Digital Business

UNIT III
Prof. Sujeet Subhash Tambe
B.E(Chemical), M.M.S(Operations), UGC-NET(Management), SET(Management), Ph.D (Pursuing)
Navsahyadri Group of Institutes, Faculty of Management – MBA
Savitribai Phule Pune University
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 Online Purchasing Process

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 Online Purchasing Process
The process of electronic payment system can be divided into following two
phases:
1) Authorization
2) Settlement

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 1) Authorization

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 2) Settlement

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 E-Marketplace
• For conducting E-Commerce transactions, the electronic marketplace
serves as the major venue.
• An e-marketplace is also called as e-market, virtual market or market-
space.
• An Electronic Market is a market which allows for the exchange of
product and services in a coordinated manner through exchange of
electronic data.
For example, An airline booking system is an electronic market that makes
use of information and communication technology to present the buyers with7
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different offering on tickets.

 Types of E-Marketplace
E-marketplace are of two types:
• Private E-Marketplaces
e.g Walmart.com
• Public E-Marketplace
e.g Stock exchange

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 The Components and Participants in E-Marketplace

1. Customers
2. Sellers
3. Product and Services
4. Infrastructure (electronic networks, databases, hardware, software)
5. Front End (seller portal, electronic catalogue, shopping cart, search engine,
auction engine and payment gateway)
6. Back End (inventory management, accounting, purchasing from suppliers,
packaging the goods, shipping and delivery, payment processing)
7. Intermediaries (Intermediaries perform functions like matching buyers and
sellers, helping customers and sellers complete transaction etc.
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 Disintermediation and Reintermediation

• The process that allows users or consumer to directly access products,

services and information without having to use the services of a mediator
like a wholesaler or a salesperson, is known as disinter-mediation.
• The process that re-introduce an intermediary between the producers and
consumers of goods is known as re-intermediation.

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 CUSTOMER SHOPPING MECHANISMS:
WEBSTORES, MALLS AND PORTALS

Suppliers, Buyers and e-marketplace interact to each other using various

mechanism are:
1. Webstores(Storefronts)
2. Internet Malls
3. Web(Information) Portals

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 Webstores/Electronic Storefront
A web storefront is an website (electronic store) where products and services are
sold. It is a website that may belongs to any type of business, manufacture or
retailors or any individual selling from home. The sale is conducted on the basis of
several mechanisms. These mechanism include:
1. Electronic Catalogue
2. Search Engine
3. Electronic Cart
4. E-Auction Facilities
5. Payment Gateway
6. Shipment arrangements
7. Customer Services
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 Electronic Malls
Electronic mall also known as virtual shopping mall or virtual shopping
mall) is a collection of individual online shops within a single website.
For example,
Microsoft shopping that includes plenty of products from number of
vendors.

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 Web(Information) Portals
A single point of access to critical business information located inside and outside of
organizations through a web browser is known as web portal.

Webstores, e-marketplace, e-malls etc.

One stop destination for the users.
iGoogle, Netvibes, AOL, MSN, Yahoo! and Excite are public web portal.
UPS and Fedex for package shipping
Amazon.com for online shopping
BusinessWeek online for information and news
IBM for corporate information

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 Intermediaries in E-marketplace
The term intermediary is usually used to refer to a party that is interposed
between two transacting parties.
Intermediary are also called electronic brokers and are the electronic agents
who stand between parties who are transacting i.e the buyers and sellers.
Sometimes, some firm act as intermediaries by gathering and selling
information to other firm.

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 Merchant Solution: Electronic Catalogues,
Search Engines and Shopping Carts
Website require EC merchant server software(include various tools and
platform) for online selling.
To facilitates the electronic trading process these software provide various
tools which include following features:
• Electronic Catalogues
• EC Search Engines
• Shopping Carts
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 Electronic Catalogues
It provide the vital information about product specification to the potential
customers
Its act as a guide to the first-time user by providing relevant details about
product.
Customer can explore the web to search a product, their availability, cost as
well as specification.

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 Search Engines
Search engine is application software.
It searches information available on WWW.
Search engine provides an interface to users for searching information by
entering some keyword or phrases or partial settlement, pertaining to
information. After completing the search, the search, the search engine
returns several pages or product.
Archie is the first search engine developed for searching the files of FTP
server. Later Veronica the text based search engine was developed, inspired
by Archie, today Google is the most popular and widely used search engine.

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 Shopping Carts

A shopping cart relates a user to a screen from where they can select to buy
the product that wishes.
Shopping cart provide following functionality to the users:
1. Selection of merchandise
2. See and give the Review for product and services
3. Make essential addition or modification
4. One can purchase the goods or services
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 AUCTIONS
• An auction is a market process by which a seller puts up a good or service
on offer and buyers make bids in order to buy them.
• E-auction is an e business that takes place between auctioneers and
bidders in an e-marketplace.

