E-Commerce

Module - 1

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 Contents
 Introduction
 Need for E –Commerce
 Difference between E-commerce and Traditional
Commerce
 Eight Unique Features of E-Commerce
 Ecommerce Process Steps
 Difference between E-commerce and E-Business
 Advantages and Disadvantages
 Types of E-Commerce
 E-Commerce Infrastructure

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 What is Commerce ?
• Commerce is a division of trade or production
which deals with the exchange of goods and
services from producer to final consumer, especially
on a large scale.
• It comprises the trading of something of economic
value such as goods, services, information, or
money between two or more entities.

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 What is E-Commerce ?
• E-commerce (electronic commerce or EC) is the buying and
selling of goods and services, or the transmitting of funds or
data, over an electronic network, primarily the internet
• E –commerce is nothing but, digitally enabled commercial
transactions between and among organizations and individuals
• Commonly known as Electronic Marketing
• “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”

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TRADITIONAL BUSINESS

DIRECT SELLING

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6
 Difference between Traditional
Commerce and E-Commerce
No. Traditional Commerce E-Commerce

1 Heavy dependency on information Information sharing is made easy via

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

2 Communication/ transaction are done Communication or transaction can be

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

3 It is difficult to establish and maintain A uniform strategy can be easily

standard practices in traditional established and maintain in e-
commerce. commerce.

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 Difference between Traditional
Commerce and E-Commerce [contd..]
4 Communications of business In e-Commerce or Electronic
depends upon individual skills. Market, there is no human
intervention.

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

sharing as it depends heavily on platform to support commercial /
personal communication. business activities across the globe
and information is available at one
place

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8 unique features OF e-commerce technology

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1. Ubiquity
•Internet/Web technology available everywhere:
work, home, and so on, anytime.
•Effect:
–Marketplace removed from temporal,
geographic locations to become “market space”
–Marketplace = physical place
–Enhanced customer convenience and reduced
shopping costs
•Reduces transaction costs
–Costs of participating in market
– Lowers cognitive energy

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2. Global reach
•The technology reaches across national boundaries,
around Earth
•Market size = world’s online population
•Effect:
•Commerce enabled across cultural and national
boundaries seamlessly and without modification.
•Marketspace includes, potentially, billions of
consumers and millions of businesses
worldwide.
Eg: World population is the audience of startups

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3. Universal standards
–One set of technology standards: Internet
standards
–Effect:
•Different computer systems easily
communicate with one another
•Lower market entry costs—costs merchants
must pay to bring goods to market
•Lower consumers’ search costs—effort
required to find suitable products
•Price discovery becomes simpler, faster and
most accurate

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4. Richness
–Information richness refers to the complexity and
content of a message
–Supports video, audio, and text messages
–Effect:
•Possible to deliver rich messages with text,
audio, and video simultaneously to large
numbers of people
•Video, audio, and text marketing messages can
be integrated into single marketing message and
enhances consumer experience
•Eg: face to face interaction, online chatting

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5. Interactivity
–The technology works through interaction with the
user
–Technologies allows for two-way communication
between merchant and consumer and among
consumers
–Effect:
•Consumers engaged in dialog that dynamically
adjusts experience to the individual
•Avoid traditional television technology
•Use smartphones, social networks, Twitter, etc

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6. Information density
–Large increases in information density—the total
amount and quality of information available to all
market participants
– Effect:
•Greater price, cost transparency, price
transparency
•Enables merchants to engage in price
discrimination
•Information becomes more plentiful, less
expensive, and of higher quality
•Merchants also have differentiate their
products in terms of cost, brand, and quality

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7. Personalization/Customization
–Personalization: merchants can target their
marketing messages to specific individuals by
adjusting the message to a person’s name, interests,
and past purchases.
–Customization: changing the delivered product or
service based on a user’s preferences or prior
behavior.
–Effect:
•Personalized messages can be sent to individuals
as well as groups.
•Products and services can be customized to
individual preferences.
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8. Social technology
–The technology promotes user content generation
and social networking
–Effect:
•New Internet social and business models
enable user content creation and distribution,
support social networks
•Internet provides a unique many-to-many
model of mass communication

