E-COMMERCE

UNIT - I

Electronic Commerce: Overview of Electronic Commerce, Scope of Electronic Commerce, Traditional

Commerce vs. Electronic Commerce, Impact of E-Commerce, Electronic Markets, Internet Commerce,
e-commerce in perspective, Application of E Commerce in Direct Marketing and Selling, Obstacles in
adopting E-Commerce Applications: Future of E- Commerce.

Unit-II

Value Chains in electronic Commerce, Supply chain, Porter's value chain Model, Inter Organizational
value chains, Strategic Business unit chains, Industry value chains. Security Threats to E-commerce:
Security Overview, Computer Security Classification, Copyright and Intellectual Property, security Policy
and Integrated Security, Intellectual Property Threats, electronic Commerce Threats, Clients Threats,
Communication Channel Threats, server Threats.

Unit-III

Implementing security for E-Commerce: Protecting E-Commerce Assets, Protecting Intellectual Property,
Protecting Client Computers, Protecting E-commerce Channels, Insuring Transaction Integrity, Protecting
the Commerce Server.

Electronic Payment System: Electronic Cash, Electronic Wallets, Smart Card, Credit and Change Card.

Unit - IV

Business to Business E-Commerce: Inter-organizational Transitions, Credit Transaction Trade Cycle, a

variety of transactions. Electronic Data Interchange (EDI): Introduction to EDI, Benefits of EDI, EDI
Technology, EDI standards, EDI Communication, EDI Implementation, EDI agreement, EDI security.
 UNIT 1
ELECTRONIC COMMERCE

E-Commerce or Electronics Commerce is a methodology of modern business, which addresses the need
of business organizations, vendors and customers to reduce cost and improve the quality of goods and
services while increasing the speed of delivery. Ecommerce refers to the paperless exchange of business
information using the following ways −

• Electronic Data Interchange (EDI)

• Electronic Mail (e-mail)

• Electronic Bulletin Boards

• Electronic Fund Transfer (EFT)

• Other Network-based technologies

The following are the main characteristics of e-commerce:

• Online presence
• Electronic transactions
• Convenience
• Global reach
• Wide product range
• Personalization.
• Competitive pricing
• Real-time transactions
• Increased efficiency
• Mobile commerce
Features

E-Commerce provides the following features −

• Non-Cash Payment − E-Commerce enables the use of credit cards, debit cards, smart cards,
electronic fund transfer via bank's website, and other modes of electronics payment.

• 24x7 Service availability − E-commerce automates the business of enterprises and the way they
provide services to their customers. It is available anytime, anywhere.

• Advertising / Marketing − E-commerce increases the reach of advertising of products and

services of businesses. It helps in better marketing management of products/services.

• Improved Sales − Using e-commerce, orders for the products can be generated anytime,
anywhere without any human intervention. It gives a big boost to existing sales volumes.

Support − E-commerce provides various ways to provide pre-sales and post-sales assistance to

provide better services to customers .

• Inventory Management − E-commerce automates inventory management. Reports get generated
instantly when required. Product inventory management becomes very efficient and easy to
maintain.

• Communication improvement − E-commerce provides ways for faster, efficient, reliable

communication with customers and partners.

Traditional Commerce v/s E-Commerce

Sr. No. Traditional Commerce E-Commerce

Information sharing is made easy via electronic

Heavy dependency on information communication channels making little
1
exchange from person to person. dependency on person to person information
exchange.

Communication or transaction can be done in

Communication/ transaction are done
asynchronous way. Electronics system
in synchronous way. Manual
2 automatically handles when to pass
intervention is required for each
communication to required person or do the
communication or transaction.
transactions.

It is difficult to establish and maintain

A uniform strategy can be easily established
3 standard practices in traditional
and maintain in e-commerce.
commerce.
 Communications of business depends In e-Commerce or Electronic Market, there is
4
upon individual skills. no human intervention.

Unavailability of a uniform platform as

E-Commerce website provides user a platform
5 traditional commerce depends heavily
where al l information is available at one place.
on personal communication.

