an HTTP response that includes the HTML, CSS, and
JavaScript files that make up the webpage. The browser then renders the webpage for the user to view.

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

HTTP has several versions, with HTTP/1.1 being the most widely used version currently. However, it has
some limitations in terms of speed and security, which has led to the development of newer protocols such
as HTTP/2 and HTTPS.

Internet service provider (ISP):

An ISP is a company that provides internet access and related services to consumers and businesses. ISPs
offer a variety of internet connection options, such as dial-up, DSL, cable, fiber optic, and wireless.

ISPs provide their customers with access to the internet by using a variety of network technologies and
infrastructure. For example, some ISPs may use their own fiber optic or coaxial cables to provide internet
access to customers, while others may lease network capacity from other providers.

ISPs also offer a variety of services and features to their customers, such as email, web hosting, online
storage, and security software. Some ISPs may also offer value-added services such as parental controls,
spam filtering, and virus protection.

ISPs are regulated by government bodies in many countries, which oversee their activities and ensure that
they adhere to certain standards and regulations. ISPs may also have their own policies and guidelines, such
as acceptable use policies, which outline the rules and restrictions for using their services.

Overall, ISPs play a critical role in providing access to the internet, which has become an essential part of
modern life for many people and businesses around the world.

3.2 Enablers of E-commerce

3.2.1 Infrastructure
E-commerce infrastructure includes the hardware, software, and services needed to support the website's
operation. This includes servers, storage devices, load balancers, and other hardware, as well as operating
systems, web servers, and databases. To ensure the infrastructure is reliable, e-commerce sites often use
redundancy, failover mechanisms, and backup systems.

Networking: Networking involves the connectivity between the e-commerce website and its users, as well as
between the various components of the website infrastructure. This includes network protocols, routers,

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

switches, firewalls, and other devices that enable data transfer and communication. Networking is essential
for ensuring that the website can handle high traffic volumes, is secure from cyber threats, and provides a
fast and reliable user experience.

The Internet

The internet is a global network of interconnected computer networks that allows users to exchange
information and communicate with each other making it the backbone of e-commerce. It is a vast network of
computers, servers, routers, switches, and other devices that are connected together to enable
communication and data exchange.

The internet enables users to access a wide variety of services and resources, such as email, web browsing,
social media, online shopping, video conferencing, and many other applications. It is a decentralized network
that allows users to connect with each other and share information without being limited by geographical
barriers or time zones.

The internet is made up of various protocols and technologies that work together to provide seamless
connectivity and communication as TCP/IP , DNS: The Domain Name System, HTTP/HTTPS .

The internet has revolutionized the way we live and work, and it continues to evolve and expand with new
technologies and innovations. It has become an essential tool for communication, commerce, education,
entertainment, and much more.

Payment systems: E-commerce transactions require a way to process payments from customers. Payment
systems allow online merchants to accept payments from customers via credit/debit cards, digital wallets,
bank transfers, and other methods. Popular payment systems include PayPal, Stripe, Square, and
Authorize.net.

Security: As with any online activity, security is crucial in e-commerce to protect customers' personal and
financial information. Security measures include using SSL certificates, encryption technologies, two-factor
authentication, and secure payment gateways to ensure that customers' sensitive data is protected.

Databases: E-commerce websites need databases to store and manage data related to products, customers,
orders, and transactions. Popular databases used in e-commerce include MySQL, PostgreSQL, and Oracle.

Hardware/Servers: E-commerce websites require robust hardware and servers to ensure that the site can
handle high traffic volumes and provide a seamless user experience. This includes using reliable servers,
storage devices, and networking equipment to ensure that the website is always up and running.

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

Software: E-commerce websites rely on software applications to manage inventory, process payments, and
provide a smooth customer experience. Popular e-commerce software solutions include Magento, Shopify,
WooCommerce, and BigCommerce.

Cloud computing: Cloud computing enables e-commerce websites to scale up or down as needed, without
having to invest in expensive hardware and infrastructure. Cloud-based solutions like Amazon Web Services
(AWS) and Microsoft Azure provide on-demand computing resources, storage, and applications that can be
accessed from anywhere in the world.

Various Internet and web-based services available for managing business

Web-Based CRM: Customer relationship management (CRM) systems provide businesses with a way to
manage relationships with their customers. A web-based CRM allows customers to access and manage their
information, as well as to track customer interactions and analyze customer data.

