Introduction to E-Commerce

Ch-4

What is E-Commerce?

• The use of Internet for conducting business activities is known as E-commerce.
• E-Commerce can also be defined as buying and selling of products, services and information using electronic media like Internet.

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Applications of E-commerce

• It includes trading of goods comprises of marketing and selling, auctions of goods, financial services like banking and insurance etc……

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Applications of E-Commerce

Internet Bookshops

• This was one of the first applications of E-Commerce on Internet.
• Customers prefere purchasing books on Internet as they do not require to be physically checked and can be easily described.
• Books can be easily shipped to the customer’s place with little or no damage to them.
• The online bookstore websites are:
• www.amazon.com
• Shopping.indiatimes.com
• www.buybooksindia.com
• www.bookshopofindia.com

The first online bookstore is www.amazon.com

Shopping.indiatimes.com

BuyBooksIndia.com

Electronic Newspaper

• It is a newspaper that exists on the Internet in digital form.
• It gives us up-to-date news on the issues that are happening worldwise.
• It removes the hassle of printing process and further help in reducing the cost.
• Majority of the leading newspaper now provide E-newspaper.
• Example: www.washingtonpost.com

Online Auctions

• An auction is the process of buying and selling products or services by offering the customers to bid the price and selling the product to the highest bidder.
• There are 2 types of people in an auction site.
• Seller: Wants to sell his/her product.
• Bidder: Wants to purchase a particular product. They can bid for a product.
• Today, the auction mechanism can be implemented using E-commerce technologies which allow the people to bid on Internet. This is known as Online Auction.
• There are many websites providing live auctions of goods.
• These web sites provide the platform for both seller and the bidder.

As a seller

• When you place a product for auction on an auction site, you are a seller.
• You can also bid for any other seller’s product at the same time.
• To sell an item through an online auction site, you need to first register with the site.
• It is required to track the items that you sell or bid on.
• Seller can also put a digital picture of the item that they want to put up for auction.

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Online Auction websites

• www.ebay.com
• www.onlineauction.com
• www.mybids.in
• www.ubid.com

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Advantage of Online Auction

• Traditional auctions have limited participation of people where as online auctions have sellers and bidders all over world.
• The sellers can get the advantage of getting best prices for their products.
• The bidders save time to get the product of their choice.

Online Auction process

• User must register on online auction site first.
• After free registration a person can place goods for auction.
• Bidders can bid for the goods. Once the target price is reached or the time limit is over, the item is transferred to the bidder.
• Various payment options are also provided to the bidder.

Marketing and selling

• Many companies now-a-days conduct their business of marketing and selling of goods and services by their websites.
• They provide their product catalogue online over Internet for better marketing.

Product catelogue

Online selling process

• The catalogue displays different categories of products with images, videos in some cases.
• It shows brief description and features of the product.
• The customers can view the catalogue and select the product of their choice by adding them to the shopping cart.
• The work of online shopping cart is similar to the cart available in a physical store or mall.

Examples

• www.homeshop18.com
• www.flipkart.com
• www.myntra.com
• www.makemytrip.com

Online billing

• Companies who need to send the bills to a large number of customers periodically can use these facilities.

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• For eg. BSNL, PGVCL GEB …

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• Companies send their bills to customers through E-mail.

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• Once the customer receives the bills, he/she can pay online on the company’s website using credit card or net banking or any other payment ways.

Information services

• Many organizations use the Internet to provide latest information to their users or members.
• This includes educational institutes and universities, which provide the examination results, online enrolment forms, examination schedule and seating arrangement and important notices.
• Students can view their results using the website from anywhere. For eg. www.gseb.org
• Another example of information services is the notices and reminders sent to the customer by the companies or banks.
• Many organizations provide various forms to be downloaded so that the customer can easily download and use it.

Support services

• Support services have become increasingly important due to the huge technological changes that have taken place in the last decade.
• Today, even the simplest product utilise sophisticated electronics which requires specialized knowledge and technical ability for maintenance and support when any problem arises.
• After selling the products, companies are providing online support to the customers, which is known as support services.
• A company selling electronic product provides online complaint registration to their customers, which is then forwarded to the support engineer.
• Customers can also track the status of their complaint placed online.

• Software companies provide online support to their customers for any problem in installation, configuration or use.

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• Software vendors also allow their licensed customers to download the recent updates of the software.

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• Hardware vendors put software drivers for their devices so that the customer can download them by choosing proper product type and model.

Net Banking

• Net banking is getting more popular day by day.
• When there is a need for urgent pay or to check balance without visiting the bank, net banking can become helpful.
• It is the process of conducting the banking transactions over the Internet.
• Check account balance at any time.
• Transfer the money from one account to other.
• Obtain statements for any credit or debit.
• Find status of transactions.
• Pay various bill online like telephone, electricity and many more without going to the bank.