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 Evolution of E- commerce
• Invention 1995–2000
– Technology driven
– Revenue growth emphasis
• Consolidation 2001–2006
– Business driven
– Earnings and profits emphasis
• Re- invention 2007– present
– Mobile technology enables social, local, and mobile
commerce
– Audience and social network connections emphasis

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The Process Of E-Commerce

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1. A consumer uses Web browser to connect to the
home page of a merchant's Web site on the Internet.
2. The consumer browses the catalog of products
featured on the site and selects items to purchase
3. The selected items are placed in the electronic
equivalent of a shopping cart.
3. When the consumer is ready to complete the
purchase of selected items, he/she provides a bill-to
and ship-to address for purchase and delivery

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4. When the merchant's Web server receives this
information, it computes the total cost of the
order including tax, shipping, and handling charges and
then displays the total to the customer.
5. The customer can now provide payment information,
such as a credit card number, and then submit the order.
6. When the credit card number is validated and the
order is completed at the Commerce Server site, the
merchant's site displays a receipt confirming the
customer's purchase.
7. The Commerce Server site then forwards the order to a
Processing Network for payment processing and
fulfillment.

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 E - Commerce And E - Business

• E- Commerce encloses the entire world of

electronically based organizational activities that
support a firm’s market exchanges, including a
firm’s entire information system’s infrastructure
• E- Business encompasses the entire world of internal
and external electronically based activities, including
e-commerce

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• E-commerce is concerned with the firm’s dealings with its
customers, clients or suppliers.
• E-business refers to undertaking industry, trade, and
commerce, with the help of information technology and
communication.
• Trading of commodities, over the internet is known as E-
commerce.
• Running business using the internet is known as
E-business.
• E-commerce is one of the important components of E-
business, but it is not an essential part.
• It can also be said that e-commerce is e-business websites

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• E- Business to refer primarily to the digital enabling of
transactions and processes within a firm, involving
information systems under the control of the firm.
• E- Business does not include commercial transactions
involving an exchange of value across organizational
boundaries.
• For example, a company’s online inventory control
mechanisms are a component of e-business, but such
internal processes do not directly generate revenue for
the firm from outside businesses or consumers, as e-
commerce, does.

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Difference Between e-commerce and
e-business

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 E-Commerce vs E-Business
BASIS FOR
E-BUSINESS
COMPARISON E-COMMERCE
Meaning Trading of Running business using
merchandise, over the the internet is known as
internet is known as E-business
E-commerce.
What is it? Subset Superset
Is it limited to monetary Yes No
transactions?
What they carry out? Commercial Business
transactions transactions

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 E-Commerce vs E-Business [contd..]

BASIS FOR
E-BUSINESS
COMPARISON E-COMMERCE
Approach Extroverted Ambiverted
Requires Website Website, CRM, ERP, etc.
Which network is used? Internet Internet, Intranet and
Extranet.

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TYPES OF E-COMMERCE

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 Types of E -Commerce

– B2C—Business-to-Consumer
• Eg: Amazon
– B2B—Business-to-Business
• Eg: Go2Paper.com, Bigcommerce.com
– C2C—Consumer-to-Consumer
• Eg: eBay, olx
– C2B - Consumer-to-Business
• Eg: freelancer, photographer

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 Types of E –Commerce[contd..]

– Social E-commerce
• Eg: Facebook

– M- Commerce—Mobile E-
Commerce
• Eg: tablet computers, smartphones

– Local E-commerce
• Eg: Discount coupon

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 Types of E –Commerce[contd..]

– B2 G ( Business to Government )
– G2C ( Government to Consumer)
– C2 G ( Consumer to Government)
– G2 B ( Government to Business)
– G2 G (Government to Government )
– G2E (Government to Employee)
– P 2 P ( Peer to Peer)

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 Business-to-consumer (B2C):

• This is the most common type of E-Commerce

• B2C is the direct trade between the company and
consumers
• B2C commerce includes purchases of retail goods,
travel services, and online content
• The basic concept of this model is to sell the product
online to the consumers.

