The Study Hall College

Affiliated to University of Lucknow

BBA VI Sem
E-Commerce
UNIT – I

E-Commerce: Meaning, Characteristics,

Advantage and Disadvantage
E-Commerce or Electronic Commerce means buying and selling of goods, products, or services
over the internet. E-commerce is also known as electronic commerce or internet commerce.
These services provided online over the internet network. Transaction of money, funds, and data
are also considered as E-commerce. These business transactions can be done in four ways:
Business to Business (B2B), Business to Customer (B2C), Customer to Customer (C2C),
Customer to Business (C2B). The standard definition of E-commerce is a commercial transaction
which is happened over the internet. Online stores like Amazon, Flipkart, Shopify, Myntra,
Ebay, Quikr, Olx are examples of E-commerce websites. By 2020, global retail e-commerce can
reach up to $27 Trillion.

E-commerce is a popular term for electronic commerce or even internet commerce. The name is
self-explanatory, it is the meeting of buyers and sellers on the internet. This involves the
transaction of goods and services, the transfer of funds and the exchange of data.

So when you log into your Amazon and purchase a book, this is a classic example of an e-
commerce transaction. Here you interact with the seller (Amazon), exchange data in form of
pictures, text, address for delivery etc. and then you make the payment.

Characteristics of E-Commerce

E-commerce is characterized by the following features:

(i) The business tools are electronic and the application is commerce, i.e. profit motive.

(ii) Business is externally focused on those with whom business is conducted.

(iii) Most of the transactions are processed automatically.

(iv) Uses a gamut of business support services, such as inter-organizational e-mail and on-line
directories.

Examples of E-Commerce
  Amazon
 Flipkart
 eBay
 Fiverr
 Upwork
 Olx
 Quikr

Advantages of e-commerce

 E-commerce provides the sellers with a global reach. They remove the barrier of place
(geography). Now sellers and buyers can meet in the virtual world, without the hindrance
of location.
 Electronic commerce will substantially lower the transaction cost. It eliminates many
fixed costs of maintaining brick and mortar shops. This allows the companies to enjoy a
much higher margin of profit.
 It provides quick delivery of goods with very little effort on part of the customer.
Customer complaints are also addressed quickly. It also saves time, energy and effort for
both the consumers and the company.
 One other great advantage is the convenience it offers. A customer can shop 24×7. The
website is functional at all times, it does not have working hours like a shop.
 Electronic commerce also allows the customer and the business to be in touch directly,
without any intermediaries. This allows for quick communication and transactions. It also
gives a valuable personal touch.

Disadvantages of e-commerce

 The start-up costs of the e-commerce portal are very high. The setup of the hardware and
the software, the training cost of employees, the constant maintenance and upkeep are all
quite expensive.
 Although it may seem like a sure thing, the e-commerce industry has a high risk of
failure. Many companies riding the dot-com wave of the 2000s have failed miserably.
The high risk of failure remains even today.
 At times, e-commerce can feel impersonal. So it lacks the warmth of an interpersonal
relationship which is important for many brands and products. This lack of a personal
touch can be a disadvantage for many types of services and products like interior
designing or the jewelry business.
 Security is another area of concern. Only recently, we have witnessed many security
breaches where the information of the customers was stolen. Credit card theft, identity
theft etc. remain big concerns with the customers.
 Then there are also fulfillment problems. Even after the order is placed there can be
problems with shipping, delivery, mix-ups etc. This leaves the customers unhappy and
dissatisfied.

Types of e-commerce Models

Electronic commerce can be classified into four main categories. The basis for this simple
classification is the parties that are involved in the transactions. So the four basic electronic
commerce models are as follows,

1. Business to Business

This is Business to Business transactions. Here the companies are doing business with each
other. The final consumer is not involved. So the online transactions only involve the
manufacturers, wholesalers, retailers etc.

2. Business to Consumer

Business to Consumer. Here the company will sell their goods and/or services directly to the
consumer. The consumer can browse their websites and look at products, pictures, read reviews.
Then they place their order and the company ships the goods directly to them. Popular examples
are Amazon, Flipkart, Jabong etc.

3. Consumer to Consumer

Consumer to consumer, where the consumers are in direct contact with each other. No company
is involved. It helps people sell their personal goods and assets directly to an interested party.
Usually, goods traded are cars, bikes, electronics etc. OLX, Quikr etc follow this model.

4. Consumer to Business

This is the reverse of B2C, it is a consumer to business. So the consumer provides a good or
some service to the company. Say for example an IT freelancer who demos and sells his software
to a company. This would be a C2B transaction.

Difference between e-Commerce and e-

Business
e-commerce

e-commerce is an abbreviation used for electronic commerce. It is the process through which the
buying, selling, dealing, ordering and paying for the goods and services are done over the
internet is known as e-commerce. In this type of online commercial transaction, the seller can
communicate with the buyer without having a face-to-face interaction.

Some examples of real-world application of e-commerce are online banking, online shopping,
online ticket booking, social networking, etc.
The basic requirement of e-commerce is a website. The marketing, advertising, selling and
conducting transaction are done with the help of internet. Any monetary transaction, which is
done with the help of electronic media is e-commerce.