Online project management: Companies may manage teams and projects from a single, accessible platform
thanks to online project management technologies. Task scheduling, progress monitoring, and resource
management are some examples of this.

Online Accounting Solutions: Online accounting solutions provide businesses with a way to manage their
finances, including invoicing, bookkeeping, and payroll.

Online Marketing Solutions: Online marketing solutions allow businesses to create and manage digital
marketing campaigns, track their results, and measure the effectiveness of their efforts.

Online Storage: Cloud storage solutions allow businesses to store and access their data securely from any
device, anywhere.

Online Collaboration Tools: Online collaboration tools provide businesses with a way to connect and
collaborate with teams, vendors, and clients in real-time.

Web-based help desk solutions: These solutions provide organisations a way to monitor and address client
enquiries and concerns.

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

 Figure 3.1 Salesforce CRM Solution -A cloud based CRM service
(Source: Salesforce https://www.emizentech.com/salesforce.html )

3.2.2 Content and Digital Marketing Tools

1. Email: Email is an important communication tool used for both personal and business purposes. It
allows for quick and easy communication with individuals and groups.

2. Instant Messaging: A text-based, real-time communication technology, instant messaging allows

users to interact with one another more quickly than email.

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

 3. Streaming Media: Streaming media is a technology that allows users to view or listen to audio or
video content without downloading the entire file.

4. Web2.0: Web2.0 is a term that refers to the evolution of the internet over the past decade. It has
enabled users to create and share content on the web, and has led to the development of social
networks, blogs, and other web-based technologies.

5. Social Networks: Social networks are websites that allow users to connect and interact with each
other. These networks create virtual communities that connect people from all over the world.

6. Blogs: Authors of blogs regularly update their online journals or diaries. Public opinion, thoughts, and
experiences are often shared on blogs.

7. Users may subscribe to online information using a method called RSS, or Really Simple Syndication.
The user is then given access to this material through an RSS feed.

8. Podcast: Podcasts are audio or video files that are distributed over the internet. They are often used
to deliver news, music, and other types of media to users.

9. Music and Video Streaming: Music and video streaming is a technology that allows users to listen or
watch audio and video content without downloading the entire file.

10. Wikis: Wikis are websites that allow users to collaborate and create content. They are often used in
educational or business settings to facilitate collaboration.

3.3 Digital signature

A digital signature is a sort of electronic signature that is used to verify the sender's identity and guarantee
that the message or document's original content is preserved after being transferred digitally. It is typically
created using encryption technology and is widely used in many industries and applications, such as online
banking and e-commerce transactions.

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

3.3.1 How Digital Signatures work?

A public key and a private key are used in a cryptographic procedure to produce digital signatures. The data
is encrypted using the public key, and it is decrypted using the private key. When a communication is
digitally signed, the sender encrypts the data using their private key to produce a distinct digital signature.
The contents and signature may then be verified by the receiver using the sender's public key, proving that
they were sent by the sender and were not tampered with.

Figure 3.1 How digital signature works?

(Source: https://comodosslstore.com/blog/what-is-digital-signature-how-does-it-work.html)

3.3.2 Uses of Digital Signatures

Digital signatures are electronic signatures that use cryptographic methods to verify the authenticity of a
document or transaction. Here are some common uses of digital signatures:

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

 I. Legal Docs: Digital signatures can be used to sign legal documents such as contracts, agreements,
and deeds. Digital signatures are legally binding and can provide evidence of the signer's intent to
enter into the agreement.

II. For Online Transactions: Digital signatures can be used to authenticate online transactions such as
purchases, bank transfers, and other financial transactions. Digital signatures can provide assurance
that the transaction is genuine and has not been tampered with.

III. Email Secured: Digital signatures can be used to secure emails by verifying the identity of the sender
and ensuring the integrity of the message content. This can be useful in situations where sensitive or
confidential information is being transmitted via email.

IV. Legal Compliance: Digital signatures can be used to comply with legal and regulatory requirements.
For example, some jurisdictions require certain types of documents to be signed using digital
signatures.

V. Identity Verification: Digital signatures can be used to verify the identity of individuals in various
contexts, such as online account creation or access to sensitive information. Digital signatures can
provide a secure and reliable way to verify the identity of the signer.