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 Business-to-business (B2B)

• In B2B, businesses focus on selling to other businesses,

is the largest form of e-commerce.
• This model defines that Buyer and Seller are two
different entities
• It is similar to manufacturer issuing goods to the retailer
or wholesaler
• Ex: Intel selling microprocessor to Dell
• Heinz selling ketchup to Mc Donalds

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 B2B [contd..]
• The ultimate size of B2B e-commerce is potentially
huge
• There are two primary business models used within the
B2B arena: Net marketplaces, which include
e-distributors, e-procurement companies, exchanges
and industry consortia, and private industrial
networks.
• For example, a manufacturer can sell to a wholesaler,
or a wholesale can sell to a retailer.

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 Consumer-to-consumer (C2C)
• C2C E- Commerce provides a way for consumers to
sell to each other, with the help of an online market
maker.
• In C2C e-commerce, the consumer prepares the
product for market, places the product for auction or
sale, and relies on the market maker to provide
catalog, search engine, and transaction-clearing
capabilities so that products can be easily displayed,
discovered, and paid for.

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 Consumer-to-Business (C2B)

• It is the most recent E-Commerce business model.

• In this model, individual customers offer to sell
products and services to companies who are prepared
to purchase them.
• This business model is the opposite of the traditional
B2C model.

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 Social e-commerce

• Social e-commerce is an e-commerce that is enabled by

social networks and online social relationships.
• It is sometimes also referred to as Facebook commerce

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 Mobile E-Commerce (m-commerce)

• It refers to the use of mobile devices to enable online

transactions
• M-commerce involves the use of cellular and wireless
networks to connect laptops, smartphones such as the
iPhone, Android, and BlackBerry, and tablet computers
such as the iPad to the Internet
• Ex: Mobile Ticketing, Information Services , Mobile
Banking

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 Local e-commerce

• Local e-commerce focused on engaging the

consumer based on his or her current geographic
location.
• Local merchants use a variety of online marketing
techniques to drive consumers to their stores.

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 B2G e-commerce
• Business – to- Government e-commerce is generally
defined as commerce between companies and the
public sector
• It refers to the use of Internet for public procurement,
licensing procedures and other government –related
operations
• Ex: Business pay taxes, file reports or sell goods and
services to Government agencies

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 G2C e-commerce
• Government to Citizen/Consumer model, the
government transacts with an individual
consumer
• Ex: A government can enforce laws pertaining to
tax payments on individual consumers over the
Internet by using the G2C model
• Online non-commercial interaction
between Local and Central Government
and private individuals eg: IRS, FirstGov
etc

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 C2G e-commerce
• In Consumer/Citizen to Government
model, an individual consumer interacts
with the government
• Ex: A consumer can pay his income tax or
house tax online, Issuance of certificate or
other documents etc

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 G2B e-commerce
• Government to Business model involves
transactions between a government and
business organizations
• Ex: The government plans to build a fly over
For this, the government requests for
tenders from various contractors

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G2B e-commerce

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 G2G e-commerce
• Government to Government model involves
interaction between Government
organizations, departments and authorities
and with other Government organizations,
departments and authorities
• Ex: Northeast Gang Information Systems
(NEGIS)

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 G2E e-commerce
• Government to Employees model involves online interaction
between Government organizations and its employees
• It is an effective way to provide E-learning to the
employees, bring them together and to promote knowledge
sharing among them
• It also gives employees the possibility of accessing
information in regard to compensation and benefit policies,
training and learning opportunities and civil rights laws
• G2E services also includes software for maintaining
personnel information and records of employees
• Ex: egovonline.com

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Peer to Peer (P2P) e-Commerce
• P2P technology enables internet users to share
files and computer resources directly without
having to go through a central web server
• Ex: Bit Torrent is a software application that
permits consumers to share videos
and other high – bandwidth content with
one another directly, without the intervention of
a market maker

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Why
Use
E-Commerce
…….?