The following are the types of e-commerce:

B2B: The process where buying and selling of goods and services between businesses is known
as Business to Business. Example: Oracle, Alibaba, Qualcomm, etc.

B2C: The process whereby the goods are sold by the business to customer. Example: Intel, Dell
etc.

C2C: The commercial transaction between customer to customer. Example: OLX, Quickr etc.

C2B: The commercial transaction between customer to the business.

e-Business

More of a general branch of e-commerce, E-business refers to carrying out business activities
through digital platforms. This is one of the emerging modes of doing business which is gaining
momentum and popularity in the digital age. Further, Intranet, internet and extranet networks are
used in this e-business.

e-business is not confined to buying and selling of goods only, but it includes other activities that
also form part of business-like providing services to the customers, communicating with
employees, client or business partners can contact the company in case if they want to have a
word with the company, or they have any issue regarding the services, etc. All the basic business
operations are done using electronic media. There are two types of e-business, which are:

 Pure-Play: The business which is having an electronic existence only. Example:

Hotels.com
 Brick and Click: The business model, in which the business exists both in online i.e.
electronic and offline i.e. physical mode.

E-Commerce E-Business
E-Commerce refers to the performing
E-Business refers to performing all type of business
online commercial activities,
activities through internet.
transactions over internet.
E-Commerce is a narrow concept and
E-Business is a broad concept and it is considered as a
it is considered as a subset of E-
superset of E-Commerce.
Business.
Commercial transactions are carried
Business transactions are carried out in e-business.
out in e-commerce.
In e-commerce transactions are
In e-business transactions are not limited.
limited.
It includes activities like buying and It includes activities like procurement of raw
 materials/goods, customer education, supply activities
selling product, making monetary
buying and selling product, making monetary transactions
transactions etc over internet.
etc over internet.
It usually requires the use of only a It requires the use of multiple websites, CRMs, ERPs that
website. connect different business processes.
It involves mandatory use of internet. It involves the use of internet, intranet or extranet.
E-commerce is more appropriate in E-business is more appropriate in Business to Business
Business to Customer (B2C) context. (B2B) context.
E-Commerce covers outward/external E-Business covers internal as well as external business
business process. process/activities.

The Role of E- Commerce in Supply Chain

Management
Business efficiency at all operational levels is critical for the success of e-commerce. Supply
chain management is an essential component of e-commerce. Supply chain management in e-
commerce focusses on procurement of raw material, manufacturing, and distribution of the right
product at the right time. It includes managing supply and demand, warehousing, inventory
tracking, order entry, order management, distribution and delivery to the customer.

The e-commerce industry is not just limited to setting up a website and selling products online. It
includes product configuration, suitable infrastructure, logistics, secured payment gateway, and
supply chain management. An efficient supply chain accelerates e-commerce processes to meet
customers’ expectations.

Vital Components forming the Supply Chain and Logistics Processes of E-commerce Industry:

Inventory Management: Inventory is a critical component of supply chain management.

According to the traditional inventory model, businesses used their own warehouses to sell the
products directly to customers. But, now as per the risk-pooling strategy, e-commerce businesses
do not hold their own inventory and rather outsource their inventory to a larger wholesaler. It
enables e-commerce businesses to reduce the risk of keeping their own inventory.

Several businesses are adopting the drop-shipping model for inventory. According to this model,
a store does not hold the product it sells on the website, rather it purchases the product from a
third-party and ships it to the customer.

Reverse Logistics: E-commerce businesses also have an SCM structure which entails reverse
logistics. Reverse logistics is defined as the planning and execution of the movement of goods
from the point of consumption to the point of origin. Almost, all e-commerce businesses provide
the facility of exchange and returns. This increases the need for logistics.

Optimized Inventory Management, a Must-have for Supply Chain Management in E-commerce

Product Availability and Service Level:

The success of an e-commerce website depends on customer satisfaction. If customers cannot

buy the right product at the right time, they will immediately switch to other e-commerce stores.
A service level of 95% of products is ideal for e-commerce success. The slow delivery process
increases the risk of losing potential customers and can even cause a negative impact on the
reputation of the business.

From inventory to logistics and purchase to supplier management, processes should be well-
coordinated and optimized. Even if one link of the supply chain doesn’t function well the entire
supply chain management will fail, resulting in loss of revenue.

Customer Reviews:

The reputation of an e-commerce business is measured by customer reviews and experiences. It

is a critical factor that impacts the growth of an online store. Price comparison search engines are
the first point of contact for online shoppers. The search engine ranking is also done based on
customer reviews. To receive good reviews, the delivery of the right product at the right time is
necessary.

Platforms like Amazon and eBay use internal key figures to assess the credibility of distributors.
These platforms have supply chain key performance indicator (KPI) targets. If the KPI is below
certain minimum values, then penalties in the form of account suspension can be imposed.

Excess Inventory Increases Costs:

E-commerce businesses are expanding rapidly due to which they reach their limit on inventory
management. With the growth in business, product portfolio, supplier base and surge in returns
also grow at a rapid pace.

