BPLM II

INFORMATION SYSTEMS

1.1 Applications of E-commerce and E-business

Overview
Traditional commerce, also known as brick-and-mortar commerce, refers to the buying and selling
of goods and services through traditional channels such as physical stores or marketplaces.
Traditional commerce has been around for centuries and is still a vital part of the global economy
today.

1.2 Growth of Internet and the web

The growth of the internet and the web has had a significant impact on traditional commerce. The
internet has provided a new platform for businesses to reach customers and sell their products,
leading to the development of e-commerce.

1.3 E-commerce

E-commerce, or electronic commerce, refers to the buying and selling of goods and services
through the internet. The earliest example of e-commerce is electronic funds transfer. This allows
financial institutions to transfer funds between one another in a secure and efficient manner.
Later, electronic data interchange (EDI) was introduced to facilitate inter-business transactions. E-
commerce includes a wide range of activities, including online retail, wholesale, auctions, and the
sale of digital products and services.

1.4 Origin and growth of e-commerce

The origins of e-commerce can be traced back to the early days of the internet, with the first
recorded online transaction taking place in 1994. Since then, e-commerce has grown rapidly, with
the global e-commerce market now worth trillions of dollars. The growth of the internet and
mobile phone penetration has enabled more and more people to access online shopping
platforms, leading to the rise of e-commerce giants such as Flipkart and Amazon.

1.5 E-Business

E-Business is the conduct of business on the Internet, not only buying and selling, but also servicing
the customers and collaborating with the business partners. E-Business includes customer service
(e-service) and intra-business tasks. Example of E-Business:

• Email marketing to existing and/or prospective customers is an e-business activity, as it

electronically conducts a business process—in this case, marketing.
• An online system that tracks inventory and triggers alerts at specific levels is also e-
business. Inventory management is a business process, and when facilitated electronically,
it becomes part of e-business.

1.6 Comparison between Traditional and Electronic commerce

i) Location: Traditional commerce typically takes place in a physical location such as a store
or marketplace, while electronic commerce can be conducted from anywhere with an
internet connection.
ii) Speed: Electronic commerce transactions can be completed much faster than traditional
commerce transactions, as there is no need to travel to a physical location or wait for items
to be shipped.
iii) Convenience: Electronic commerce allows consumers to shop from the comfort of their
own homes, at any time of day or night, making it more convenient than traditional
commerce.
iv) Selection: Electronic commerce often offers a wider selection of products and services
than traditional commerce, as it is not limited by physical space constraints.

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 v) Price comparison: Electronic commerce makes it easier for consumers to compare prices
and shop around for the best deal, as they can easily browse multiple websites and
compare prices.
vi) Personalization: Electronic commerce platforms often use data analytics to personalize
the shopping experience for individual consumers, suggesting products based on their
previous purchases or browsing history.
vii) Payment options: Electronic commerce typically offers a wider range of payment options,
including credit and debit cards, e-wallets, and mobile payments, as well as traditional
methods such as cash or checks.
viii) Customer service: Traditional commerce often offers more personal and face-to-face
customer service, while electronic commerce may rely more on automated customer
service channels such as chatbots or email.
ix) Returns and exchanges: Electronic commerce can make it more difficult for consumers to
return or exchange products, as they may need to ship items back or visit a physical
location to do so.
x) Security: Electronic commerce transactions may be more vulnerable to fraud or security
breaches, as they involve the exchange of sensitive financial and personal information over
the internet.

1.7 Unique features of E-Commerce

(1) Ubiquity: Ubiquity of E-Commerce means E-Commerce technological features are available
anywhere and, we can connect to the Internet at any time, because they are web-based. It makes
it possible to shop from homes, offices, video game systems with an Internet connection and
mobile phone devices. The result is called a market space (i.e.) a marketplace which is able to
extend its traditional geographic boundaries and operating hours. Example: An example includes
the ability to access the Internet wherever there is a Wi-Fi hotspot, such as a cafe or airport.

(2) Global reach: Technologies within ecommerce seamlessly stretch across traditional cultural
and national boundaries and enable worldwide access. Pearson Education states that instead of
just offering goods and services to a population within a specific boundary, businesses can market

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to and serve an international audience. The Internet and multilingual Web sites, as well as the
ability to translate a Web page, allows international visitors all over the globe to access company
Web sites, purchase products and make business interactions.

