E-Commerce: A Revolution

1. Traditional Commerce – An Overview

• Definition:
Traditional commerce refers to the system of buying and selling goods and
services in physical places such as markets, shops, shopping malls, and other
retail outlets. This form of commerce requires both the buyer and the seller to be
physically present in a specific location to carry out the transaction. Traditional
commerce is the earliest form of trade and has been practiced for centuries.
• Key Characteristics:
o Physical Interaction: It involves face-to-face interaction between buyers
and sellers.
o Geographic Limitations: It is restricted to specific locations and regions.
o Fixed Operating Hours: Transactions can take place only during business
hours.
o Manual Inventory Management: Stock is managed and updated
manually.
o Limited Reach: The customer base is usually local.
o Higher Overheads: Includes costs for rent, electricity, maintenance, and
salaries.
• Example:
A person walks into a local electronic store to buy a television. The buyer
discusses the features with the store staff, sees the product physically, pays at the
counter using cash or card, and takes it home.

2. Growth of Internet and the Web

• Internet:
The internet is a global system of interconnected computer networks that allows
data sharing and communication. It forms the foundation of modern digital
communication and e-commerce.
• World Wide Web (WWW):
The World Wide Web is a system of interlinked hypertext documents and
multimedia content accessed through browsers such as Google Chrome or
Firefox using the internet.
• Growth Milestones:
o 1960s-1980s: Early foundations such as ARPANET.
o 1991: Launch of the World Wide Web by Tim Berners-Lee.
o 1995: Commercial use of the internet began; emergence of Amazon and
eBay.
 o 2000s: Broadband and wireless internet became widespread.
o 2010s onwards: Smartphone revolution and mobile internet led to mass
adoption.
• Impact on Commerce:
o Increased internet access facilitated online shopping.
o Businesses created websites to reach customers.
o Use of digital marketing and online advertisements grew.

3. What is E-Commerce?
• Definition:
E-commerce, or electronic commerce, refers to the process of buying and selling
goods and services over the internet or other electronic networks. It includes
activities such as online shopping, electronic payments, online auctions, internet
banking, and ticket bookings.
• Key Components:
o Websites or mobile apps as storefronts
o Online payment systems (cards, UPI, wallets)
o Logistics and delivery systems
o Customer support (email, chatbots)
• Examples:
o Buying groceries from Big Basket
o Booking flight tickets via MakeMyTrip
o Purchasing clothing on Myntra

4. Origin and Growth of E-Commerce

• Origin:
o 1970s: Use of EDI (Electronic Data Interchange) and EFT (Electronic Fund
Transfer).
o 1980s: Teleshopping and computer-based shopping started emerging.
o 1990s: Real growth with the availability of the internet and introduction of
web browsers.
• Key Milestones:
o 1995: Launch of Amazon (books) and eBay (auctions)
o 2000s: Expansion into multiple product categories
o 2010s: Introduction of mobile commerce (m-commerce)
o 2020s: Rise of AI, machine learning, and personalization in e-commerce
• Growth Factors:
 o Increased internet penetration
o Safe and secure payment systems
o Widespread use of smartphones
o Improved logistics and supply chains
o Social media advertising

5. Comparison Between Traditional and Electronic Commerce

Criteria Traditional Commerce E-Commerce

Physical Presence Required Not required

Limited to business
Time of Operation 24x7 availability
hours

Communication Face-to-face Online chat, email, phone

Automatically tracked with

Inventory Manually managed
software

Geographic Reach Local Global

Marketing Newspaper, TV, banners SEO, social media, email

Payment Modes Cash, Cards Cards, UPI, Net banking, Wallets

Cost Structure High (rents, bills, etc.) Low (digital space, automation)

Product
Limited Extensive online comparison tools
Comparison

6. Advantages of E-Commerce
1) Global Market Reach: Businesses can reach customers across the world without
opening physical stores.
2) 24/7 Availability: Online stores operate 24 hours a day, 7 days a week.
3) Cost-Effective Operations: Reduced costs in inventory, rent, utilities, and staff.
4) Faster Transactions: Immediate purchases and payments.
5) Product Diversity: Large variety of products available on a single platform.
6) Customer Reviews: Helps in making informed purchase decisions.
 7) Customization: Personalized product recommendations using AI.
8) Scalability: Easy to expand operations with lower investment.