Net Banking

• The customer is provided a password for online banking services with which he logs in to the bank site and performs all the banking activities from his computer or mobile.
• The another password is used to perform the actual transaction over Internet. Now-a-days for security purpose bank also asks to input otp sent to the person’s registered mobile number.

Traditional commerce vs. E-commerce

• Due to the growth of Internet, the nature of competition in traditional way of doing business and using E-commerce has changed significantly.
• In traditional commerce, the businesses have to compete within a single industry and limited geographical area.
• In many cases business processes use traditional commerce activities very effectively and they cannot be improved through technology.
• The products that customers prefer to touch, smell or examine precisely are difficult. To sell using E-commerce.
• For example, buyers will hesitate in buying perishable food items, expensive jewelry and high-fashion cloth.
• It is because one cannot buy all these products without closely examining it.

Traditional commerce vs. E-commerce

• In traditional commerce, the retail merchants with their years of experience create the store design that helps to convince the customer to purchase a product.
• This is called merchandising.
• It includes store design, layout, arrangement of products and convincing art of merchant to make the customer purchase a product.
• The merchant develops the skills to identify customer needs and find products and services that meet those needs.
• This art of merchandising can be difficult to implement over Internet.

Common features of traditional commerce:

• Some of the common features of traditional commerce are:
• Operates within a certain period of time or during business hours.
• No sharing of information with competitors.
• Hiring of sales persons, sales manager and many more.
• Location renting or purchasing, advertising, inventory, shipping of products.

Common features of E-commerce:

• Advertising of the product is done electronically.
• Customers can browse through products catalogue and available offers.
• E-payments systems are used for receiving payment. Payment on delivery option is also available.
• Goods are delivered to the customer within few days.
• Reduces the per transaction cost.
• Reduces the time taken to perform an overall transaction.

• There are many factors playing role for the growth of E-commerce in India:
• The growth of technology facilitators such as Internet connections, broadband and 3g services, laptops, smartphones, tablets and dongles.
• Increase in use of mobile devices.
• Availability of much wider product range.
• Busy lifestyles, traffic congestion, lack of time for traditional shopping.
• Increased usage of online classified sites, with more consumers buying and selling second-hand goods.
• Evolution of the online marketplace model with sites like eBay, Flipkart, Snapdeal and many more.

E-commerce in India

• The Internet users in India are growing day by day.
• In India E-commerce technology is experiencing a remarkable growth and successfully changing the way people transact.
• From high end designer apparel to second hand books, everything is now available to Indian online buyers at the click of a button.
• It has opened up new opportunities for millions of people.
• A greater variety of goods and services over the Internet is making online buying more attractive and convenient.

Advantages of E-commerce

• With the growth of Internet, companies are finding new and exciting ways to expand their business.
• Ecommerce provides multiple benefits to the customers in the form of availability and goods at lower cost, wider choice and saves time.
• There are several advantages of E-commerce:

Conduct business 24 x 7:

Using E-commerce a business can operate anywhere anytime.

It do not remain time bound.

A customer can purchase a product any hour of the day.

Hence on order can also be accepted at any hour of the day.

Lower cost:

It can reduce the cost of marketing, distribution, phone, postage, printing and many other such activities.

The requirement of physical store space or infrastructure investment is minimal.

Customers are also benefited by getting a wide range of products for selection at lower cost due to competition amongst the vendors and elimination of distribution for selling the products.

No boundaries or geographical limitations:

A physical store is limited by its geographical area of service.

With E-commerce, businesses can reach out to millions of customers in an instant which is not possible in any conventional mode of marketing.

Global coverage can be reached through creating a website and uploading it on Internet.

Improved and better customer service:

As there is a direct communication with the customer, it is possible to solve their queries related to the price, quality, features of the product and the other thus resulting in a better customer service.

Online customer service makes customers happier due to the quick services.

Teamwork:

E-commerce helps organizations to work together.

It has changed the way organizations interact with suppliers, vendors, business partners, and customers.

Eliminate Travel Time and Cost:

The customers do not have to travel long distances to reach their preferred physical store.

E-commerce allows them to visit the same store virtually, with a few mouse clicks.

Speed:

Doing business electronically is much faster than using the traditional methods.

The speed of business transactions increases because conducting transactions online makes the entire process very speedy.

Limitations of E-Commerce

• Although there are several advantages of E-commerce, it also has some limitations and disadvantages.

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• However with passage of time many of the limitations may disappear.

Resistance to change

• Business organizations need to change from traditional business to E-commerce.
• This change is faced by a lot of resistance.
• People need to get used to paper-less and faceless business transactions.

Initial Cost

• E-commerce requires significant initial investment in new technologies which can change the company’s core business processes.
• It also requires investment in hardware and software technologies.
• The staff training is needed to understand the way of conducting the business using E-commerce.

Security

• This is a primary concern in E-commerce.
• The data or information travelling on the Internet related to the company or an individual should be protected by unauthorized access.
• Internet is public network and it provides universal access but companies should protect their assets from malicious or accidental misuse.

