ICT2-LECTURE 1-E-COMMERCE
1. What is Electronic Commerce (E-Commerce)?
Answer:
E-Commerce refers to the exchange of goods, services, and information through Internet-enabled
technologies. It involves the entire online process of developing, marketing, selling, delivering,
servicing, and paying for products and services.
2. How is E-Business different from E-Commerce?
Answer:
E-Commerce focuses on online transactions like buying and selling (e.g., Amazon).
E-Business includes all business processes (e.g., HR, inventory, supply chain) using
digital tools, not just transactions.
Key Differences:
Feature E-Commerce E-Business
Scope Narrow (transactions only) Broad (entire business operations)
Example Online shopping Cloud-based payroll, CRM systems
3. What are the two types of E-Business?
Answer:
1. Pure-Play: Online-only businesses (e.g., Hotels.com).
2. Brick and Click: Businesses with both physical and online presence (e.g., Walmart)
4. List the categories of E-Commerce with examples.
Answer:
B2C (Business-to-Consumer): Amazon, Flipkart.
C2C (Consumer-to-Consumer): eBay.
B2B (Business-to-Business): Alibaba, Qualcomm.
5. What are the benefits of E-Commerce?
Answer:
Global Reach: No geographical limits.
Cost-Effective: Lower startup/running costs vs. physical stores.
24/7 Availability: Always open for customers.
Convenience: Quick product search, no queues, home delivery.
Scalability: No shelf-space limits.
6. What are the barriers to E-Commerce?
Answer:
Quality Evaluation: Cannot physically inspect products.
Internet Access: Cost/connectivity issues in remote areas.
Trust/Security: Fear of fraud or data breaches.
Instant Gratification: Delivery delays vs. in-store purchases.
7. Name 5 E-Commerce payment systems.
Answer:
1. Credit/Debit Cards: Visa, Mastercard.
2. Digital Wallets: PayPal, Apple Pay.
3. Mobile Money: MTN Mobile Money, Orange Money.
4. Bank Transfers: Direct account-to-account transfers.
5. Cryptocurrency: Bitcoin, Ethereum.
8. What is the difference between a Brick-and-Mortar store and an E-Commerce store?
Answer:
Feature Brick-and-Mortar E-Commerce Store
Presence Physical location only Online-only or hybrid
Operating Hours Fixed hours 24/7
Feature Brick-and-Mortar E-Commerce Store
Customer Reach Local Global
Costs High (rent, staff, utilities) Lower (no physical space needed)
9. How does E-Commerce save time and cost for customers?
Answer:
Time: No travel needed; purchases made in minutes.
Cost: Saves transportation expenses and avoids impulse buys.
10. What is the role of targeted communication in E-Commerce?
Answer:
Uses customer data (e.g., email, browsing history) to send personalized promotions.
Tools like cookies analyze behavior for better marketing.
Key Terms:
Pure-Play: Online-only business.
Brick and Click: Hybrid business model.
BNPL (Buy Now, Pay Later): Split-payment option (e.g., Afterpay).
Assignment Hint:
For Q1, describe a marketplace like eBay (C2C auctions) or Amazon (B2C catalog + checkout).
11. What is the significance of search engine visibility in E-Commerce?
Answer:
Increased Traffic: A well-optimized E-Commerce site ranks higher on search engines,
attracting more potential customers.
Broader Reach: Customers can discover products through search queries, reducing
dependency on physical advertising.
Competitive Edge: Businesses with strong SEO (Search Engine Optimization)
outperform competitors in online visibility.
Example:
Amazon’s product listings appear in Google searches, driving organic traffic.
12. How does E-Commerce handle rare or hard-to-find products?
Answer:
Global Marketplace: Customers can search for niche products worldwide (e.g., vintage
items, spare parts).
Specialized Platforms: Websites like eBay or Etsy cater to rare/unique goods.
Search Efficiency: Search engines and filters help locate specific products quickly.
Example:
Finding discontinued electronic parts via Alibaba.
13. Why do some customers prefer physical stores despite E-Commerce benefits?
Answer:
Personal Interaction: Face-to-face assistance from sales reps.
Instant Gratification: Immediate product ownership (no shipping delays).
Product Inspection: Ability to touch, try, or test items (e.g., clothes, electronics).