Increasing inventory drastically is common mistake e-commerce businesses make to meet the
demands of customers. Inventory represents a significant portion of the total investment of e-
commerce businesses. Excess inventory can mutate into obsolete stock (dead capital) which can
lead to increased costs.

Role of Supply Chain Management In E-Commerce

 Supply chain management helps E-commerce business to track their business across the
network and provides complete transparency.
 Supply chain management plays a vital role in connecting the customers to the business
through websites so that the customers can communicate directly with the organizations.
Organizations form company websites to stay connected with the customers and collect
feedback regularly.
 Supply Chain Management provides a global platform for organizations for trading. It
plays an active role in the import and export of products and raw materials.
  Supply chain management is also helping to promote virtual business, where
organizations can list their products on online portals. Supply chain management does all
that is required to send the products to their customers.
 Supply chain management software comes useful to coordinate and monitor the
movement of products and services to ensure they are delivered to customers on time. It
also helps to execute the activities that are required to satisfy the customer’s
requirements.
 Supply chain management helps to reduce company costs by removing retail units, and
excess staff since the process is mostly done online.
 E-Commerce businesses aim at customer satisfaction. This is where supply chain
management plays a vital role. It helps to keep track of the requirements of customers and
ensures the products and services are delivered to customers on time.
 E-Commerce Supply Chain further helps companies maintain proper inventory by
monitoring the time taken to deliver a product to ensure customers are satisfied with the
service.

Strategies of Supply Chain Management for E-Commerce

 The main focus of any E-commerce Business is to deliver a product on time to its
customers. Therefore SCM has developed a strategy to strengthen the inbound supply
chain by accessing the currently existing problems and finding solutions to them,
identifying the vendors who are responsible for the delay, Implementing compliance
programs for vendors, and ensuring faster and cheaper ways of conducting final checks
on supply chains.
 Supply chain management has further developed strategies that help in lowering the cost
and time for delivery.
 Since organizations can monitor the inflow and outflow of products on regular basis
through the SCM software, the normal capacity of a warehouse can be utilized to its
fullest by tracking the products being delivered and are yet to be sent to customers.
 It further has developed strategies that have reduced manual labor. All the documentation
can be done and stored in the machines. This helps reduce the risk of human errors and
also adds to the efficiency of the organizations using supply chain management because
the processing time considerably reduces. Students who are finding it difficult to
understand how supply chain management increases the market efficiency can take
marketing assignment help from professionals. They guide students and help them gain
more clarity.
 Supply Chain Management further helps to reduce labor costs by making the most of
their skills. It has also developed strategies to streamline the process of taking orders. As
a result, the number of accepting orders in a day has increased leading to more revenue.
 It has also helped in the growth and development of E-Commerce by making the most of
the existing warehouses reducing the outbound expenditures by using logistics of the
third party.

The Value Chain of Business Function

 A company is in essence a collection of activities that are performed to design, produce, market,
deliver and support its product (or service). It’s goal is to produce the products in such a way that
they have a greater value (to customers) than the orginal cost of creating these products. The
added value can be considered the profits and is often indicated as ‘margin’. A systematic way of
examining all of these internal activities and how they interact is necessary when analyzing the
sources of competitive advantage. A company gains competitive advantage by performing
strategically important activities more cheaply or better than its competitors. Michael Porter’s
value chain helps disaggregating a company into its strategically relevant activities, thereby
creating a clear overview of the internal organization. Based on this overview managers are
better able to assess where true value is created and where improvements can be made.

One company’s value chain is embedded in a larger stream of activities that can be considered
the supply chain or as Porter mentions it: the Value System. Suppliers have a value chain
(upstream value) that create and deliver the purchased inputs. In addition, many products pass
through the value chain of channels (channel value) on their way to the buyer. A company’s
product eventually becomes part of its buyer’s value chain. This article will not go into the entire
supply chain (from suppliers all the way to the end-consumer), but rather focuses on one
organization’s value chain. The value chain activities can be divided into two broader types:
primary activities and support activities.

Primary Activities

The first are primary activities which include the five main activities. All five activities are
directly involved in the production and selling of the actual product. They cover the physical
creation of the product, its sales, transfer to the buyer as well as after sale assistance. The five
primary activities are inbound logistics, operations, outbound logistics, marketing & sales and
service. Even though the importance of each category may vary from industry to industry, all of
these activities will be present to some degree in each organization and play at least some role in
competitive advantage.

1. Inbound Logistics

Inbound logistics is where purchased inputs such as raw materials are often taken care of.
Because of this function, it is also in contact with external companies such as suppliers. The
activities associated with inbound logistics are receiving, storing and disseminating inputs to the
product. Examples: material handling, warehousing, inventory control, vehicle scheduling and
returns to suppliers.

2. Operations

Once the required materials have been collected internally, operations can convert the inputs in
the desired product. This phase is typically where the factory conveyor belts are being used. The
activities associated with operations are therefore transforming inputs into the final product form.
Examples: machining, packaging, assembly, equipment maintenance, testing, printing and
facility operations.