(3) Universal Standards: Individuals, Businesses and governments use one set of technological,
media and Internet standards to use e-commerce features. Consequently, universal standards
help to simplify the interactions. This universal technical standards of E-Commerce, greatly reduce
the market entry costs. For the customers, it reduce the “search costs(i.e.) the efforts required to
find suitable products. And by creating a single, one world market space, where the prices and the
product descriptions can be inexpensively displayed to all to see, and so, the price discovery
becomes simpler, faster and more accurate. With the E-Commerce technologies, it is possible for
the first time in the history, to easily find all the suppliers, prices and delivery terms of a specific
product, anywhere in the world.

(4) Information Richness: Information provided on the web can be made rich, by adding color to
the textual information, and adding audio and video clips. Users can access and utilize text
messages and visual and audio components to send and receive the information. Pearson
Education states that such aspects provide a rich informational experience in regards to marketing
and the consumer experience. An individual may see information richness on a company's blog, if
a post contains a video, which is related to a product and hyperlinks that allow him to look at or
purchase the product and send information about the post via text message or email. Users can
access and utilize text messages and visual and audio components to send and receive the
information.

(5) Interactivity: E-Commerce technologies are interactive means it allow for two way
communication between the merchant and the customer. Technologies used in ecommerce
require consumer interactions in order to make an individual feel as though he is an active
participant in the transaction process. As a result, ecommerce technologies can adjust to each
individual’s experience. For example, while shopping online, an individual is able to view different
angles of some items, add products into a virtual shopping cart, checkout by inputting his payment
information and then submit the order.

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(6) Information Density: Information density means the total amount and quality of information
available to all the market participants, consumers and merchants alike. The use of ecommerce
reduces the cost to store, process and communicate information, according to Pearson Education.
At the same time, accuracy and timeliness increase; thus, making information accurate,
inexpensive much more about the consumers and plentiful. For example, the online shopping
process allows a company to receive personal, shipping, billing and payment information from a
customer, all at once and sends the customer's information to the appropriate departments in a
matter of seconds. A number of business consequences are resulting because of the growth in the
information density. In E-Commerce markets, prices and costs become more transparent. Price
transparency refers to the ease with which the consumers can in out the variety of prices in a
market. Cost transparency refers to the ability of the consumers to discover the actual costs, by
which the merchants are paying for their products. Also, there are advantages for the merchants
as well. Online merchants can discover much more about the various consumers, and this allows
the merchants to segment the market into groups, and permits them to engage in price
discrimination(i.e.) selling the same goods, or nearly the same goods to different targeted groups
with different prices.

(7) Personalization / Customization: Technologies within E-Commerce allow for the

personalization and customization of marketing messages groups or individuals receives. An
example of personalization includes product recommendations based on a user's search history
on a Web site that allows individuals to create an account. Merchants can target their marketing
messages to specific individuals by adjusting those messages. The technology also permits
customization. With the increase in the information density, a great deal of information about the
consumer's past purchases and behavior can be stored and used by the online merchants. The
result is a level of personalization and customization, which is unthinkable with the existing
commerce technologies. For example, we may be able to shape what we see on a television by
selecting a channel, but, we cannot change the contents of the channel, which we have already
chosen.

1.8 E-commerce models

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E-commerce business models can generally be categorized into the following categories.
• Business - to - Business (B2B)
• Business - to - Consumer (B2C)
• Consumer - to - Consumer (C2C)
• Consumer - to - Business (C2B)
• Business - to - Government (B2G)
• Government - to - Business (G2B)
• Government - to - Citizen (G2C)

1.8.1 Business - to - Business

A website following the B2B business model sells its products to an intermediate buyer who then
sells the product to the final customer. As an example, a wholesaler places an order from a
company's website and after receiving the consignment, sells the end product to the final
customer who comes to buy the product at one of its retail outlets.

1.8.2 Business - to - Consumer

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A website following the B2C business model sells its products directly to a customer. A customer
can view the products shown on the website. The customer can choose a product and order the
same. The website will then send a notification to the business organization via email and the
organization will dispatch the product/goods to the customer.