No uniform platform for information E-Commerce provides a universal platform to

6 sharing as it depends heavily on support commercial / business activities
personal communication. across the globe.

SCOPE OF ELECTRONIC COMMERCE :

• Cross-border e-commerce: Cross-border e-commerce refers to the buying and selling of

goods and services across national borders. With the e-commerce it is becoming easier for
businesses and consumers to engage in cross-border transactions, even if they are
located in different countries. This can benefit businesses by allowing them to reach new markets
and expand their customer base, and it can benefit consumers by providing access to a wider
range of products and services. However, cross-border e-commerce also presents challenges,
such as differences in legal regulations, language barriers and cultural differences.
• Digital goods and services: Digital goods and services refer to products that are delivered and
consumed in a digital form. Examples include software, music, e-books, and online courses.
The ease of delivery and the low costs associated with distributing digital goods make them an
attractive option for both businesses and consumers. Customers can access digital goods
and services instantly, without having to wait for shipping, and businesses can reach customers
around the world with minimal overhead costs.
• Online marketplaces: Online marketplaces, such as Amazon and eBay, are websites that bring
together buyers and sellers to facilitate transactions. They offer a wide range of products
and services from consumer goods and electronics to clothing and home goods. Online market
places offer a convenient and efficient way for businesses to reach customers, and for
customers to find and purchase products. also provide a platform for small businesses and
entrepreneurs to sell their products to a global audience.
• E-payment systems: E-payment systems, such as PayPal and Stripe, are essential components
of the e-commerce ecosystem. They provide a secure and convenient way for customers to
make payments online, and for businesses to receive payment for their products and services. E-
payment systems use encryption and other security measures to protect sensitive financial
information, and they offer a range of options for customers, such as credit cards, bank
transfers, and mobile payments.
• E-marketing and advertising: E-marketing and advertising refers to the use of digital channels
to promote and sell products. This includes activities such as email marketing, search
 engine optimization, social media marketing, and online advertising. E-marketing and
advertising can be an effective way for businesses to reach customers, as it allows them to target
specific segments of the population and track the effectiveness of their campaigns.
• Logistics and delivery : Logistics and delivery refer to the processes of getting products from the
manufacturer or warehouse to the customer. This is a critical component of e-commerce, as
it determines the customer's experience with the product and affects the overall
satisfaction with the transaction Delivery options can range from standard ground shipping
to expedited shipping, and businesses can use technology, such as drones and self-driving
vehicles, to improve the seamline and delivery process.
• B2C (Business-to-Consumer) e-commerce:
• B2B (Business-to-Business) e-commerce:
• C2C (Consumer-to-Consumer) e-commerce:
• M-commerce (Mobile Commerce):
• Social commerce:
• Marketplace platforms:

IMPACT OF E-COMMERCE

E-commerce has a multifaceted impact, broadly affecting businesses, consumers, and the broader
economy. For businesses, it offers increased market reach, reduced costs, and opportunities for data-
driven decision-making. Consumers benefit from greater convenience, access to a wider variety of
products, and often lower prices. However, e-commerce also presents challenges like increased
competition, logistical complexities, and potential security risks.

For Business:

• Expanded Market Reach:

E-commerce allows businesses to reach customers globally, breaking down geographical barriers and
expanding their customer base.

• Reduced Costs:

Operating online can significantly reduce overhead costs compared to traditional brick-and-mortar
stores, including rent, utilities, and staffing.

• Data-Driven Insights:

E-commerce platforms provide valuable data on customer behavior, preferences, and trends, enabling
businesses to make informed decisions and personalize marketing efforts.

• Increased Efficiency:

E-commerce can streamline processes like inventory management, order fulfillment, and customer
service, leading to increased efficiency and productivity.

• Enhanced Customer Experience:

Online platforms can offer features like personalized recommendations, easy product comparisons, and
secure payment options, improving the overall customer experience.

• Logistics and Fulfillment Challenges:

Managing shipping, returns, and order fulfillment can be complex and costly for e-commerce
businesses.

