FUNDAMENTAL OF E-

COMMERCE (BBA-606)
UNIT – I
Syllabus Contents:

E-Commerce: Introduction, meaning and concept;

Needs and advantages of e- commerce;
Traditional commerce; Types of E-Commerce, Basic
requirements of E-Commerce.

Dr.P.K.Tripathi
Asso. Prof.
Department of BBA
IIMT College of Management, Greater Noida
 E-Commerce: Introduction,
meaning and concept
 Commerce : Commerce is a division of trade
or production which deals with the exchange
of goods and services from producer to final
consumer.
 It comprises the trading of something of
economic value such as goods, services,
information, or money between two or more
entities.
 Business:-A business is an organization
engaged in the trade of goods, services, or
both to consumers.
 E-COMMERCE
 Commonly known as Electronic Commerce.
 “It consist of buying and selling goods and
services over an electronic systems such as
the internet and other computer networks.”
 “E-commerce is the purchasing, selling and
exchanging goods and services over computer
networks (internet) through which transaction
or terms of sale are performed Electronically.
 The concept where ICT (Internet &
Communication Technology) is used in buying
and selling of goods or services between
organizations and in Business-to-Consumer
(B2C) transactions is known as e-commerce.
E-Commerce consists of:
Electronic retailing (e-tailing)
EDI (Electronic Data interchange)
EFT (electronic Funds Transfer)
E-mail
Other network based technologies

Examples of e-commerce activities

Retail
Wholesale
Drop shipping
Crowd funding
Subscription
Physical Products
Digital Products
Services
 Definitions by different means:-
 From a communication perspective:
e-commerce is the delivery of information,
products or payments via telephone lines,
computer networks or any other means.

 From a business perspective: ,e-commerce

is the application of technology toward the
automation of business transactions.

 From a online perspective: e-commerce

provides capability of buying & selling
products & information on the internet.
Definitions-
Some of the definitions of e-commerce often heard
and found in publications and the media are:
Electronic Commerce (EC) is where business
transactions take place via telecommunications
networks, especially the Internet.
Electronic commerce describes the buying and
selling of products, services, and information via
computer networks including the Internet.
Electronic commerce is about doing business
electronically.
E-commerce, ecommerce, or electronic
commerce is defined as the conduct of a
financial transaction by electronic means.
 E-BUSINESS
As with e-commerce, e-business (electronic business) also
has a number of different definitions:

E-business is the conduct of business on the Internet, not

only buying and selling but also servicing customers and
collaborating with business partners.
E-business includes customer service (e-service) and intra-
business tasks.
E-business is the transformation of key business processes
through the use of Internet technologies. An e-business is a
company that can adapt to constant and continual change.
The development of intranet and extranet is part of e-
business.
E-business is everything to do with back-end systems in an
organisation.
 The concept where ICT is used to
enhance the key business processes
through the facilities available on the
Internet is known as e-Business.
 It comprises of any process by which
an organization conducts business
over a computer network.
 The three main processes
enhanced in e-Business are:
1. Production processes, which include:
(a) Procurement
(b) Ordering and replenishment of stocks
(c) Processing of payments
(d) Electronic links with suppliers
(e) Production control processes
2. Customer-focused processes, which include:
(a) Promotional and marketing efforts
(b) Selling over the Internet
(c) Processing of customers’ purchase orders and payments
(d) Customer support
3. Internal management processes, which include:
(a) Employee services
(b) Employee training
(c) Internal information-sharing
(d) Video conferencing
(e) Recruiting
 E-commerce vs. E-business
E-commerce include commercial transactions
involving an exchange of value across organizational
boundaries.

We use the term e-business to refer primarily to the

digital enablement of transactions and processes
within a firm, involving information systems under the
control of the firm.