3. Outbound Logistics

After the final product is finished it still needs to finds it way to the customer. Depending on how
lean the company is, the product can be shipped right away or has to be stored for a while. The
activities associated with outbound logistics are collecting, storing and physically distributing the
product to buyers. Examples: finished goods warehousing, material handling, delivery vehicle
operations, order processing and scheduling.

4. Marketing & Sales

The fact that products are produced doesn’t automatically mean that there are people willing to
purchase them. This is where marketing and sales come into place. It is the job of marketers and
sales agents to make sure that potential customers are aware of the product and are seriously
considering to purchase them. Activities associated with marketing and sales are therefore to
provide a means by which buyers can purchase the product and induce them to do so. Examples:
advertising, promotion, sales force, quoting, channel selection, channel relations and pricing. A
good tool to structure the entire marketing process is the Marketing Funnel.

5. Service

In today’s economy, after-sales service is just as important as promotional activities. Complaints

from unsatisfied customers are easily spread and shared due to the internet and the consequences
on your company’s reputation might be vast. It is therefore important to have the right customer
service practices in place. The activities associated with this part of the value chain are providing
service to enhance or maintain the value of the product after it has been sold and delivered.
Examples: installation, repair, training, parts supply and product adjustment.
Support Activities

The second category is support activities. They go across the primary activities and aim to
coordinate and support their functions as best as possible with eachother by providing purchased
inputs, technology, human resources and various firm wide managing functions. The support
activities can therefore be divided into procurement, technology development (R&D), human
resource management and firm infrastructure. The dotted lines reflect the fact that procurement,
technology development and human resource management can be associated with specific
primary activities as well as support the entire value chain.

1. Procurement

Procurement refers to the function of purchasing inputs used in the firm’s value chain, not the
purchased inputs themselves. Purchased inputs are needed for every value activity, including
support activities. Purchased inputs include raw materials, supplies and other consumable items
as well as assets such as machinery, laboratory equipment, office equipment and buildings.
Procurement is therefore needed to assist multiple value chain activities, not just inbound
logistics.

2. Technology Development (R&D)

Every value activity embodies technology, be it know how, procedures or technology embodied
in process equipment. The array of technology used in most companies is very broad.
Technology development activities can be grouped into efforts to improve the product and the
process. Examples are telecommunication technology, accounting automation software, product
design research and customer servicing procedures. Typically, Research & Development
departments can also be classified here.

3. Human Resource Management

HRM consists of activities involved in the recruiting, hiring (and firing), training, development
and compensation of all types of personnel. HRM affects the competitive advantage in any firm
through its role in determining the skills and motivation of employees and the cost of hiring and
training them. Some companies (especially in the technological and advisory service industry)
rely so much on talented employees, that they have devoted an entire Talent Management
department within HRM to recruit and train the best of the best university graduates.

4. Firm Infrastructure

Firm infrastructure consists of a number of activities including general (strategic) management,

planning, finance, accounting, legal, government affairs and quality management. Infrastructure
usually supports the entire value chain, and not individual activities. In accounting, many firm
infrastructure activities are often collectively indicated as ‘overhead’ costs. However, these
activities shouldn’t be underestimated since they could be one of the most powerful sources of
competitive advantage. After all, strategic management is often the starting point from which all
smaller decisions in the firm are being based on. The wrong strategy will make it extra hard for
people on the workfloor to perform well.

Linkages within the Value Chain

Although value activities are the building blocks of competitive advantage, the value chain is not
a collection of independent activities. Rather, it is a system of interdependent activities that are
related by linkages within the value chain. Decisions made in one value activity (e.g.
procurement) may affect another value activity (e.g. operations). Since procurement has the
responsibility over the quality of the purchased inputs, it will probably affect the production
costs (operations), inspections costs (operations) and eventually even the product quality. In
addition, a good working automated phone menu for customers (technology development) will
allow customers to reach the right support assistant faster (service). Clear communication
between and coordination across value chain activities are therefore just as important as the
activities itself. Consequently, a company also needs to optimize these linkages in order to
achieve competitive advantage. Unfortunately these linkages are often very subtle and go
unrecognized by the management thereby missing out on great improvement opportunities.

In the end, Porter’s Value Chain is a great framework to examine the internal organization. It
allows a more structured approach of assessing where in the organization true value is created
and where costs can be reduced in order to boost the margins. It also allows to improve
communication between departments. Combining the Value Chain with the VRIO Framework is
a good starting point for an internal analysis. In case you are interested in the entire supply chain,
you could repeat the process by adding the value chains of your company’s suppliers and buyers
and place them in front and behind your own company’s value chain.
Competitive Advantage
There is no one answer about what is competitive advantage or one way to measure it, and for
the right reason. Nearly everything can be considered as competitive edge, e.g. higher profit
margin, greater return on assets, valuable resource such as brand reputation or unique
competence in producing jet engines. Every company must have at least one advantage to
successfully compete in the market. If a company can’t identify one or just doesn’t possess it,
competitors soon outperform it and force the business to leave the market.