7. Issues in E-Commerce
1) Security Concerns: Risks of data theft, hacking, and credit card fraud.
2) Lack of Physical Inspection: Customers can't touch or try the product.
3) Logistics and Delivery Issues: Late deliveries or wrong/damaged products.
4) Return and Refund Policies: Complex or delayed return procedures.
5) Technological Dependence: Requires continuous access to internet and
electricity.
6) Trust Issues: Fear of fake products or non-delivery.
7) Legal and Taxation Problems: Complicated international trade laws and
taxation.

8. Relation Between E-Commerce and E-Business

• E-Commerce: Focuses mainly on the buying and selling part using digital
platforms.
• E-Business: A broader term that includes e-commerce plus business processes
such as inventory management, human resource management, customer
relationship management, etc.
• Relation:
E-Commerce is a subset of E-Business. All E-commerce activities are part of E-
business, but not all E-business activities involve buying or selling online.

9. Digital Convergence
• Definition:
Digital convergence refers to the merging of previously distinct technologies such
as broadcasting, communications, and computing into a single system or
platform.
• Example:
Modern smartphones combine features of a phone, camera, GPS, music player,
shopping device, and more.
• Importance in E-Commerce:
o Unified user experience across platforms
o Increased customer convenience
o Access to multiple services from one device
 o Boosts mobile commerce and app-based sales

10. Unique Features of E-Commerce Technology

1. Ubiquity:
o Available everywhere, anytime.
o No physical boundaries.
o Increases convenience and reduces transaction costs.
2. Global Reach:
o Reaches customers across international borders.
o Businesses can operate globally from a local base.
3. Universal Standards:
o Uses common internet standards like TCP/IP.
o Reduces complexity and entry barriers.
4. Richness:
o Delivers rich content through videos, text, audio, and images.
o Enhances product understanding.
5. Interactivity:
o Two-way communication between buyers and sellers.
o Customer feedback, reviews, live chat.
6. Information Density:
o Reduces costs to store, process, and transmit data.
o Allows better decision-making and targeting.
7. Personalization/Customization:
o Personalized recommendations and customized offers.
o Increases customer satisfaction and retention.
8. Social Technology:
o Integration with social media platforms.
o Customers can share products, give feedback, and influence others.

11. Types of E-Commerce

1. Business to Business (B2B):
 o Businesses sell to other businesses.
o Example: Alibaba selling bulk goods to resellers.
2. Business to Consumer (B2C):
o Businesses sell directly to end customers.
o Example: Amazon, Flipkart.
3. Consumer to Consumer (C2C):
o Consumers sell to other consumers.
o Example: OLX, eBay.
4. Consumer to Business (C2B):
o Individuals offer services/products to businesses.
o Example: Freelancers on platforms like Fiverr.
5. Government to Citizen (G2C):
o Government services provided to citizens online.
o Example: Passport applications, tax filing.
6. Business to Government (B2G):
o Businesses provide goods/services to the government.
o Example: Software companies providing IT services to government.

12. Case Study: Traditional Commerce vs E-Commerce

Scenario: Purchasing a Laptop

Aspect Traditional Commerce E-Commerce

Visit local shop, inspect Visit website, check features and

Purchase Method
product reviews
Compare prices from multiple
Price Comparison Limited to local stores
sellers easily

Payment Options Cash, Debit/Credit cards Cards, UPI, Wallets, Net Banking

Customer carries product Delivered to doorstep within few

Delivery
home days
Product Detailed online description,
Provided by salesperson
Information images, videos
 Customer
Rarely available User reviews and ratings present
Feedback

Return Policy Often strict or no return Easy return and refund options

Time Required 2-3 hours including travel 10-15 minutes from any location

Conclusion:
Traditional commerce gives personal touch and immediate access but is limited by time
and location. E-commerce offers flexibility, variety, and global access, making it more
suitable for modern digital consumers.

Final Conclusion:
E-Commerce is not just a modern way of shopping but a complete transformation of
traditional business processes. It offers significant benefits such as global presence,
personalized marketing, and reduced costs. Despite challenges like security risks and
lack of personal touch, e-commerce continues to evolve with the integration of AI,
machine learning, IoT, and blockchain technologies. Understanding its foundation,
features, types, and impact is essential for students and future professionals in the digital
age.