E-business refers to a broader definition of EC, not just

the buying and selling of goods and services, but also
servicing customers, collaborating with business
partners, conducting e-learning, and conducting
electronic transactions within an organization.
Advantages of E-Commerce
 Able to conduct business 24 x 7 x 365
 Access the global marketplace
 Speed
 Opportunity to reduce cost
 Platform independent
 Customer self service
 Large purchase per transaction
 People can shop in different ways
 Large catalogs
 Improved customer relation
Disadvantages of e-commerce
 Time for delivery of physical products
 Limited and selected sensory
information
 Returning goods
 Privacy, security, payment, identity
 Personal service
 Features of E- Commerce:
1. Payment: enabling credit card, smart card, e-money and other
payments along with electronic funds transfer.
2. Service Availability: It automates the conduct of business
among enterprises, customers, suppliers and employers
anytime, anywhere.
3. Advertising and marketing: publicizing and advertising product
and services.
4. Sales: generating orders for the product.
5. Fulfillment: processing the order and delivering product.
6. Support: providing pre and post sale assistant to generate
more sales.
7. Inventory Mgt: maintaining and reporting inventory status.
8. Secure communication: fast efficient, reliable communication
with customers and partners.
9. E commerce allows you to gather information from customers
while delivering marketing and sales through a website.
10.E commerce can be a fully integrated solution.
Goals of E Commerce:
 Reduce cost
 Reduced product cycle time
 Attract more customer
 Faster customer response
 Improve service quality
Main activities of E commerce
 Buying and selling of goods
 Shipping of product
 Producing financial statement.
Key Drivers of E-commerce
Technological Factors
Political Factors
Social Factors
Economic Factors
Reasons for increase in electronic trading are:
The drive to reduce cost
Easy accessibility to internet
Lack of regulation on internet
Access to global market for vendors
Greater choice and potentially lower price to buyer
Lower inventory cost for vendors
The ability to enter new market more easily.
Low entry cost
Reduces transaction costs
Access to the global market
Secure market share
 Need and Advantages/Benefits
The advantages of e-commerce can be broadly
classified into three major categories:
◦ Advantages to Organizations
◦ Advantages to Consumers
◦ Advantages to Society
1. Advantages to organization:

E- commerce decreases the cost of creating,

processing, distributing, storing and retrieving
paperless information.
E commerce reduces the time. E-commerce helps to
simplify the business processes and makes them
faster and efficient.
Improved the brand and organization's Image.
Improved customer service.
Found new business partners, suppliers and locate
more customers.
Organizations can expand their market to national and
international markets with minimum capital investment.
E-commerce increases the productivity of
organizations. It supports "pull" type supply
management.
2. Advantages to consumer:

Customer can do transaction 24X7X365 basis.

It provides customers with more choices and It
allows quicker delivery.
A customer can put review comments about a
product and can see what others are buying, or see
the review comments of other customers before
making a final purchase.
 E-Commerce increases the competition among
organizations and as a result, organizations provides
substantial discounts to customers.
It provides customers with less expensive products
and service.
It provides readily available information.
Customers can interact with other customer in
electronic communication.
3. Advantages to Society:

 It reduces the time for travelling for shopping, thus

less traffic on road and low air, noise pollution.
 E-commerce helps in reducing the cost of products,
so less affluent people can also afford the
products.
 It allows some merchant to be sold at low price.
 It enables people in rural areas to enjoy products
and services.
 It facilitates delivery of public services, such as
health care, education, social services etc.
 E-Commerce ─ Disadvantages
 Technical disadvantages
 Non-technical disadvantages