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 Types of Auctions
1) Forward Auctions: This type auction is used by those sellers who want to
sell items to numerous potential buyers. The items are put on offer on
website where continuous bidding is done by buyer. The top bidder gets
the item. E.g eBay.com
2) Reverse Auction: In this type of auction, buyer is an individual business
that needs to purchase product or service. It asks sellers to submit bids.
Online bid submission attracts several bidders as it is much faster than
traditional bidding. E.g used by government and large firm e-tendering
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 Dynamic Pricing Models
Auction have a special features i.e they based on dynamic pricing.
Dynamic pricing is said to take place when the price of products and
services are not fixed but fluctuate.
The price determined by the supply and demand of the products and
services.
Industry segments like entertainment, retail, travel and hospitality are fast
adopting dynamic pricing wherein flexible prices are offered to the
consumers.
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Dynamic Pricing refers to dynamic adjusting of prices as per the customers
depending on how much value a customer adds to a specific product or
 Changing Supply Chain

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 E-Supply Chains
Web technologies are also used to manage supply chains electronically, such
supply chains are known as e-supply chains.
E-Supply Chain Management can be referred to as the collaborated use of
technologies to improve B2B process.
E-SCM uses such technologies to improve the speed and control of the SCM
operations.

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 Structure of the Supply Chain
E-Supply chain encompasses the following infrastructural elements and tools:
1. Electronic Data Interchange
2. Extranets
3. Intranets
4. Corporate Portals
5. Workflow Systems and Tools
6. Groupware and Other Collaborative Tools
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 Speeding Up Deliveries
• E-Commerce critically influences transportation by enhancing direct home
delivery of smaller freights.
• The essential part of fulfilling orders in E-Commerce is delivery of real
objects to customers.
• The problem faced by E-commerce is heavy amount of deliveries to heavy
amount of people.
• Most of the EC sellers deploy the shipping to companies like USPS, FedEx,
UPS
1) Same-Day
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 Partnering Efforts and Outsourcing Logistics

Partnering with other organisation is an effectual way for resolving the issue related with the
timely order fulfilment. The common example one can recall is the partnership of various EC
companies with FedEx or UPS. The latest outsourcing fulfilment companies are Alibaba’s Tmall
and Amazon.
Logistic Outsourcing as an act of ‘ strategically using the third party has independent business
unit in order to execute the activities which usually managed the job using internal resources and
staff.
1) Cheap air carriers 2) Manages goods for shipping
3) Less expensive carrier bids which arranges shipping goods management
4) Find outs the optimal way to ship the product
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 Order Fulfillment in Make to Order(MTO) and Mass Customisation

• Mass customisation aims to make particular products according to the

customer requirement and dispatch those products soon.
• Companies enjoy to selling large amount of same products which are
changed accordingly to someone choice.
• Such as making an order of hamburger from Burger King or McDonald’s
according to your choice.
• Mass customisation is also called made to order or built to order
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 Make-to-Order(MTO)
• Make to order often called made to order is a business production strategy
that permits customers to buy the customised products according to their
required features.
• It is a manufacturing process where construction of a product starts only
when a confirmed order is received from customer.

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 Digital Payment
• Digital payment is a transaction that takes place via digital or online modes, with
no physical exchange of money involved. This means that both parties, the payer
and the payee, use electronic mediums to exchange money.

• Please note that digital payments can take place on the internet as well as on
physical premises. For example, if you buy something from Amazon and pay for it
via UPI, it qualifies as a digital payment. Similarly, if you purchase something
from your local Kirana store and choose to pay via UPI instead of handing over
cash, that also is a digital payment.
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 What is a Smart Card?
It is a special type of card-like device which contains an integrated circuit
chip embedded in it. The IC chip can be a microprocessor with memory or
just a simple memory circuit. In simple layman’s words, a smart card is a
card with which we can exchange data, store it and manipulate data.
Types of Smart Card
1) Relationship-Based Smart Cards
2) Electronic Purses
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 EC Micropayment
• A micropayment is an e-commerce transaction involving a very small sum
of money in exchange for something made available online, such as an
application download, a service or Web-based content.
• Micropayments are sometimes defined as anything less than 75 cents and
can be as low as a fraction of a cent. A special type of system is required
for such payments, which are too small to be feasible for processing
through credit card companies.

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 What is A Payment Gateway?

A payment gateway as a merchant service that processes credit card

payments for ecommerce sites and traditional brick and mortar stores.
Popular payment gateways include PayPal/Braintree, Stripe, and Square.

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 Mobile Payment
Mobile payment refers to transaction performed under financial regulation
and done through mobile phones.
Many bank have incorporated this technology into their banking apps to
allow their customers to transfer money instantly from their bank accounts
to their friends and family members.
Mobile payment can also be made by scanning barcodes through payment
apps installed on mobile phone.

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 Digital and Virtual Currencies
Digital currency, virtual currency and E-money are the term which are often
interchangeably used by users.
Electronic money is a type of digital representation of cash which is usually stored on
an electronic device.
The type of currency which is not printed on paper or stamped into metal is known as
virtual currency.
The type virtual currency that is present in the digital space is known as digital
currency. (Digital Form 0s and 1) Stored in digital storage such as Hard drive or Server.

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 Thanking You

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