• Increased Competition:

The online marketplace can be highly competitive, requiring businesses to differentiate themselves
through pricing, product quality, and customer service.

• Security Risks:

E-commerce transactions are susceptible to fraud and cyberattacks, posing a security threat to
businesses and customers.

• Scalability:

E-commerce businesses can easily scale their operations to meet changing demand, but they also need
to ensure their infrastructure can handle increased traffic and sales.

For Consumers:

• Convenience:

E-commerce allows consumers to shop from anywhere at any time, offering flexibility and convenience.

• Wider Product Selection:

Online stores often offer a wider variety of products than traditional retailers, providing consumers with
more choices.

• Competitive Pricing:

E-commerce creates a competitive environment, often leading to lower prices and more frequent
promotions.

• Price Comparisons:

E-commerce platforms make it easy for consumers to compare prices from different retailers, ensuring
they get the best deal.

• Access to Reviews and Ratings:

Online reviews and ratings provide valuable information to consumers, helping them make informed
purchasing decisions.

• Security Concerns:

Consumers may be concerned about the security of their financial and personal information when
shopping online.
 • Product Quality Issues:

Online retailers may struggle to accurately represent the quality of their products, leading to customer
disappointment.

Broader Economic Impact:

• Economic Growth:

E-commerce contributes to economic growth by creating new jobs, stimulating innovation, and driving
down costs for consumers.

• Increased Trade:

E-commerce facilitates international trade, enabling businesses to sell to customers across the globe.

• Social Impact:

E-commerce can have both positive and negative social impacts, such as increased access to
information and services, but also potential concerns about job displacement and social inequalities.

ELECTRONIC MARKETPLACE

In e-commerce, electronic markets, also known as online marketplaces, are platforms that facilitate the
buying and selling of goods and services over the internet, connecting sellers with buyers and managing
transactions.

What are Electronic Markets?

• Electronic markets are essentially online platforms or websites where various companies
and individuals can list, sell, and buy products or services.

• They act as intermediaries, connecting buyers and sellers and managing transactions.

• Examples of electronic markets include online retailers like Amazon, eBay, and Craigslist.

How do they work?

• Sellers list their products or services on the platform.

• Buyers browse the listings and make purchases.

• The platform typically handles payment processing and logistics, such as shipping.

What are the benefits of an online marketplace?

The biggest advantages of an online marketplace and the reasons many businesses sell via online
marketplaces is that:

• It is an additional source of revenue.

• It cuts marketing costs.

• It allows companies to internationalize its business.

 • It creates transparency in availability, stock levels, and prices.

• It is a great way for customers to compare prices.

• It allows your company to function 24/7.

• It generates trust between your brand and customers.

• Customers are more likely to purchase from an online marketplace with a wide range of options.

• Businesses need to pay a fee/percentage of sales to the online marketplace platform.

• Selling via your own e-commerce site vs. via a marketplace.

Challenges of Electronic Markets:

• Security Concerns: Online transactions can be vulnerable to fraud and cyberattacks.

• Logistics and Shipping: Managing shipping and delivery can be complex.

• Customer Service: Providing timely and effective customer service can be challenging.

• Maintaining Trust: Building trust and reputation in a virtual environment can be difficult.

INTERNET COMMERCE

Internet Commerce is the use of the Internet for all phases of creating and completing business
transactions. Various surveys suggest that the amount of business conducted online will increase ten-
fold over the next few years, from around $500 million in 1996 to over $6 billion in 2000. However, this still
represents less than 10 per cent of the business conducted by mail order.