Technical disadvantages:
◦ There can be lack of system security, reliability or standards
owing to poor implementation of e-commerce.
◦ The software development industry is still evolving and keeps
changing rapidly.
◦ In many countries, network bandwidth might cause an issue.
◦ Special types of web servers or other software might be
required by the vendor, setting the e-commerce environment
apart from network servers.
◦ Sometimes, it becomes difficult to integrate an e-commerce
software or website with existing applications or databases.
◦ There could be software/hardware compatibility issues, as
some e-commerce software may be incompatible with some
operating system or any other component.
 Non-Technical Disadvantages:
◦ Initial cost: The cost of creating/building an e-commerce
application in-house may be very high. There could be
delays in launching an e-Commerce application due to
mistakes, and lack of experience.
◦ User resistance: Users may not trust the site being an
unknown faceless seller. Such mistrust makes it difficult to
convince traditional users to switch from physical stores to
online/virtual stores.
◦ Security/ Privacy: It is difficult to ensure the security or
privacy on online transactions.
◦ Lack of touch or feel of products during online shopping is a
drawback.
◦ E-commerce applications are still evolving and changing
rapidly.
◦ Internet access is still not cheaper and is inconvenient to
use for many potential customers, for example, those living
in remote villages.
 Comparison of E-Commerce with
Traditional Commerce
In spite of the fact that the goals and objectives of both e-
commerce and traditional commerce are the same, they
can be differentiated based on their business processes.
The Web and telecommunication technologies play a major
role in e-commerce. In e-commerce there may be no
physical store, and in most cases the buyer and seller do
not see each other.
In most of the cases, traditional commerce activities are
used in business processes very efficiently and these
processes do not need improvement with the help of
technology. It is very difficult to sell using ecommerce when
buyers wish to touch, smell, or examine the products.
Ex. Customers might be unwilling to buy high fashion
clothing or food products if they cannot examine the
products closely before agreeing to purchase them.
 Traditional Commerce Vs E-Commerce
Parameters Traditional Commerce E-Commerce
Meaning A branch which focuses on the E-commerce means carrying out
exchange of products and commercial transactions, exchange
services manually. of information electronically on the
internet
Processing of Manual Automatic
Transaction
Accessibility Limited Time 24X7X365

Physical Goods can be inspected Can’t be inspected physically

inspection physically before purchase

Customer Face-to-face Screen-to face

Interaction
Scope of Business Limited to a particular World wide reach
geographic area
Information No uniform platform for Provides uniform platform for
Exchange exchange of information information exchange

Resource Focus Supply Side Demand Side

Business Linear End-to-end

Relationship
Marketing One way marketing One-to-one marketing

Payment Cash, cheques, credit cards etc. Credit card, debit card, payment apps,
EFT, and other gateways
Instantly Takes time
Types of E commerce:
 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 (G2Citizen)
 1.Business to Business (B2B)
 In this Seller and Buyer are both the business houses. Business to
business web sites sell the product to the intermediate buyer who
takes the products to the final consumer. In this type of web sites a
wholesaler places an order through the companies web sites and
then sells the supplies to the final consumer.
 Ex. Intel selling Microprocessor to Dell, Heinz selling ketchup to Mc
Donald’s
 2. Business to Consumer (B2C)
 In this, Seller is business house and buyer is end consumer.
Business to consumer is a website where all transaction take
place between a business organization and the final consumer. In
this type of websites customer login to the organization’s website
and place an order to buy the goods after receiving the order the
organization would complete the order and sends the goods to
the customer and the customer would receive the ordered goods.
 Ex. Dell, Samsung, HP selling laptop in the market, Amazon,
Flipkart, etc.
 3. Consumer to Consumer (C2C)
 In this, Seller and buyer are both consumers.
Consumers sell directly to consumer. If an individual
have something to sell, then he get it listed at an
auction site, and others can bid for it.
 Ex. Buying and selling of products on OLX, Quicker, e-
bay sites.
 4.Consumer to Business (C2B)

 In such sites, the consumer places an estimate of the

amount of money he is willing to spend for a particular
service. Businesses that can offer this service within
the customer’s specified limit get back to him with the
offer. Such sites depend on proper estimate by
consumer.
 5. Business to Government (B2G)