There are many ways to achieve the advantage but only two basic types of it: cost or
differentiation advantage. A company that is able to achieve superiority in cost or differentiation
is able to offer consumers the products at lower costs or with higher degree of differentiation and
most importantly, is able to compete with its rivals.

In business, a competitive advantage is the attribute that allows an organization to outperform its
competitors. A competitive advantage may include access to natural resources, such as high-
grade ores or a low-cost power source, highly skilled labor, geographic location, high entry
barriers, and access to new technology.

The following diagram illustrates the basic competitive advantage model-

 1. External Changes

(i) Changes in PEST factors

PEST stands for political, economic, socio-cultural and technological factors that affect firm’s
external environment. When these factors change many opportunities arise that can be exploited
by an organization to achieve superiority over its rivals. For example, new superior machinery,
which is manufactured and sold only in South Korea, would result in lower production costs for
Korean companies and they would gain cost advantage against competitors in a global
environment. Changes in consumer demand, such as trend for eating more healthy food, can be
used to gain at least temporary differentiation advantage if a company would opt to sell mainly
healthy food products while competitors wouldn’t. For example, Subway and KFC.
If opportunities appear due to changes in external environment why not all companies are able to
profit from that? It’s simple, companies have different resources, competences and capabilities
and are differently affected by industry or macro environment changes.

(ii) Company’s ability to respond fast to changes

The advantage can also be gained when a company is the first one to exploit the external change.
Otherwise, if a company is slow to respond to changes it may never benefit from the arising
opportunities.

2. Internal Environment

(i) VRIO resources

A company that possesses VRIO (valuable, rare, hard to imitate and organized) resources has an
edge over its competitors due to superiority of such resources. If one company has gained VRIO
resource, no other company can acquire it (at least temporarily). The following resources have
VRIO attributes:

 Intellectual property (patents, copyrights, trademarks)

 Brand equity
 Culture
 Know-how
 Reputation

(ii) Unique competences

Competence is an ability to perform tasks successfully and is a cluster of related skills,

knowledge, capabilities and processes. A company that has developed a competence in
producing miniaturized electronics would get at least temporary advantage as other companies
would find it very hard to replicate the processes, skills, knowledge and capabilities needed for
that competence.

(iii) Innovative capabilities

Most often, a company gains superiority through innovation. Innovative products, processes or
new business models provide strong competitive edge due to the first mover advantage. For
example, Apple’s introduction of tablets or its business model combining mp3 device and iTunes
online music store.

Types of Competitive Advantage

1. Porter has identified 2 basic types of competitive advantage: cost and differentiation advantage.

1. Cost advantage
Porter argued that a company could achieve superior performance by producing similar quality
products or services but at lower costs. In this case, company sells products at the same price as
competitors but reaps higher profit margins because of lower production costs. The company that
tries to achieve cost advantage (like Amazon.com) is pursuing cost leadership strategy. Higher
profit margins lead to further price reductions, more investments in process innovation and
ultimately greater value for customers.

2. Differentiation advantage

Differentiation advantage is achieved by offering unique products and services and charging
premium price for that. Differentiation strategy is used in this situation and company positions
itself more on branding, advertising, design, quality and new product development (like Apple
Inc. or even Starbucks) rather than efficiency, outsourcing or process innovation. Customers are
willing to pay higher price only for unique features and the best quality.

The cost leadership and differentiation strategies are not the only strategies used to gain
competitive advantage. Innovation strategy is used to develop new or better products, processes
or business models that grant competitive edge over competitors.

Competitive Analysis
A competitive analysis identifies your competitors and evaluates their strategies to determine
strengths and weaknesses relative to your brand. A competitive analysis often includes a SWOT
analysis that helps the marketer define a competitive marketing plan.

A competitive analysis is a critical part of your company marketing plan. With this evaluation,
you can establish what makes your product or service unique–and therefore what attributes you
play up in order to attract your target market.

Evaluate your competitors by placing them in strategic groups according to how directly they
compete for a share of the customer’s dollar. For each competitor or strategic group, list their
product or service, its profitability, growth pattern, marketing objectives and assumptions,
current and past strategies, organizational and cost structure, strengths and weaknesses, and size
(in sales) of the competitor’s business. Answer questions such as:

 Who are your competitors?

 What products or services do they sell?
 What is each competitor’s market share?
 What are their past strategies?
 What are their current strategies?
 What type of media are used to market their products or services?
 How many hours per week do they purchase to advertise through the media used in this
market?
 What are each competitor’s strengths and weaknesses?
 What potential threats do your competitors pose?
 What potential opportunities do they make available for you?
A quick and easy way to compare your product or service with similar ones on the market is to
make a competition grid. Down the left side of a piece of paper, write the names of four or five
products or services that compete with yours. To help you generate this list, think of what your
customers would buy if they didn’t buy your product or service.

Need of Competitive Analysis

Knowing how your competition acts and thinks can have a major impact on your own business.
If you’re competing for the same market share, you need to know how they’re acquiring business
and what you might be able to do to win some of your own.