VI. Efficient Workflow: Digital signatures can streamline business processes by eliminating the need for
physical signatures and paper-based document management. Digital signatures can save time and
money by reducing the administrative burden of managing paper documents and signatures.

Overall, digital signatures provide a secure and reliable way to authenticate documents and transactions,
verify identities, and streamline business processes.

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

3.4 Components of distribution system

1. Warehousing:

Warehousing is an essential component of the logistics and supply chain management process. It
involves the physical location where goods are stored and managed before being delivered to
customers. A well-organized warehouse is crucial to ensuring that the right products are available at
the right time and in the right quantity. Effective warehousing involves proper inventory
management, efficient layout and design, and careful monitoring of product movement.

2. Inventory Management:

Inventory management is a critical component of the supply chain management process that
involves tracking, controlling, and monitoring inventory levels to ensure that goods are available
when needed. The goal of inventory management is to maintain adequate stock levels while
minimizing excess inventory, reducing holding costs, and preventing stockouts. This involves
accurate demand forecasting, efficient ordering and replenishment, and effective stock tracking and
management.

3. Transportation:

Transportation is the process of moving goods from one place to another. It plays a crucial role in
the supply chain process, ensuring that products are delivered to customers on time and in good
condition. Effective transportation involves choosing the right mode of transportation, managing
logistics, and ensuring timely delivery. It also involves careful management of shipping and
transportation costs, as these can impact profitability.

4. Packaging

Packaging is the process of preparing goods for distribution and delivery. It involves labelling,
wrapping, and packing products to ensure that they are protected during transportation and arrive
in good condition. Effective packaging involves choosing the right packaging materials, designing an
efficient packaging process, and ensuring that packaging is both cost-effective and environmentally
friendly.

5. Distribution Channels

Distribution channels refer to the methods used to move goods from the manufacturer to
customers. This can include direct-to-consumer, retail, and online channels. Effective distribution
channel management involves understanding customer preferences and behaviours, choosing the

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

 right distribution channels, and ensuring that products are delivered to customers quickly and
efficiently. This also involves working closely with retailers and other partners to ensure that
products are displayed and marketed effectively.

6. Customer Service:

Customer service is the process of providing direct customer support for orders and inquiries. It
involves order processing, returns, and customer support. Effective customer service involves
responding promptly to customer inquiries and complaints, ensuring that orders are processed
efficiently and accurately, and providing ongoing support and assistance to customers. It is crucial to
building strong customer relationships and promoting customer loyalty.

3.5 Collaborative Commerce

Collaborative commerce (also known as c-commerce) is a business strategy that involves collaboration and
coordination between two or more companies to create mutually beneficial outcomes. The objective of
collaborative commerce is to achieve greater efficiencies, reduce costs, and enhance value creation for all
parties involved. This is done through the sharing of information, resources, and expertise to create a more
integrated and seamless supply chain.

3.5.1 Various forms of Collaborative commerce:

1. Joint procurement: Companies can pool their purchasing power and negotiate better prices and
terms from suppliers. This approach can result in significant cost savings and more favourable
supplier relationships.
2. Joint marketing: Companies can collaborate on marketing initiatives to reach a broader audience or
promote complementary products or services. This approach can help increase brand awareness,
customer loyalty, and revenue.
3. Joint development: Companies can work together to develop new products, technologies, or services
that leverage each other's expertise and resources. This approach can lead to innovation, faster
time-to-market, and reduced costs.
4. Joint logistics: Companies can share logistics and distribution networks to improve efficiency and
reduce costs. This approach can help optimize inventory management, reduce lead times, and
improve customer satisfaction.

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

Collaborative commerce relies on technology to facilitate communication and coordination between
partners. This includes tools like electronic data interchange (EDI), enterprise resource planning (ERP)
systems, and customer relationship management (CRM) software.

3.5.2 Benefits of collaborative commerce:

1. Cost savings: By pooling resources and sharing information, companies can reduce costs and
improve efficiency.
2. Improved supply chain visibility: Collaborative commerce enables greater visibility into the supply
chain, which can help identify areas for improvement and reduce the risk of disruptions.
3. Increased innovation: By leveraging each other's expertise and resources, companies can drive
innovation and create new products, services, and technologies.
4. Improved customer satisfaction: Collaborative commerce can result in faster, more accurate order
fulfillment, improved product quality, and better customer service, all of which can lead to greater
customer satisfaction.