 It is a website used by the govt. to exchange information

and trade with various organization across the world.
Such websites are accredited by the government and
provide a medium to businesses to submit application
forms to the government.
 6.Government to Business (G2B)
 A G2B website is an attempt by the govt. to reached to business.
Such sites provides access to various application forms.
Governments use B2G model websites to approach business
organizations. Such websites support auctions, tenders, and
application submission functionalities.
 Government sites offering information, forms and facilities to
conduct transactions for individuals, including paying bills and
submitting official forms on-line such as tax returns.(Also known
as e-government)
 7.Government to Citizen (G2Citzn)

 In this, seller is government and user is customer. A

G2C website is an attempt by the govt. to reach out to
people in general. The govt. regularly conducts
auctions and sales of vehicles, machinery and other
material. These auctions are high valued and are
visited by customers. These websites also provides
access to application forms. Ex. Various facilities to
citizen/consumer through websites (e-governance).
 Peer–to-Peer Network (P-to-P)
 This is the communications model in which each party has the
same capabilities and either party can initiate a communication
session. In recent usage, peer-to-peer has come to describe
applications in which users can use the Internet to exchange files
with each other directly or through a mediating server.
 In peer-to-peer (P2P) networking, a group of computers are linked
together with equal permission and responsibilities for processing
data.
 Ex. Ubuntu, Linux Mint, and Manjaro
Peer Network-to-Consumer (P-to-
C)
 Thisis in effect peer-to-peer
networking, offering services to
consumers who are an integral part of
the peer network.
Peer Network-to-Government (P-
to-G)
 This has not yet been used, but if it was,
it would be used in a similar capacity to
the P-to-B model (see below), only with
the government as the party accepting
the transaction.
 Peer Network-to-Business (P-to-B)
 Peer-to-peer networking provides resources to
business.
 For example, using peer network resources such as
the spare processing capacity of individual machines
on the network to solve mathematical problems or
intensive and repetitive DNA analyses which requires
very high capacity processing power.
 This framework can be used by organisations to
segment their customers and distinguish the different
needs, requirements, business processes, products
and services that are needed for each.
 Business-to-Peer Networks (B-to-
P)
 This would be the provision of hardware, software or
other services to the peer networks.
 An example here would be Napster who provided the
software and facilities to enable peer networking.
Consumer-to-Government (C-to-G)
 Examples where consumers provide
services to government have yet to be
implemented.
Basic requirements of E-Commerce
 Here are seven important infrastructure
decisions that ecommerce businesses
face.
 1. Marketing
 2. Facilities
 3. Customer Service
 4. Information Technology
 5. Fulfillment
 6. Finance and Administration
 7. Human Resources
 1. Marketing
 Of all the infrastructure elements, marketing may be the
most important.
 To succeed, your website must be found. Once visitors
are on your site, you need to keep them there and
compel them to buy from you. That’s the job of your
marketing team. Whether it’s website design, social
media, search marketing, merchandising, email, or
other forms of advertising, it’s all about marketing.
 To effectively manage marketing activities in-house is
very challenging. Most small ecommerce businesses
outsource some element of marketing.
 2. Facilities
 A key competitive advantage that ecommerce businesses have
over brick-and mortar stores is the investment in their physical
offices and warehouses.
 In many cases, you can host your business out of a home office
and your basement or garage.
 If you drop ship or outsource fulfillment, you may be able to do
that for a long period of time. Even when you grow to have many
employees, you can set up your offices in class B or C space, as
you have no need for a fancy store in the right location. A word of
advice is to keep your options flexible.
 Try to find an office park that has a wide variety of spaces in
different sizes.
 You may be able to start in a smaller space and move up to a
larger one.
 3. Customer Service