1.8.3 Consumer - to - Consumer

A website following the C2C business model helps consumers to sell their assets like residential
property, cars, motorcycles, etc., or rent a room by publishing their information on the website.
Website may or may not charge the consumer for its services. Another consumer may opt to buy
the product of the first customer by viewing the post/advertisement on the website.

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1.8.4 Consumer - to - Business

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.

1.8.5 Business - to - Government

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B2G model is a variant of B2B model. Such websites are used by governments to trade and
exchange information with various business organizations. Such websites are accredited by the
government and provide a medium to businesses to submit application forms to the government.

1.8.6 Government - to - Business

Governments use B2G model websites to approach business organizations. Such websites support
auctions, tenders, and application submission functionalities.

1.8.7 Government - to - Citizen

Governments use G2C model websites to approach citizen in general. Such websites support
auctions of vehicles, machinery, or any other material. Such website also provides services like
registration for birth, marriage or death certificates. The main objective of G2C websites is to
reduce the average time for fulfilling citizen’s requests for various government services.

1.9 Benefits of E-Commerce to Businesses:

i) It helps to reach Global: E-Commerce enabled business now have access to people all
around the world. In effect all E-Commerce businesses have become virtual multinational
corporations. E-Commerce expands the market place to national and international
markets. Internal and web based E-Commerce helps to reach a more geographically
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 dispersed customer base and more business partners as compared to the traditional
business methods.
ii) Cost effective: E-Commerce is proved to be highly cost effective for business concerns as
it cuts down the cost of marketing, processing, inventory management, customer care etc.
It also reduces the burden of infrastructure required for conducting business. It can also
collect and manage the information related to the customers efficiently which in turn will
assist the consumer in developing efficient promotional strategy.
iii) New Customers with Search Engine Visibility: Physical retail is driven by branding and
relationships. In addition to these two drivers, online retail is also driven by traffic from
search engines. It is not unusual for customers to follow a link in search engine results and
land up on an ecommerce website that they have never heard of. This additional source of
traffic can be the tipping point for some e-commerce businesses.
iv) It Reduces the Paper Costs: E-Commerce decreases the cost of creating, processing,
distributing, storing and retrieving information through the use of FDI systems. This greatly
cuts on the cost of paper work in terms of the time taken and the man power required.
Also the date is more secure from theft and destruction.
v) Reduction in Inventories: A reduction in inventory is desirable to enable reduction in
storage, handling, insurance and administrative costs. Internet E-Commerce can helps
firms to reduce inventories by electronically linking the suppliers and buyers. The process
starts from the customer orders and uses just-in-time manufacturing. Information on
inventory levels and production rate is shared between manufacturers and their suppliers.
Using such information, the delivery schedules are “fine turned” for just in time
manufacturing, rather than maintaining large inventories.
vi) Mass Customization and Competitive advantage: The web based interactive E-commerce
enables the customization of products/services as per the customer needs. This provides
a great competitive advantage to businesses. For example, an online travel agency may
customize the literary for a customer who wishes to travel abroad or a computer
manufacturer may be able to supply to customized PC to a user.

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vii) No Middlemen: There is a direct contract with customers in E-Commerce through internet
without any intermediation. Companies can now focus more on specific customers by
adapting different one-to-one marketing strategy.
viii) Reduced Production lead Time: The production cycle time is the time taken by a business
to build a product, beginning with the design phase and ending with the completed
product. The internet based E-Commerce enables the reduction of this cycle time by
allowing the production teams to electronically share design specifications and refinement
processes. The reduction in the production cycle time helps to reduce the fixed overheads
associated with each unit produced. This saving in the cost production can be passed onto
the customer or may be used to achieve higher profits.
ix) Improved Customer relationship: Customer service can be enhanced using the internet
based E-Commerce by helping the customer to access information before, during and after
a sale. Customers may need to retrieve information on product specifications and pricing.
On the status of an order or may need online help in the installation or use of a product he
has purchased. A prompt customer support service can help businesses to earn goodwill
of customers in the long run.
x) Lower Sale and Marketing Costs: The internet allows businesses to reach many customers
globally at lower costs. Thus by shifting the sale and marketing functions to the electronic
processes, the organizations can bring down greatly the marketing overheads. For
example, advertisements on the internet can cut down the cost of printing and mailing the
pamphlets or brochure. Any charge in product specifications in the case of paper- based
advertisements may mean re-printing, how-ever in web based advertisement it may mean
changes only in the web site.
xi) Lower Telecommunication Costs: The Internet is much cheaper than value added
networks (VANs) which were based on leasing telephone lines for the sole use of the
organization and its authorized partners. It is also cheaper to send a fax or e-mail via the
Internet than direct dialing before the coming internet, only few organizations were using
the private networks and VANs for their EDI. The cost of installation and running these