Trust Factor: Less fear of online scams or misrepresented products.
14. What security risks are associated with E-Commerce?
Answer:
Credit Card Fraud: Stolen card details used for unauthorized purchases.
Phishing Scams: Fake websites/emails trick users into sharing sensitive data.
Data Breaches: Hackers target customer databases (e.g., passwords, addresses).
Identity Theft: Personal information misuse for fraudulent activities.
Mitigation Strategies:
SSL encryption, two-factor authentication, and secure payment gateways (e.g., PayPal).
15. How does "Cash on Delivery (COD)" work in E-Commerce?
Answer:
Process: Customer pays in cash (or card) upon receiving the order.
Use Case: Common in regions with low digital payment adoption (e.g., parts of Africa,
Asia).
Pros: Builds trust for first-time buyers.
Cons: Higher operational costs (shipping failures, cash handling).
Example:
Jumia and Daraz offer COD options in emerging markets.
16. What is the role of social media in E-Commerce?
Answer:
Marketing: Ads on Facebook/Instagram target specific demographics.
Engagement: Direct interaction with customers via comments/DMs.
Sales Channels: "Shop Now" features on social platforms (e.g., Instagram Shopping).
Influencer Partnerships: Promotions through trusted personalities.
Example:
A fashion brand using Instagram influencers to drive traffic to its online store.
17. How does E-Commerce support business scalability?
Answer:
Unlimited Inventory: Digital catalogues vs. physical shelf space.
Automation: Tools handle orders, payments, and logistics without proportional cost
increases.
Global Expansion: No need for multiple physical locations to reach new markets.
Example:
Shopify stores can scale from 10 to 10,000 orders/month with minimal infrastructure changes.
18. What are the environmental impacts of E-Commerce?
Answer:
Positive:
o Reduced need for physical stores (lower energy consumption).
o Optimized logistics (e.g., bulk shipping to warehouses).
Negative:
o Increased packaging waste from deliveries.
o Carbon footprint from frequent, last-mile deliveries.
Solution:
Eco-friendly packaging and consolidated shipping options.
19. How do digital wallets enhance E-Commerce convenience?
Answer:
Speed: One-click payments without re-entering card details.
Security: Tokenization replaces sensitive data with encrypted tokens.
Versatility: Links multiple payment methods (cards, bank accounts).
Example:
Google Pay streamlines checkout for returning customers.
20. What future trends could shape E-Commerce?
Answer:
AI & Chatbots: Personalized shopping assistants (e.g., product recommendations).
AR/VR: Virtual try-ons for clothes/furniture.
Voice Commerce: Purchases via smart speakers (e.g., Alexa).
Blockchain: Transparent supply chains and secure transactions.
Example:
IKEA’s AR app lets users visualize furniture in their homes before buying.
Summary Table: Key Concepts
Concept Definition/Example
B2C E-Commerce Amazon selling directly to consumers.
C2C E-Commerce eBay auctions between individuals.
Digital Wallet PayPal for secure, fast payments.
BNPL Afterpay splits payments into instalments.
COD Payment upon delivery (common in emerging markets).
Assignment Tips (Expanded)
1. For Q1 (E-Commerce Marketplaces):
o Example: Describe eBay’s auction model (bidding system, seller ratings, PayPal
integration).
2. For Q2 (Credit vs. Debit Cards):
o Credit Card: Borrowed funds (interest charges if unpaid).
o Debit Card: Direct deduction from bank account (no debt).
3. For Q3 (Brick-and-Mortar vs. E-Commerce):
o Highlight cost structure, customer reach, and operational hours.
Final Note: Use these Q&A notes to reinforce key concepts for exams or discussions. Focus on
examples to illustrate abstract ideas (e.g., Alibaba for B2B, BNPL for payment innovations).
21. How does supply chain management integrate with E-Commerce?
Answer:
Real-Time Tracking: Customers and businesses monitor shipments via digital platforms
(e.g., FedEx, DHL).
Automated Inventory: Systems sync stock levels across warehouses to prevent
overselling.
Supplier Collaboration: B2B platforms (e.g., Alibaba) streamline procurement and
logistics.
Example:
Amazon’s AI-driven warehouses automate order fulfillment, reducing delivery times.