In summary, collaborative commerce is a business strategy that involves collaboration and coordination
between companies to achieve greater efficiencies, reduce costs, and enhance value creation. This approach
relies on technology to facilitate communication and coordination, and can take many forms, including joint
procurement, joint marketing, joint development, and joint logistics. The benefits of collaborative commerce
include cost savings, improved supply chain visibility, increased innovation, and improved customer
satisfaction.

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

 Case Study 3.1

Airbnb is an excellent example of collaborative commerce, where people can rent out their spare rooms or
entire homes to travellers. This case study will analyse Airbnb's business model, strategy, and success
factors. Airbnb's business model is based on collaborative commerce, where it connects hosts who have
extra space with travellers who need a place to stay. Airbnb acts as an intermediary between the two parties
and earns a commission on each transaction. The company's primary revenue stream is commissions on
bookings, which range from 6% to 12% of the total cost.

Airbnb's strategy is to offer travellers a unique and authentic experience, while at the same time providing
hosts with a new source of income. The company achieves this by providing a platform for hosts to showcase
their properties and offering travellers the ability to search and book unique accommodations. Airbnb's
strategy also involves investing in technology to make the booking process as seamless as possible. Airbnb's
success can be attributed to several factors, including its business model, unique offerings, and focus on
customer experience. The company's collaborative commerce model has enabled it to offer a unique and
diverse range of accommodations, from treehouses to castles, which sets it apart from traditional hotel
options. Additionally, Airbnb's focus on providing a personalized and authentic experience for travellers has
contributed to its success.

Another significant factor in Airbnb's success is its investment in technology. The company's platform offers
a user-friendly interface, allowing hosts to manage their listings easily, and travellers to book their stays
seamlessly. Airbnb's use of user reviews and ratings also provides travellers with an added level of trust and
transparency when booking accommodations.

Answer the following:

a. How Airbnb creates value?

b. What are the factors responsible for Airbnb’s success?
c. Highlight the benefits offered to travellers and hosts.

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

 Case Study: 3.2

Collaborative E-commerce Design and Production in the Automobile Industry

Collaborative e-commerce in the automobile industry can also refer to the use of digital platforms to
facilitate collaboration between different companies involved in the design and production of vehicles. This
can include everything from suppliers of parts and components to manufacturers and distributors.

One example of a company using collaborative e-commerce in the automobile industry is Ford, which has
developed an online portal called Ford Supplier Portal that allows suppliers to access information on design
specifications, quality requirements, and production schedules. This platform helps to facilitate collaboration
between Ford and its suppliers, allowing them to work more effectively together to bring new vehicles to
market.

Questions:

 What are some advantages of using collaborative e-commerce in the automobile industry for both
manufacturers and suppliers?

 How does collaborative e-commerce differ from traditional supply chain models, and what are some
potential challenges associated with this approach?

 How can collaborative e-commerce platforms be designed to provide a more streamlined and
efficient collaboration process, and what role do technologies like artificial intelligence and machine
learning play in this process?

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India

Summary

This unit provides a comprehensive overview of the various aspects that comprise the e-commerce
infrastructure. It covers key technology concepts such as the internet, web browsers, and security protocols,
which form the backbone of e-commerce. The unit also discusses the enablers of e-commerce, including
payment systems, EDI, and supply chain management systems, which help businesses to conduct
transactions online. Additionally, the unit explores the concept of digital signatures and how they are used to
verify the authenticity of electronic documents and transactions. It covers the components of the
distribution system, such as inventory management, warehousing, and transportation, which are essential
for the efficient delivery of goods and services in e-commerce. Finally, the unit delves into collaborative
commerce, which is an increasingly important aspect of e-commerce, facilitating collaboration and
communication between businesses and their partners, suppliers, and customers. Concepts such as
electronic marketplaces, B2B exchanges, and online communities are covered in detail. Overall, this unit
provides a comprehensive understanding of the e-commerce infrastructure and the key components and
concepts that underpin it.

Self-Learning Material (ODM-2007) CDOE-Department of Business Studies, NCU, India