Privacy

• It is a serious issue in E-commerce.
• Customers hesitate to share their personal information on the Internet due to fear of misuse.
• Many times the companies sell their database information to marketing companies and they in turn send unwanted mails to the customers.
• The hackers also might intercept the information on the Internet and misuse the data.

Lack of trust

• Sometimes, business frauds like non-delivery of products, incorrect information of the product, lack of security for payment transactions creates dissatisfaction amongst the customers.
• Returning defective goods purchased online can be difficult issue.
• Who pays the return postage? Will Full refund be given?

Time for delivery of products

• In a physical store, we select the product and leave with the product in our hands.
• In E-commerce we often buy products that are not available locally, which means the product needs to be delivered which takes time and cost money.
• The cost of shipping charges is an overhead in case the product is ordered from a distant place.

• Perishable products like fruits, vegetables and others are not preferred to be purchased online.
• Online store doesn’t provide the opportunity to touch, wear or feel the product.
• Therefore online selling of such products like clothes and furniture might be tricky.
• Payments on E-commerce are most often conducted using credit card facilities and as a result very small and very large transactions are not preferred to be conducted online.
• Timely updates of information and services are often a problem in case of small organizations trying to establish their business online.
• E-commerce is dependent on Internet and any problem in the Internet connectivity causes business risk.

E-commerce Business Models

• The business models of E-commerce are defined based on the parties involved and the type of business activities or services provided.
• Many business models have been proposed for E-commerce, but the following are the most popular amongst all.
• This classification of E-commerce models is done on the basis of who is selling to whom.
• Business to Consumer(B2C)
• Business to Business(B2B)
• Consumer to Consumer(C2C)
• Consumer to Business(C2B)

Business to Consumer

• Business to Consumer (B2C) refers to business and organizations that sells products or services to consumers over the Internet.
• Customers from anywhere can browse and order the products or services anytime.
• The sellers can sell products directly to the consumers, and the buyers are individual customers.
• This is the type of E-commerce that the consumers are most likely to see on Internet.
• B2C also includes services like online banking, real estate services, travel services and many more.
• Some examples of B2C are: rediff.com, fabmart.com, flipkart.com

Business to Business

• Business to Business(B2B) refers to E-commerce activities between different business partners.
• In B2B both the seller and the buyer are business entities.
• With the help of B2B, companies can improve the efficiency of common business activities supplier management, inventory management, payment management and many more.
• It is an effective media for managing telemarketing, supply chain, procurement, just-in-time delivery, online services etc.
• Some examples of B2B are: comodity.com and tradeindia.com

Consumer to Consumer

• Consumer to Consumer(C2C) refers to E-commerce activities involving transactions between and among the consumers.
• It enables the consumers to directly deal with each other through online auctions andclassified advertisements without the involvement of third party.
• Any Internet user can become a vendor or purchaser at C2C websites.
• Auction sites are a good example of C2C model.
• Some examples of C2C are: OLX.com and Quikr.com

Consumer to Business

• Consumer to Business(C2B) involves reverse auctions where the consumers determine the prices of the products or services.
• In this type of E-commerce, consumers have a choice of a wide range of products and services, along with the opportunity to specify the range of the prices that they can afford or are willing to pay for a particular product or services to the consumer.
• This helps in reducing the bargaining time which increasing flexibility for both the consumer and the company.
• C2B uses Internet to reverse the normal buying process wherein the decide what they are willing to pay and business decides whether to accept it or not.
• Some examples of C2B websites are: bidstall.com , jeetLe.in

Content removed in exam for this year only�G2B, G2C and G2G (Page No: 86 and 87)

• There are other variations to E-commerce business model.
• Government to Business (G2B)
• Government to Citizen(G2C)
• Government to Government (G2G)

Which of the following is the process of buying and selling products by offering the customers to bid the price?

• Auction

Which is known as the process of conducting the banking transactions over the Internet?

• Net banking or Internet banking

Which of the following is a feature of traditional commerce?

(a) Operates within a certain period or during business � hours.

(b) Advertising of the product is done electronically.

(c) E-payment systems are used for receiving payment.

(d) Customers can browse through products and offers.

Which of the following is a feature of E-commerce?

(a) Operates within a certain period or during business � hours.

(b) No sharing of information with competitors

(c) Location renting or purchasing

(d) Advertising of the product is done electronically.

Which of the following is not an advantage of E-commerce?

(a) Lower cost

(b) Conduct business 24 x 7

(c) Security

(d) No geographical limitations

Which of the following is a disadvantage of E-commerce?

(a) Privacy

(b) Improved customer service

(c) Speed

(d) Conduct business 24 x 7

Which of the following E-commerce business model referes to business and organizations that sell products or services to consumers over the Internet using websites?

(a) B2C

(b) B2B

(c) C2B

(d) G2B