22. What is dropshipping, and how does it work in E-Commerce?
Answer:
Model: Retailers sell products without holding inventory. Suppliers ship directly to
customers.
Pros: Low upfront costs, no storage needs.
Cons: Lower profit margins, dependency on suppliers.
Example:
Shopify stores often use Oberlo for dropshipping.
23. How do E-Commerce businesses handle returns and refunds?
Answer:
Policies: Clear return windows (e.g., 30 days) and conditions (e.g., unused items).
Automation: Software like Returnly streamlines label generation and refund processing.
Cost: Free returns boost customer trust but increase operational expenses.
Example:
Zappos offers 365-day returns to enhance customer loyalty.
24. What role does data analytics play in E-Commerce?
Answer:
Personalization: Recommends products based on browsing history (e.g., Netflix’s
algorithm).
Demand Forecasting: Predicts trends to optimize inventory.
Customer Insights: Tracks behavior (e.g., cart abandonment rates) to improve UX.
Tools: Google Analytics, Hotjar, Kissmetrics.
25. How does E-Commerce impact traditional retail jobs?
Answer:
Decline: Reduced need for cashiers, sales associates in physical stores.
Growth: Increased demand for IT, digital marketing, and logistics roles.
Hybrid Roles: "Click-and-collect" services blend online/offline retail jobs.
Stat: The U.S. Bureau of Labor predicts a 6% decline in retail jobs by 2031 due to E-Commerce.
26. What are the legal considerations for E-Commerce businesses?
Answer:
GDPR/CCPA: Compliance with data protection laws for customer privacy.
Taxation: Sales tax collection varies by region (e.g., EU VAT rules).
Intellectual Property: Avoid selling counterfeit goods (e.g., Amazon’s anti-
counterfeiting policy).
Example:
Etsy requires sellers to prove handmade/authentic products.
27. How do subscription models work in E-Commerce?
Answer:
Recurring Revenue: Customers pay weekly/monthly for products (e.g., Dollar Shave
Club).
Types:
o Replenishment (e.g., groceries).
o Access (e.g., Netflix).
o Curation (e.g., Stitch Fix).
Advantage: Predictable income and customer retention.
28. What is omnichannel E-Commerce?
Answer:
Strategy: Seamless shopping across platforms (website, app, social media, physical
stores).
Example: Nike’s app lets users check in-store inventory, buy online, or reserve for
pickup.
Tech: Unified CRM systems track customer interactions across channels.
29. How do E-Commerce businesses combat cart abandonment?
Answer:
Email Reminders: Automated emails for abandoned carts (e.g., "Complete your
purchase!").
Discounts: Offer coupons (e.g., 10% off if purchased within 24 hours).
Guest Checkout: Avoid mandatory account creation.
Stat: Average cart abandonment rate is ~70% (Baymard Institute).
30. What is the future of drone delivery in E-Commerce?
Answer:
Current Use: Amazon Prime Air (limited trials in the U.S./UK).
Challenges: Regulatory hurdles, battery life, payload limits.
Potential: Faster last-mile delivery for urban areas by 2030.
Case Studies
1. Alibaba’s Singles’ Day:
o The world’s largest shopping event ($115B sales in 2023) leverages live-
streaming and gamification.
2. Tesla’s Direct Sales:
o Bypasses dealerships via online orders, reducing costs.
Infographic: E-Commerce Workflow
1. Customer browses website/app.
2. Order placed via payment gateway.
3. Warehouse auto-processes shipment.
4. Logistics (e.g., UPS) delivers.
5. Feedback loop (reviews, returns).
Glossary
Chargeback: Transaction reversal due to fraud/disputes.
SKU (Stock Keeping Unit): Unique product identifier for inventory.
KPI (Key Performance Indicator): Metrics like conversion rate, AOV (Average Order
Value).
Final Assignment Tips
For Marketplace Examples: Compare Amazon (B2C) vs. Etsy (C2C) transaction flows.
For Payment Comparisons: Highlight interest (credit cards) vs. real-time deduction
(debit cards).
For Brick-and-Mortar vs. E-Commerce: Contrast overhead costs (rent vs. web
hosting).
Pro Tip: Use recent stats (e.g., "Global E-Commerce sales hit $6.3T in 2023") to strengthen
answers.