 There are many choices today for delivering high-quality

customer service.
 You can manage those activities in-house or outsource
to a third party. Basic customer service for sales and
post-sales activities can be handled using email, and by
providing an Toll free number for more extensive phone
support.
 A customer-management system will make those
activities easier, but for smaller companies it is not a
requirement.
 Live chat will impact your operations as someone needs
to be available during specified hours of operation.
 4. Information Technology
Choosing the right ecommerce platform is one of the most
important decisions you will make in your business.
Do you want to build and host your own system, outsource the
development and then manage the system going forward, or
use a hosted, software-as-a-service platform.
If you build and host your own system, you may need more
cash upfront and skilled administrators and developers on
your staff.
By using a SaaS (Software as a Service) platform, you will not
need to host or manage the system in-house, but you may still
need web developers on staff.
Choosing to outsource the development and hosting will
reduce your staffing costs, but you will incur higher costs for
any future enhancements or changes to your websites. There
are pros and cons to any approach. Just be sure to think
through the impacts on both your staffing and your cash flow
and bottom line before you move forward.
 5. Fulfillment
Another key decision is whether you will manage your
own inventory or outsource those activities to a
fulfillment house or through drop shipping
arrangements with your suppliers.
Managing your own inventory will provide you with a
high level of control, but you will tie up your cash in
inventory, warehouse space, and your own fulfillment
staff.
In some industries — like the jewelry supply industry
managing your own inventory is the most logical
choice.
Be sure to understand the costs involved and analyze
the other options before moving forward.
 6. Finance and Administration
As with other business operations, you will need to decide if you want
to manage your finance and administration activities in-house,
outsource, or a hybrid of the two.
If your ecommerce platform is tightly integrated to your accounting
system, you may have very little need for an in-house bookkeeper. If you
use separate systems for your website, order management and
accounting, you may need more help for data entry and making sure
that the information is properly managed.
Many ecommerce companies use outside services for vendor
payments, payroll, and other basic accounting activities. They decide to
focus on the sales, marketing, and customer service. This allows them
to maintain a focus on growing their businesses, instead of paying an
internal accountant or doing that work yourself as the business owner.
On the administration side, you need a leadership team and provide
direction to them. Good communication is important, whether you have
3 or 100 employees.
Whether you choose to be more authoritative or democratic in your
management style is up to you. But choose a style and stay consistent.
Be sure that everyone understands their roles, as well as the overall
business strategies. You may need to adjust your approach as your
business evolves.
 7. Human Resources

 Many small-business owners avoid the human

resources function.
 Recruiting, setting up compensation, maintaining
compliance and other HR activities are specialized and
time consuming.
 You may choose to bring the resources in-house to
manage those activities, but also evaluate outsourcing
them. There are many individuals and agencies well
equipped to take on your HR activities.
Tasks Performed by Customers
 Browse catalogs
 Conduct research on products/services
 Configure and place orders
 Look up pricing
 Look up lead time and order status
 Access invoicing information
 Access customer service information
E-commerce Implementation
Strategies
 Educate the customer
 Make the shopping fun
 Serve customers well
 Personalize the sales pitch
 Cross sell and up sell
 Low price
 Painless returns
 Elements of Commerce
You need a Product or service to sell
You need a Place from which to sell the
products
You need to figure out a way to get people to
come to your place.
You need a way to accept orders.
You also need a way to accept money.
You need a way to deliver the product or
service, often known as fulfillment.
Sometimes customers do not like what they
buy, so you need a way to accept returns.
You need a customer service and technical
support department to assist customers with
products.
E-commerce infrastructure
Information superhighway infrastructure
Internet, LAN, WAN, routers, etc
Telecom, cable TV, wireless, etc
Messaging and information distribution
infrastructure
HTML, XML, email, HTP, etc
Common business infrastructure
Security, authentication, electronic payment,
directories, catalogs, etc
Web architecture
Client/server model
N-tier architecture; e.g. web servers,
application servers, database servers, scalabilty
The process of e-commerce
Attract customers
Advertising, marketing
Interact with customers
Catalog, negotiation
Handle and manage orders
Order capture
Payment
Transaction
Fulfillment (physical good, service good,
digital good)
React to customer inquiries
Customers service
Order tracking
Buyer and Seller Roles In
Commerce
 The End

Thank You