When conducted the right way, your analysis can help you find potential gaps in the market and
create new products or services to fill them. In doing so, you can make your marketing more
effective and potentially stay ahead of your competitors (or at the very least, have a greater
ability to shift faster when they change up their strategy).

Entrepreneurs agonize over how they can differentiate their service or product offering, and a
competitive analysis is arguably your best opportunity. By identifying holes or weaknesses in
your competitors’ strategies, you can better tailor your own strategy to pick up where they leave
off.

Today’s technology has made it easier than ever to do intelligent recon on the competition and
collect trustworthy data. Let’s look at what’s involved in the process and how you can conduct
your own competitor’s analysis like a pro.

Benefits of competitive analysis

Competitive analysis should be viewed as an ongoing process whereby your company continues
to understand the strengths, weaknesses, opportunities and threats in relation to your
competition. Most businesses already gather information about their competition, but many small
business owners don’t recognise it as competitive analysis. The difference is the quality of
information that is gained or lost by hiring an outside source. In our mind, the most important
thing to take away is to recognise that any information about your competition is considered
competitive analysis and to think about it in those terms.

There are a series of business benefits you can gain by having insight into the competitive
landscape, particularly if you track products, prices, staffing, research and development, and
other aspects of the competition on an ongoing basis. “This is so a business can understand the
external and internal environments they’re operating in,” says Ken Garrison, chief executive
officer of the Society of Competitive Intelligence Professionals (SCIP).

There are quite a few benefits to be gained by having specific insight into the landscape of your
niche market, especially if information is itemised. For example, if your company sells computer
monitors, tracking your competitions products offered, price points, staff levels, social media
traffic and promotion scheduling might offer significant insight into their company over a year
and even more insight over a five year period.
The following are benefits that can be gleaned from conducting competitive analysis:

 Understanding the market

 Better targeting customers
 Market potential forecasting
 Economic climate tracking
 Competitor product tracking
 Competitor pricing
 Tertiary market possibilities
 Customer acquisition

Different Types of e-Commerce:

Business to Business (B2B) business Model
A website following the B2B business model sells its products to an intermediate buyer who then
sells the products to the final customer. As an example, a wholesaler places an order from a
company’s website and after receiving the consignment, it sells the end product to the final
customer who comes to buy the product at the wholesaler’s retail outlet.
B2B identifies both the seller as well as the buyer as business entities. B2B covers a large
number of applications, which enables business to form relationships with their distributors, re-
sellers, suppliers, etc. Following are the leading items in B2B e-Commerce.

 Electronics
 Shipping and Warehousing
 Motor Vehicles
 Petrochemicals
 Paper
 Office products
 Food
 Agriculture

Key Technologies

Following are the key technologies used in B2B e-commerce:

 Electronic Data Interchange (EDI): EDI is an inter-organizational exchange of business

documents in a structured and machine processable format.
 Internet: Internet represents the World Wide Web or the network of networks connecting
computers across the world.
 Intranet: Intranet represents a dedicated network of computers within a single organization.
 Extranet: Extranet represents a network where the outside business partners, suppliers, or
customers can have a limited access to a portion of enterprise intranet/network.
 Back-End Information System Integration: Back-end information systems are database
management systems used to manage the business data.

Architectural Models

Following are the architectural models in B2B e-commerce:

 Supplier oriented marketplace: In this type of model, a common marketplace provided by

supplier is used by both individual customers as well as business users. A supplier offers an e-
stores for sales promotion.
 Buyer oriented marketplace: In this type of model, buyer has his/her own market place or e-
market. He invites suppliers to bid on product’s catalog. A Buyer company opens a bidding site.
 Intermediary Oriented marketplace: In this type of model, an intermediary company runs a
market place where business buyers and sellers can transact with each other.

Business to Consumer (B2C) business Model

In B2C model, a business website is a place where all the transactions take place directly
between a business organization and a consumer.
In the B2C model, a consumer goes to the website, selects a catalog, orders the catalog, and an
email is sent to the business organization. After receiving the order, goods are dispatched to the
customer. Following are the key features of the B2C model:

 Heavy advertising required to attract customers.

 High investments in terms of hardware/software.
 Support or good customer care service.

Consumer Shopping Procedure

Following are the steps used in B2C e-commerce:

A consumer:

 Determines the requirement.

 Searches available items on the website meeting the requirement.
 Compares similar items for price, delivery date or any other terms.
 Places the order.
 Pays the bill.
 Receives the delivered item and review/inspect them.
 Consults the vendor to get after service support or returns the product if not satisfied with the
delivered product.

Disintermediation and Re-intermediation

In traditional commerce, there are intermediating agents like wholesalers, distributors, and
retailers between the manufacturer and the consumer. In B2C websites, a manufacturer can sell
its products directly to potential consumers. This process of removal of business layers
responsible for intermediary functions is called disintermediation.
Nowadays, new electronic intermediary breeds such as e-mall and product selection agents are
emerging. This process of shifting of business layers responsible for intermediary functions from
traditional to electronic mediums is called re-intermediation.