In our view too much focus of electronic commerce to date has been put on carrying out the final
transactional phases - the ordering and payment. While such a perspective is all right when there are
established supply chains for regular and routine purposes, this overlooks the wider perspective. It is
often said, that the formal placement of an order is preceded by as many as 30 previous information
exchanges. Thus, in its broadest sense we view Internet Commerce as also including:

• The full sales and marketing cycle - for example, by analysing online feedback to ascertain
customer's needs

• Identifying new markets - through exposure to a global audience through the World Wide Web

• Developing ongoing customer relationships - achieving loyalty through ongoing email

interaction

• Assisting potential customers with their purchasing decision - for example by guiding them
through product choices in an intelligent way

• Providing round-the-clock points of sale - making it easy for buyers to order online, irrespective
of location

• Supply Chain Management - supporting those in the supply chain, such as dealers and
distributors, through online interaction
 • Ongoing Customer Support - providing extensive after-sales support to customers by online
methods; thus increasing satisfaction, deepening the customer relationship and closing the
selling loop through repeat and ongoing purchases.

This wider perspective of Internet Commerce - as an ongoing iterative relationship that uses email,
discussion lists, and other Internet facilities as well as the World Wide Web - is the strategy of most
successful 'Entrepreneurs'. As in other marketing, the main categories of Internet Commerce are
business-to-business and business-to-consumer.

BENEFITS:

Those who trade via the Internet cite the following benefits:

• Timeliness - Your Web site is accessible round the clock. Email queries can be handled more
expeditiously and completely than is often possible by mail or phone.

• Reduced Marketing Costs - Online catalogues are cheaper to produce and maintain that paper
catalogues.

• Better Targeting - Internet communities are self-selecting. People with particular interests tend to
visit particular places in Cyberspace. Customers find you, rather than vice versa.

• Greater Market Reach - Distance is no object. Sending information or exchanging messages costs
virtually the same as someone locally. You don't need to pay expensive courier bills.

• Reduced communications costs - With electronic networking it cost virtually the same to send a
message to 100 people as to one.

• Improved After Sales Service - By providing online support, customers can serve themselves for
many of the common post-sales information needs.

There are particular opportunities for those who have specialized markets, or wish to expand their market
base without the cost of opening new offices. There are also opportunities created by the medium itself -
for example for Internet intermediaries (directory and trading services), and novel ways of providing
access e.g. kiosks in public areas.

APPLICATION OF E-COMMERCE IN DIRECT MARKETING

Direct marketing: is a very popular and widely method of informing people about products and services
in order to make sales. It’s a method of contacting customers and potential customers personally. Using
e-commerce, companies provide credit and electronically buying facilities to a customer in order to
facilitate the customers and to attract the attention of customers.

Following are the application of e-commerce in direct marketing and selling.

• Introduction and rapid promotion of a product through direct link, interactive and customizable
information to the customer.
 • Generation of responsive feedback to customer inquiries, capturing and tracking of information
about consumer requests and providing customized services based on personal needs and
interests of consumers.
• Reduced delivery time of digitized products like music, software, online education,
and consultancy.
• Elimination of all the administration work and transport time.
• Increased in customer satisfaction because of availability of online detailed information and quick
response to his queries via email.
• Targeting customer segments with personalized offers and generating sales leads through
observation and analysis of customer behavior.
• Providing the easiest, cost-effective and quickest method to contact the customers directly.
• Surveys can be easily conducted without the involvement of the machinery of surveyors.
• Data about transactions of customers along with their personal information can be collected and
stored into databases. Analysis of this data helps in achieving a higher return of on investment.

OBSTACEL OF ADOPTING AN E-COMMERCE BUSINESS

The study identified the main obstacles to the adoption of e–commerce applications, which include:
organizational, financial, environmental, legal, behavioral, and technological obstacles. …
The adoption levels of application that aimed at providing services and processing transactions were very
low.

Obstacles in Adopting e Commerce Applications

1. Lack of awareness

2. Trust and Confidence

3. The difficulty in re-engineering the business process

4. Huge investment required

5. Poor customers, Suppliers, and Business Partners’ Base

6. Lack of trust and confidence

7. Lack of legal and Regulatory Framework

8. Lack of Knowledge of E-commerce

9. Weak Payment and delivery system

10. Taxation

11. Cost

12. Digital payment failure

13. Attracting traffic

14. Finding the right delivery partner

 FUTURE OF E-COMMERCE

The future of e-commerce is marked by growth, personalization, and increased automation. E-commerce
is expected to continue its rapid expansion, driven by rising smartphone penetration, growing consumer
wealth, and the increasing digitalization of consumer behavior. Key trends include hyper-personalized
shopping experiences, the rise of social commerce, and the integration of AI and machine learning for
more efficient and tailored customer interactions.