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 systems was very high and beneficial only to the larger firms and enough business volumes
to justify the cost.
xii) New Found Business Partners: Internet based E-Commerce enables businesses to find
new business partners globally on the web, thus not restricting themselves to a specific
choice of suppliers.
xiii) Increased supply chain efficiencies: E-Commerce minimizes supply chain inefficiencies,
reduces inventories, and reduces delivery delays.
xiv) Digitization of Products and Processes: Particularly in the case of software and
music/video products, this can be downloaded or e-mailed directly to customers via the
Internet in digital or electronic format. The internet helps to expedite access to remote
information, thus adding speed to transactions and processes.
xv) Information sharing: It takes only few seconds to share information over the internet. A
firm can e-mail its customers relating new products and new offers and can solve their
product related quires and welcome suggestions.

1.10 Benefits of E-Commerce to Consumers:

i) Gives freedom to make choices: It also gives customers an opportunity to look for cheaper
and better quality products. With E-Commerce, consumers can search the specific product
or service they require and can even find the direct manufacturer from where they can
purchase products at comparatively less price. Shopping online is time saving and
convenient. In addition to it, consumers also get to see the reviews of other consumers
that will help in making beneficial purchase decision.
ii) Increase in variety of goods: As the market will expand the variety of goods available will
also expand. Wide variety of goods are available than ever before.
iii) It gives more choice and alternatives: E-Commerce provides more choice and alternatives
to customers that will increase the choice of vendors or products because they are no
longer geographically constrained to reach a vendor or a product. A large number of
vendors/manufacturers are marketing and selling their products/services on the internet.

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 Virtual shops (e.g. Homeshop18, snapdeal, flipkart) can offer the consumers a large
number of products/services at a single site.
iv) Convenience of Shopping at Home: Allows the consumers to shop went it is convenient
for them not strictly during store hours. Also for handicapped or ill consumers, home
shopping on the internet provides a lot of opportunity and convenience.
v) Ensure Secrecy: The various security measures that are in built are used in E-commerce
transactions to prevent any unauthorized access to information on the internet for ensure
secrecy they maintain encoding, encryption and passwords.
vi) More Competitive Prices and Increased Price comparison capabilities: The large amount
of information available on the internet is giving more and more power to the consumers.
Consumers can make comparison shopping. There are several online services that allow
customers to browse multiple e-commerce merchants and find the best prices.
vii) Access to Greater Amounts of Information on Demand: Consumers can have access to
large amount of information online on products and services, their features and prices.
This further translates into more choice to customers in shopping and greater price
comparison opportunities.
viii) Time compression: Time is not a factor with Internet communication between firms and
their stakeholders. Online stores can be open 24/7; people can communicate as their
schedules permit; time zones disappear for managers collaborating with partners on other
continents.
ix) Quick Delivery of Digitized Products/Services: E-Commerce allows quick delivery in the
case of digitized products such as music, software etc.
x) Provide Comparison Shopping: Economic facilitates comparison shopping. There are
several online services that allow customers to browse multiple e-commerce merchants
and find the best prices.
xi) E-payment system: The electronic payment system on the internet is facilitated by
payment gateways or intermediary between the business firm and customers and between
the business firms for assuring the payments from the customers.