Consumer to Consumer (C2C) business

Model
Consumer to consumer (C2C) markets provide an innovative way to allow customers to
interact with each other. Traditional markets require business to customer relationships, in which
a customer goes to the business in order to purchase a product or service. In customer to
customer markets, the business facilitates an environment where customers can sell goods or
services to each other. Other types of markets include business to business (B2B) and business to
customer (B2C).

Consumer to consumer (or citizen-to-citizen) electronic commerce involves the electronically

facilitated transactions between consumers through some third party. A common example is an
online auction, in which a consumer posts an item for sale and other consumers bid to purchase
it; the third party generally charges a flat fee or commission. The sites are only intermediaries,
just there to match consumers. They do not have to check quality of the products being offered.

Consumer to consumer (C2C) marketing is the creation of a product or service with the
specific promotional strategy being for consumers to share that product or service with others as
brand advocates based on the value of the product. The investment into conceptualizing and
developing a top of the line product or service that consumers are actively looking for is
equitable to a retail pre-launch product awareness marketing.

Business model
Most C2C websites, such as eBay, have both streamlined and globalized traditional person-to-
person trading, which was usually conducted through such forms as garage sales, collectibles
shows, flea markets and more, with their web interface. This facilitates easy exploration for
buyers and enables the sellers to immediately list an item for sale within minutes of registering.

When an item is listed on a C2C site, a nonrefundable insertion fee is charged based on the
seller’s opening bid on the item. Once the auction is completed, a final value fee is charged. This
fee generally ranges from 1.25 percent to 5 percent of the final sale price.

After the C2C site sets up the system in which bids could be placed, items can be put up for sale,
transactions can be completed, seller fees are charged, and feedback can be left, while the C2C
site stays in the background. For example, at the end of an auction, the C2C site notifies the
buyer via e-mail that he or she has won. The C2C site also e-mails the seller to report who won
and at what price the auction finished. At that point it’s up to the seller and buyer to finish the
transaction independently of the C2C site.

C2C sites make money by charging fees to sellers. Although it’s free to shop and place bids,
sellers place fees to list items for sale, add on promotional features, and successfully complete
transactions.

Many C2C sites have expanded and developed existing product categories by introducing
category-specific bulletin boards and chat rooms, integrating category-specific content,
advertising its service in targeted publications and participating in targeted trade shows. eBay
specifically has also broadened the range of products that it offers to facilitate trading on the site,
including payment services, shipping services, authentication, appraisal, vehicle inspection and
escrow services.

Specialty marketplaces have also been added to serve the specialized needs of buyers and sellers.
For example, eBay Motors serves the automotive marketplace, including vehicles, parts and
accessories; and Half.com (now closed) was focused on providing a fixed-price trading
environment, initially for books music, videos and video games.

Many online auction sites use a system called PayPal for sellers to receive online payments
securely and quickly. A traditional credit card is not required to use this site because PayPal can
be linked directly to your bank account.

There are various platforms that Consumer-to-consumer e-commerce is taking place on, such as
social media (e.g. Facebook), advertisement websites (e.g. Craigslist) and online auction sites
(e.g. eBay).

Advantages

Customer to Customer C2C marketing has become very popular in the recent years. Customers
can directly contact sellers and eliminate the middle man. Moreover, anyone can now sell and
advertise a product in the convenience of one’s home enabling one to easily start a business.
Therefore, a wide variety of products can often be found on auction sites such as eBay, including
second-hand goods. Since majority of these sales occur over the internet, sellers can reach both
national and international customers and greatly increase their market. Feedback on the
purchased product is often requested to aid both the seller and potential customers. The actual
buying and searching process is simplified and search costs, distribution costs, and inventory
costs are all reduced. Moreover, the transactions occur at a swift rate with the use of online
payment systems such as PayPal.

Disadvantages

Although online auctions allow sellers to display their products, there is often a fee associated
with such exhibitions. Other times, websites may charge a commission when products are sold.
With the growing use of online auctions, the number of internet-related auction frauds have also
increased. For instance, a seller may create two accounts on an auction site. When an interested
buyer bids for an item, the seller will use another account to bid on the same item and thus,
increasing the price. Consequently, many users have purchased products at unnecessarily inflated
prices.

Identity theft has become a rising issue. Scam artists often create sites with popular domain
names such as “ebay” in order to attract unknowing eBay customers. These sites will ask for
personal information including credit card numbers. Numerous cases have been documented in
which users find unknown charges on their credit card statements and withdrawals in their bank
statements after purchasing something online. Unfortunately, websites often have a liability
statement claiming that they are not responsible for any losses or damages. Furthermore, illegal
or restricted products and services have been found on auction sites. Anything from illegal drugs,
pirated works, prayers, and even sex have appeared on such sites. Although most of these items
are blacklisted, some still find their way onto the internet.