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 Advantages
and
Disadvantages
of
E-Commerce

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• LOW ENTRY COST
• REDUCES TRANSACTION COSTS
• ACCESS TO THE GLOBAL MARKET
• SECURE MARKET SHARE

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 Advantages
• No checkout queues
• No need of physical company set-ups
• Easy to start and manage business
• Low operational costs and better quality of services
• You can shop anywhere in the world
• Easy access 24 hours a day
• Wide selection provided for all consumers
• Faster buying / selling procedure, as well as easy to
find products

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 Disadvantages
• Unable to examine products personally
• Not everyone is connected to the Internet
• There is the possibility of credit card number theft
• On average only 1/9th of stock is available on the
net
• Mechanical failures can cause unpredictable effects
on the total process

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 E-commerce Infrastructure:
The Internet, Web, and Mobile Platform

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 The Internet: Technology Background
• Internet
– Interconnected network of thousands of networks
and millions of computers
– Links businesses, educational institutions,
government agencies, and individuals
• World Wide Web (Web)
– One of the Internet’s most popular services
– Provides access to billions, possibly trillions, of
Web pages

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 The Evolution of the Internet

• Innovation Phase, 1964–1974

– Creation of fundamental building blocks
• Institutionalization Phase, 1975–1995
– Large institutions provide funding and
legitimization; ex : DoD, NSF(National Science
Foundation)
– Commercialization Phase, 1995–present
Private corporations take over, expand Internet
backbone and local service

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 The Internet:
Key Technology Concepts
• Internet defined as network that:
– Uses IP addressing
– Supports TCP/IP
– Provides services to users, in manner similar to
telephone system
• Three important concepts:
– Packet switching
– TCP/IP communications protocol
– Client/server computing

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 Packet Switching
• Slices digital messages into packets
• Sends packets along different communication paths
as they become available
• Reassembles packets once they arrive at destination
• Uses routers
– Special purpose computers that interconnect the
computer networks that make up the Internet and
route packets
– Routing algorithms ensure packets take the best
available path toward their destination
• Less expensive, wasteful than circuit-switching
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63
Packet Switching

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 TCP/IP
• Transmission Control Protocol (TCP)
– Establishes connections among sending and receiving Web
computers
– Handles assembly of packets at point of transmission, and
reassembly at receiving end
• Internet Protocol (IP)
– Provides the Internet’s addressing scheme
• Four TCP/IP layers
– Network interface layer
– Internet layer
– Transport layer
– Application layer

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The TCP/IP Architecture and Protocol Suite

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 Internet (IP) Addresses
• IPv4
– 32-bit number
– Four sets of numbers marked off by periods:
201.61.186.227
• Class C address: Network identified by first
three sets, computer identified by last set
• IPv6
– 128-bit addresses, able to handle up to 1
quadrillion addresses (IPv4 can handle only 4
billion)
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Routing Internet Messages: TCP/IP and
Packet Switching

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 Domain Names, DNS, and URLs
• Domain name
– IP address expressed in natural language
• Domain name system (DNS)
– Allows numeric IP addresses to be expressed in
natural language
• Uniform resource locator (URL)
– Address used by Web browser to identify location
of content on the Web
– For example: http://www.computerhope.com

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 Client/Server Computing

• Powerful personal computers (clients) connected in

network with one or more servers
• A server is a connection point for several clients
• Servers perform common functions for the clients
– Storing files
– Software applications
– Access to printers, scanners and so on

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 The New Client:
The Mobile Platform
• In a few years, primary Internet access will be
through:
– Tablets
• Supplementing PCs for mobile situations
– Smartphones
• Disruptive technology:
– Shift in processors, operating systems
• 33% of all cell phones

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 Fig: The Cloud
Computing Model

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 Cloud Computing
• Firms and individuals obtain computing power and
software over Internet
– Example: Hardware Firms : IBM, HP etc
Software firms - Google Apps, Microsoft, SAP, Oracle
etc
• Fastest growing form of computing
• Radically reduces costs of:
– Building and operating Web sites
– Infrastructure, IT support
– Hardware, software

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 Other Internet Protocols and
Utility Programs
• Internet protocols
– HTTP
– E-mail: SMTP, POP3, IMAP
– FTP, Telnet, SSL/TLS
• Utility programs : To help analyse, configure, optimize
or maintain a computer.
– Disk formatting, antivirus
– Ping : system administrator's tool
– Tracert

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 The Internet Today

• Internet growth has boomed without

disruption because of:
– Client/server computing model
– Hourglass, layered architecture
– Four layers