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1.11 Benefits of E-Commerce to Society:
i) Enables More Flexible Working Practices: Which enhances the quality of life for a whole
host of people in society, enabling them to work from home. Not only is this more
convenient and provides happier and less stressful working environments. It also
potentially reduces environmental pollution a fewer people have to travel to work
regularly.
ii) Connects People: Enables people in developing countries and rural areas to enjoy and
access products, services, information and other people which otherwise would not be
easily available to them.
iii) Facilitates Delivery of Public Services: The health services available over the Internet on-
line consultation with doctors or nurses, filing taxes over the Internet through the Inland
Revenue website.

1.12 Disadvantages of E-Commerce

The following are the important drawback/disadvantages of electronic commerce:

i) E-commerce Lacks That Personal Touch: Not that all physical retailers have a personal
approach, but we do know of several retailers who value human relationship. As a result,
shopping at those retail outlets is reassuring and refreshing. Clicking on “Buy Now”, and
piling up products in virtual shopping carts.
ii) System and data integrity: A computer virus is a program that clones itself when an
injected piece of program code is executed. It is malicious program. Data protection from
the viruses that causes unnecessary delays and can clean up all stored information must.
In order to create cost effective response to the varied technical and human threats to
web site security.
iii) E-Commerce Delays Goods: E-commerce websites deliver to take a lot longer to get the
goods into consumer hands. Even with express shipping the earliest consumer gets goods
in next day. An exception to this rule is in the case of digital goods an e-book or a music

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 file. In this case, e-commerce might actually be faster than purchasing goods from a
physical store.
iv) System scalability: It means regular upgrade of the website is required when the number
of website users increase over period of time or during busy seasons. As a result of rush of
enquiries on the companies site, it might cause slowdown of the system performance and
eventually loss of customers.
v) Dependent on internet: E-Commerce is dependent on internet. Mechanical failures in the
system can cause unpredictable effects on the total processes. Furthermore, there are
many hackers who look for opportunities, and thus an ecommerce site, service, payment
gateways; all are always prone to attack. Things such as viruses could mean losing the site
or affecting the customer’s computers while on purchasing from the website.
vi) Many Goods Cannot Be Purchased Online: Despite its many conveniences, there are
goods that consumer cannot buy online. Most of these would be in the categories of
“perishable” or “odd-sized”. It could order both of them online, but consider the
inconvenience. The Popsicle would have to be transported in refrigerated trucks. Unless
the seller was willing to make a huge loss, the cost of shipping that Popsicle would far
exceed the cost of the Popsicle.
vii) Products people won’t buy online: There are various products which the customers would
like to first touch and feel and then buy it. For example: Furniture users want to touch ant
they want to sit on it, feel the texture of the fabric.
viii) E-commerce Does Not Allow Experiencing the Product before Purchase: It cannot touch
the fabric of the garment when consumers wants to buy and it check how the shoe feels
on our feet, consumer cannot “test” the perfume that consumer want to buy. In many
cases, customers want to experience the product before purchase. E-commerce does not
allow that. If they buy a music system, they cannot play it online to check if it sounds right?
If they are purchasing a home-theatre system, they would much rather sit in the
“experience centre” that several retails store set up.

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 ix) Loyal customers: Great amount of effort is put on building a customer relationship by the
organizations and retaining them is rather a bigger job. A business cannot survive without
a loyal customer.
x) Shopping is Social Experience: People love to shop in the mall because it gives them an
opportunity to have fun with friends and family. It’s something online stores lack of.
xi) Anyone one can set up an E-commerce Website: Where online storefront providers bring
the ability to set up an e-commerce store within minutes. The lowered barriers to entry
might be a great attraction to the aspiring e-commerce entrepreneur. But for the buyer,
reliability can be an issue. This could lead customers to restrict their online purchases to
famous e-commerce websites.
xii) Too Many Competitors: If there are thousands of online stores selling similar products,
how company can attract visitors, so that they can actually but from it and not from others?
As the technology has boomed the competition is increasing because more and more
people are opening their businesses on internet.
xiii) Security: When making an online purchase consumer have to provide at least credit card
information and mailing address. In many cases ecommerce websites are able to harvest
other information about our online behavior and preferences. This could lead to credit
card fraud, or worse, identity theft.