Consumer to Business (C2B) business Model

In this model, a consumer approaches a website showing multiple business organizations for a
particular service. The consumer places an estimate of amount he/she wants to spend for a
particular service. For example, the comparison of interest rates of personal loan/car loan
provided by various banks via websites. A business organization who fulfills the consumer’s
requirement within the specified budget, approaches the customer and provides its services.
Consumer-to-business (C2B) is a business model in which consumers (individuals) create value
and businesses consume that value. For example, when a consumer writes reviews or when a
consumer gives a useful idea for new product development then that consumer is creating value
for the business if the business adopts the input. In the C2B model, a reverse auction or demand
collection model, enables buyers to name or demand their own price, which is often binding, for
a specific good or service. Inside of a consumer to business market the roles involved in the
transaction must be established and the consumer must offer something of value to the business.

Another form of C2B is the electronic commerce business model in which consumers can offer
products and services to companies, and the companies pay the consumers. This business model
is a complete reversal of the traditional business model in which companies offer goods and
services to consumers (business-to-consumer = B2C). We can see the C2B model at work in
blogs or internet forums in which the author offers a link back to an online business thereby
facilitating the purchase of a product (like a book on Amazon.com), for which the author might
receive affiliate revenues from a successful sale. Elance was the first C2B model e-commerce
site.

C2B is a kind of economic relationship that is qualified as an inverted business type. The advent
of the C2B scheme is due to:

 The internet connecting large groups of people to a bidirectional network; the large traditional
media outlets are one-directional relationships whereas the internet is bidirectional.
 Decreasing costs of technology; individuals now have access to technologies that were once only
available to large companies (digital printing and acquisition technology, high-performance
computers, and powerful software).

Positives and Negatives

Nowadays people have smartphones or connect to the internet through personal
tablets/computers daily allowing consumers to engage with brands online. According to
Katherine Arline, in traditional consumer-to-business models companies would promote goods
and services to consumers, but a shift has occurred to allow consumers to be the driving force
behind a transaction. To the consumers benefit, reverse auctions occur in consumer to business
markets allowing the consumer to name their price for a product or service.

A consumer can also provide value to a business by offering to promote a business products on a
consumers blog or social media platforms. Businesses are provided value through their
consumers and vice versa.

Businesses gain in C2B from the consumers willingness to negotiate price, contribute data, or
market to the company. Consumers profit from direct payment of the reduced-price goods and
services and the flexibility of the transaction the C2B market created. Consumer to business
markets have their downfall as well. C2B is still a relatively new business practice and has not
been fully studied.

Data Aggregation

Aggregation of data is a common C2B practice done with many internet corporations. In this
instance, the consumer is creating the value of personal information and data to better target
them to the correct advertisers. Businesses such as Facebook, Twitter, and others utilize this
information in an effort to facilitate their B2B transactions with advertisers. Most of these
systems cannot be fully utilized without B2C or B2B transactions, as C2B is usually the
facilitator of these.

E-Governance
Electronic governance or e-governance is the application of information and communication
technology (ICT) for delivering government services, exchange of information, communication
transactions, integration of various stand-alone systems and services between government-to-
citizen (G2C), government-to-business (G2B), government-to-government (G2G), government-
to-employees (G2E) as well as back-office processes and interactions within the entire
government framework. Through e-governance, government services are made available to
citizens in a convenient, efficient, and transparent manner. The three main target groups that can
be distinguished in governance concepts are government, citizens, and businesses/interest
groups. In e-governance, there are no distinct boundaries.

Benefits of E-governance

 Reduced corruption
 High transparency
 Increased convenience
 Growth in GDP
 Direct participation of constituents
  Reduction in overall cost.
 Expanded reach of government

Through e-governance, the government plans to raise the coverage and quality of information
and services provided to the general public, by the use of ICT in an easy, economical and
effective manner. The process is extremely complicated which requires, the proper arrangement
of hardware, software, networking and indeed re-engineering of all the processes to facilitate
better delivery of services.

Types of Interactions in E-Governance

1. G2G (Government to Government)

When the exchange of information and services is within the periphery of the government, is
termed as G2G interaction. This can be both horizontal, i.e. among various government entities
and vertical, i.e. between national, state and local government entities and within different levels
of the entity.

2. G2C (Government to Citizen)

The interaction amidst the government and general public is G2C interaction. Here an interface
is set up between government and citizens, which enables citizens to get access to wide variety
of public services. The citizens has the freedom to share their views and grievances on
government policies anytime, anywhere.

3. G2B (Government to Business)

In this case, the e-governance helps the business class to interact with the government
seamlessly. It aims at eliminating red-tapism, saving time, cost and establish transparency in the
business environment, while interacting with government.

4. G2E (Government to Employees)

The government of any country is the biggest employer and so it also deals with employees on a
regular basis, as other employers do. ICT helps in making the interaction between government
and employees fast and efficient, along with raising their level of satisfaction by providing
perquisites and add-on benefits.

E-governance can only be possible if the government is ready for it. It is not a one day task, and
so the government has to make plans and implement them before switching to it. Some of the
measures include Investment in telecommunication infrastructure, budget resources, ensure
security, monitor assessment, internet connectivity speed, promote awareness among public
regarding the importance, support from all government departments and so forth
E-governance has a great role to play, that improves and supports all tasks performed by the
government department and agencies, because it simplifies the task on the one hand and
increases the quality of work on the other.