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 THE HOURGLASS MODEL OF THE INTERNET
• The Network Technology Substrate layer:
– It composed of telecommunications networks and protocols
• The Transport Services and Representation Standards:
– This layer houses the TCP/IP protocol
• The Applications layer:
– It contains client applications such as the World Wide Web,
e-mail, and audio or video playback
• The Middleware Services layer:
– It ties the applications to the communications networks
and includes such services as security, authentication,
addresses, and storage repositories

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Fig: THE HOURGLASS
MODEL OF THE
INTERNET

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 Internet Network Architecture

• Backbone
– High-bandwidth fiber-optic cable networks that
transports data across the Internet
– Private networks owned by a variety of NSPs or
MAEs but now commonly called IXPs
– Bandwidth: 155 Mbps–2.5 Gbps
– Built-in redundancy: multiple duplicate devices
and paths in a network

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Fig: Internet Network Architecture

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 Internet Network Architecture
[contd..]
• IXPs (Internet Exchange Points )
– Hubs where backbones intersect with regional and
local networks, and backbone owners connect with
one another
• CANs (Campus Area Networks)
– LANs operating within a single organization that
leases Internet access directly from regional or
national carrier

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 Internet Service Providers (ISPs)

• Provide lowest level of service to individuals, small

businesses, some institutions
• Types of service
– Narrowband (dial-up)
– Broadband
• Digital Subscriber Line (DSL)
• Cable modem (T1, T3 lines )
• Satellite

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 Intranets

– TCP/IP network located within a single

organization for communications and processing
– Used by private and government organizations
for internal networks
– All Internet applications can be used in private
intranets

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 Who Governs the Internet?
• Organizations that influence the Internet and monitor its
operations include:
– Internet Corporation for Assigned Names and Numbers
(ICANN)
– Internet Assigned Numbers Authority (IANA)
– Internet Engineering Task Force (IETF)
– Internet Research Task Force (IRTF)
– Internet Engineering Steering Group (IESG)
– Internet Architecture Board (IAB)
– Internet Society (ISOC)
– Internet Governance Forum (IGF)
– World Wide Web Consortium (W3C)
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 Limitations of the Current Internet
• Bandwidth limitations
– Slow peak-hour service
• Quality of service limitations
– Latency
• Network architecture limitations
– Identical requests are processed individually
• Wired Internet
– Copper and expensive fiber-optic cables

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Future Internet – Internet 2
Project

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 Wireless Internet Access Technologies
• Wi-Fi (IEEE 802.11 a/b/g/n)
– High-speed, fixed broadband wireless LAN (WLAN)
– Wireless access point (“hot spots”)
– Limited range but inexpensive (11 Mbps – 70 Mbps)
• WiMax (IEEE 802.16)
– High-speed, medium range broadband wireless
metropolitan area network
• Bluetooth (Wireless Personal Area Network)
– Personal connectivity between devices and to Internet
– Modest-speed, low power consumption, short range
connection

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Wi-Fi Networks

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 The Future Internet
• Latency solutions
– diffserv (differentiated quality of service)
• Guaranteed service levels and lower error rates
– Ability to purchase the right to move data through network at
guaranteed speed in return for higher fee
• Declining costs (WiFi and Broadband services expand
and thus increase service areas and reduce cost of access)
• The Internet of Things (IoT)
– Objects connected via sensors/RFID to the Internet
– Spearheaded by EU and China

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 The Web
• 1989–1991: Web invented
– Tim Berners-Lee at CERN
– HTML, HTTP, Web server, Web browser
• 1993: Mosaic Web browser withGUI
– Andreessen and others at NCSA
– Runs on Windows, Macintosh, or Unix
• 1994: Netscape Navigator, first commercial Web
browser
– Andreessen, Jim Clark
• 1995: Microsoft Internet Explorer
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 Hypertext

• Text formatted with embedded links

– Links connect documents to one another, and to
other objects such as sound, video, or animation
files
• Uses Hypertext Transfer Protocol (HTTP) and URLs
to locate resources on the Web
– Example URL: https://www.w3schools.com