1.13 Difference between E-commerce and E-business

i) Scope: E-commerce is focused on the exchange of goods and services over the internet,
while e-business encompasses a wider range of activities such as marketing, supply chain
management, and customer relationship management.
ii) Transactions: E-commerce involves the exchange of money for goods or services, while e-
business includes a wider range of transactions such as data exchange or collaboration
with partners.
iii) Customers: E-commerce is typically focused on consumers, while e-business may also
involve interactions with other businesses or organizations.

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 iv) Goals: E-commerce is primarily focused on generating revenue through the sale of goods
and services, while e-business may have a wider range of goals such as improving efficiency
or building relationships with customers and partners.
v) Participants: E-commerce typically involves businesses and consumers, while e-business
may also involve other businesses, governments, and other organizations.
vi) Technology: E-commerce typically requires the use of web-based platforms and
applications, while e-business may involve a wider range of technologies such as mobile
apps, cloud computing, and data analytics.
vii) Types of products: E-commerce typically involves the sale of physical goods, while e-
business may also involve the sale of digital products and services.
viii) Business model: E-commerce can take a variety of business models such as B2C, B2B, and
C2C, while e-business may involve a wider range of business models such as B2G or G2B.
ix) Legal and regulatory issues: E-commerce is subject to specific legal and regulatory
frameworks related to consumer protection and privacy, while e-business may be subject
to a wider range of legal and regulatory issues depending on the nature of the activities
being conducted.

1.14 Applications of E-commerce Applications & Implementations

i) Retail and Wholesale

Ecommerce has numerous applications in this sector. E-retailing is basically a
B2C, and in some cases, a B2B sale of goods and services through online stores
designed using virtual shopping carts and electronic catalogs. A subset of retail
ecommerce is m-commerce, or mobile commerce, wherein a consumer
purchases goods and services using their mobile device through the mobile
optimized site of the retailer. These retailers use the E-payment method: they
accept payment through credit or debit cards, online wallets or internet
banking, without printing paper invoices or receipts.

ii) Online Marketing

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 This refers to the gathering of data about consumer behaviors, preferences,
needs, buying patterns and so on. It helps marketing activities like fixing price,
negotiating, enhancing product features, and building strong customer
relationships as this data can be leveraged to provide customers a tailored and
enhanced purchase experience.

iii) Finance
Banks and other financial institutions are using e-commerce to a significant
extent. Customers can check account balances, transfer money to other
accounts held by them or others, pay bills through internet banking, pay
insurance premiums, and so on. Individuals can also carry out trading in stocks
online, and get information about stocks to trade in from websites that display
news, charts, performance reports and analyst ratings of companies.

iv) Manufacturing
Supply chain operations also use ecommerce; usually, a few companies form a
group and create an electronic exchange and facilitate purchase and sale of
goods, exchange of market information, back office information like inventory
control, and so on. This enables the smooth flow of raw materials and finished
products among the member companies and also with other businesses.

v) Online Booking
This is something almost every one of us has done at some time – book hotels,
holidays, airline tickets, travel insurance, etc. These bookings and reservations
are made possible through an internet booking engine or IBE. It is used the
maximum by aviation, tour operations and hotel industry.

vi) Online Publishing

This refers to the digital publication of books, magazines, catalogues, and
developing digital libraries.

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vii) Digital Advertising
Online advertising uses the internet to deliver promotional material to
consumers; it involves a publisher, and an advertiser. The advertiser provides
the ads, and the publisher integrates ads into online content. Often there are
creative agencies which create the ad and even help in the placement.
Different types of ads include banner ads, social media ads, search engine
marketing, retargeting, pop-up ads, and so on.

viii) Auctions
Online auctions bring together numerous people from various geographical
locations and enable trading of items at negotiated prices, implemented with
e-commerce technologies. It enables more people to participate in auctions.
Another example of auction is bidding for seats on an airline website – window
seats, and those at the front with more leg room generally get sold at a
premium, depending on how much a flyer is willing to pay.

E-Commerce is all around us today, and as an entrepreneur, you should also

get into this realm if you want to expand your markets, get more customers
and increase your profitability.

ix) Trading
Applying e-commerce to trade elevates it to a higher level, allowing individuals
to participate without regard for geographical borders. This encourages more
participation, more bargaining and contributes to the success of the trade.

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