Here's a more detailed look at the key aspects:

Growth and Expansion:

• E-commerce is projected to continue its upward trajectory, with global sales expected to reach
$7.41 trillion by 2026.

• The Indian e-commerce market is projected to reach $200 billion by 2026, fueled by factors like
rising smartphone penetration and increasing consumer wealth.

• The B2B e-commerce market is also expected to see significant growth, with a CAGR of 18.7%
from 2021 to 2028.

Personalization and AI:

• AI is becoming a key enabler for personalized shopping experiences, allowing retailers to tailor
recommendations and offers to individual customer preferences.

• AI-powered chatbots are also helping businesses automate customer service, reduce costs, and
improve efficiency.

• The use of AI is also expected to drive improvements in inventory management, pricing strategies,
and overall business operations.

Social Commerce and Mobile:

• Social commerce is growing rapidly, with customers increasingly relying on social networks for
purchasing decisions.

• Mobile commerce is expected to continue to drive a significant portion of e-commerce sales,

making it essential for businesses to optimize their mobile experiences.

• The integration of social media into e-commerce platforms is creating new opportunities for
brands to connect with customers and drive sales.

Immersive Experiences and New Technologies:

• Augmented reality (AR) and virtual reality (VR) are being used to create immersive shopping
experiences, allowing customers to visualize products in their own homes or virtually try on
clothing.

• The metaverse is also emerging as a new platform for e-commerce, offering opportunities for
virtual shopping and brand engagement.
 • Blockchain technology is being used to improve transparency and security in e-commerce
transactions.

Sustainability and Ethical Considerations:

• Customers are increasingly demanding sustainable products and practices from e-commerce
businesses.

• E-commerce businesses are being challenged to incorporate sustainability into their supply
chains and packaging.

• Ethical considerations, such as data privacy and fair pricing, are also becoming more important in
the e-commerce landscape.

Global Marketplaces & Social Commerce

• Cross-border shopping made easier with language translation, currency conversion, and localized
shipping.

• Social platforms like TikTok, Instagram, and YouTube will double as e-commerce storefronts with
integrated checkout features.

Crypto & Alternative Payment Methods

• Expect greater acceptance of cryptocurrencies, Buy Now Pay Later (BNPL) services, and digital
wallets.

• Decentralized e-commerce platforms using blockchain tech might emerge to challenge traditional
marketplaces.

Automation & Smart Logistics

• Warehouses run by robots, drones delivering packages, and autonomous delivery vehicles are
gaining traction.

• Same-day or even one-hour delivery will become more common with smarter logistics and local
fulfillment centers.

Future: E-Commerce in Prospective

Economic Perspective

• More inclusive economies: Small businesses can reach global markets.

• Decentralized platforms: Blockchain may reduce dependency on major intermediaries.

• Subscription & DTC models: Becoming dominant in niche markets.

Consumer Perspective

• Hyper-personalized journeys: AI tailors every part of the shopping experience.

• On-demand everything: Instant gratification through quick delivery, AR previews, etc.

• Ethical shopping: Demand for transparency, sustainability, and fair-trade practices.

Technological Perspective

• AI & machine learning: Powering everything from recommendations to fraud detection.

• Web3 & metaverse: New types of digital ownership (NFTs, avatars, digital goods).

• AR/VR & immersive retail: Shopping as an experience, not just a transaction.

Societal Perspective

• Urban & rural shifts: E-commerce helps bridge the rural-urban divide in access to goods.

• Job transformation: Rise in roles in tech, logistics, and digital marketing.

• Data privacy concerns: Big tech under pressure to regulate and protect user data.