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 Markup Languages

• Hypertext Markup Language (HTML)

– Fixed set of pre-defined markup “tags” used to
format text
– Controls look and feel of Web pages
– HTML5 the newest version
• eXtensible Markup Language (XML)
– Designed to describe data and information
– Tags used are defined by user

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 Web Servers and Web Clients
• Web server software
– Enables a computer to deliver Web pages to clients on a
network that request this service by sending an HTTP request
– Apache, Microsoft IIS
– Basic capabilities: Security services, FTP, search engine, data
capture
• Web server
– May refer to either Web server software or physical server
– Specialized servers: Database servers, ad servers, and so on
• Web client
– Any computing device attached to the Internet that is capable
of making HTTP requests and displaying HTML pages

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 Web Browsers

• Primary purpose to display Web pages

• Internet Explorer—54% of market
• Mozilla Firefox—20%
– Open source
• Other browsers
– Google Chrome—19%
– Apple’s Safari—5%

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 The Internet and Web: Features

• Features on which the foundations of e-commerce

are built:
– E-mail
– Instant messaging
– Search engines
– Online forums and chat
– Streaming media
– Cookies

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E-mail
• Most used application of the Internet
• Uses series of protocols for transferring messages
with text,audio,video,images with attachments from
one Internet user to another
Instant Messaging
• Displays words typed on a computer almost
instantaneously, and recipients can respond
immediately in the same way making the
communication more like a live conversation

96
Search Engines
• Identify Web pages that match queries entered by
users based on one or more techniques
– Keyword indexes, page ranking
and then provides a list of the best matches
• Also serve as:
– Shopping tools
– Advertising vehicles (search engine marketing)
– Tool within e-commerce sites
• Outside of e-mail, most commonly used Internet
activity

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How Google Works

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Online forum
– Also known as a message board, bulletin board,
discussion board, discussion group, board, or
forum
– Web application that enables Internet users to
communicate with one another, although not in
real time
– Members visit online forum to check for new
posts
Online chat
– Similar to IM, but for multiple users
– Typically, users log into chat room
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Streaming Media
• Enables music, video, and other large files to be
sent to users in chunks so that when received
and played, file comes through uninterrupted
• Allows users to begin playing media files before
file is fully downloaded

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Cookies
• Small text files deposited by Web site on user’s
computer to store information about user, accessed
when user next visits Web site
• Can help personalize Web site experience
• Can pose privacy threat

101
 Web 2.0 applications
• A set of applications has emerged on the Internet,
loosely referred to as Web 2.0.
• These applications attract huge audiences and
represent significant opportunities for e-commerce
revenues
• Twitter
• YouTube
• Instagram
• Wikipedia
• Tumblr
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 Web 2.0 Features and Services
• Online Social Networks
• Blogs
• Really Simple Syndication (RSS)
• Podcasting
• Wikis

103
 Web 2.0 Features and Services [contd..]

• Music and video services

• Internet telephony (VoIP)
• Video conferencing, video chatting, and
telepresence
• Online software and Web services –Web apps,
Widgets and Gadgets
• Intelligent Personal Assistants

104
 Mobile Apps
• A mobile application, most commonly referred to as
an app, is a type of application software designed to
run on a mobile device, such as a smart phone or tablet
computer
• Mobile applications frequently serve to provide users
with similar services to those accessed on PCs

105
 Mobile Apps [contd..]
• Apps are generally small, individual software
units with limited function
• This use of app software was originally
popularized by Apple Inc. and its App Store,
which offers thousands of applications for the
iPhone, iPad and iPod Touch.

106
 Platform for Mobile App Development
• Apps are platform – specific
• Applications for iPhone, iPad and other iOS devices are
written in the Objective – C
programming language using the iOS SDK
• Applications for Android OS based phones
are written using Java
• Blackberry apps are written in Java
• Windows mobile devices are written in C
or C++

107
 Mobile App Marketplace

• Apps are distributed through various marketplaces

• For eg: for Android –based phones Google Play which
is controlled by Google iPhone through Apple’s App
store
• Blackberry in RIM’s App world
• Microsoft operates the Windows Phone
marketplace for Windows mobile devices

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