E-Business

The objective of the course is to make the student understand the

latest trends in electronic business and the information technology
involved in running e-business

Unit – 1
Introduction to E-Business – Definitions – Types of E-
Business, Benefits of Business – Limitations of E-
Business – Impact of E-Commerce – Electronic Market
Structure – Business Model of Electronic Marketing –
Procedure for Internet Shopping: Consumer Perspective
– Aiding Comparison Shopping
The Cycle of Electronic Commerce

• Electronic Business includes the tasks that support the buying and
selling of goods and services, and interactions among these tasks
Definition of Electronic Commerce

• Electronic Business is defined as the conducting of business

transactions over electronic networks instead of paper, telephones,
couriers, tracks, planes and other means of moving products and
information.
Definitions of E-Commerce

• According to Lou Gerster, IBM’s CEO – “E

Business is all about cycle time, speed, globalization,
enhanced productivity, reaching new customers and
sharing knowledge across institutions for
competitive advantage.”
Why E-Business
• Lack of time at public or Consumers
• Flexibility in timings
• Easy delivery at door steps
• Planning for payment
• Safe Transactions
Introduction to Electronic Business

• According to Albert Gore Jr. “We are on the verge of a revolution that
is just as profound as the change in the economy that came with the
industrial revolution. Soon electronic networks will allow people to
transcend the barriers of time and distance and take advantage of
global markets and business opportunities not even imaginable today,
opening up a new world of economic possibility and progress”.
Introduction to Electronic Business
• Electronic commerce describes the manner in which
transactions take place over networks, mostly the Internet.

• It is the process of electronically buying and selling goods,

services, and information. Certain Electronic commerce
applications, such as buying and selling stocks or books on
the internet, are growing at a rate of several hundred percent
every year.
• Electronic Commerce could have an impact on significant
portion of the world on businesses, professions, and of
course on people.
• However, the impact of Electronic Commerce is not just the
creation of web-based corporations. It is the building of new
Industrial order.
Components of Electronic Business Electronic
Business

Institutions
Processes
Government
Marketing
Merchants
Sales
Manufactures
Payment
Suppliers
Fulfillment
Consumers
Support
Networks
Corporate
Internet
Commercial
The cycle of Electronic Business

Follow on sales
Access

Customer Online Ads Online order

Standard order

Distribution

Electronic customer
Support
Disintermediation and Reintermediation by Electronic Business

Eliminations of traditional intermediation is called disintermediation.

Incorporation of new electronic intermediaries (such as Electronic-
malls,electronic-catalogues/directory, search engine services and product selection
agents) are called reintermediation
Disintermediation and Reintermediation by Electronic Business

Manufacturer

Electronic
Reintermediation
Intermediaries
On the Internet

consumer
Elements of E-Business
• Direct to Consumer from Manufacturer
• Electronic payment system
• Negotiation at online
• Flexibility in Delivery of the product
• Saving the time and cost
Disadvantages of E-Business
• Can not test the product
• Disadvantage in Price and quality
• Legal Problems and jurisdiction
Disintermediation and Reintermediation by Electronic Business

Manufacture

Disintermediation

Consumer
Disintermediation and Reintermediation by Electronic Business

Manufactures

Wholesaler

Traditional
Distributor Intermediation

Retailer

Consumer
Components of Electronic Business

Electronic Business can facilitate Internal department interactions,

improve customer relations and eliminate the constraints of time and
place.
A significant synergy has formed between the use of digital
information, computerized business practices and the Internet. This
synergy is what enables electronic commerce more efficient and
effective
 Types of E-Business
a common Classification of E-Commerce is by the nature of transaction.

• Business-to-consumers (B2C)
• Business-to-business (B2B)
• Consumer-to-consumer (C2C)
• Consumer to Business (C2B)
• Non-Business EC
• Intrabusiness (organizational) EC
Types of EB (Continued)

• Mobile Commerce (m-commerce) refers

to e-commerce that is conducted in a
wireless environment. i.e. using cell
phone to shop over the Internet
• Business model is the method by which
a company generates revenue to sustain
itself.
Classification of Electronic Business Applications

Types of interorganizational
systems.
• Electronic Data Interchange (EDI), which provides
secured B2B connection over Value-added-networks
(VANs)
• Extranets, which provide secured B2B connection over
the Internet
• Electronic funds transfer
• Electronic forms
Types of Interorganisational systems
• Integrated messaging delivery of e-mail and fax documents through a
single electronic transmission system that can combine EDI, e-mail,
and electronic forms
• Shared databases – information stored in repositories is shared
between trading partners and is accessible to all.
• Supply Chain Management – cooperation between a company and its
suppliers and/or customers regarding demand forecasting, inventory
management and orders fulfillment can reduce inventories, speed
shipments, and enable just-in-time manufacturing.
Classification of Electronic Business Applications

Interorganizational Systems (IOS)

An IOS involves information flow among two or
more organizations. Its major objective is efficient
transaction processing. Such as transmitting orders,
bills, and payments using Electronic Data Interchange
(EDI) or extranets.
Interorganizational systems are used exclusively
for Business to Business (B2B) applications, whereas
electronic markets exist in both the B2B and Business
to Consumer (B2C) cases.
Interorganisational system
A typical IOS will include a company and its suppliers and/or
customers. Through IOS, buyers and sellers arrange routine business
transactions. Information is exchanged over communications networks
using prearranged formats.
Classification of Electronic Business Applications

What is internet, intranet and extranet?

1. Computers connected to a global networked environment
known as the Internet.

2. Computers connected to a global networked environment and

its counterpart within organizations, called an intranet. An
intranet is a corporate network that functions with Internet
technologies, such as browsers, using Internet protocols.

3. An extranet, a network that links the intranets of business

partners over the Internet.
Classification of Electronic Commerce Applications
Electronic Markets

Electronic Market is a network-based location where business interactions

occurs. Where information, products, services, and payments are

exchanged. The Electronic Market is place where shoppers and sellers

meet. The Electronic Market handles all the necessary transactions,

including the transfer of money between banks. In Electronic Markets the

principal participants are transaction handlers, buyers, brokers, and

sellers.
Classification of Electronic Business Applications

Application of EC are divided into 3 categories

1. Buying and selling goods and services. These are usually referred to as
Electronic Markets

2. Facilitating Inter and Intra-organization flow of information. Communication

and collaboration. These are sometimes referred to as Interorganizational
Systems (IOS).

3. Providing customer services.

Business-to-Consumers (B2C)

These are retailing transactions with

individual shopper. The typical shopper at
Amazon.com is a consumer, or customer.

Woolworths of Australia with home shopping site (

www.woolworths.com.au) is designed with freshness
in mind and all the fresh food is available for
delivery.
Business-to-Consumers (B2C) cont…

• Electronic Storefront has its own URL at which buyers

can place orders.

• Electronic Malls (Cybermall or e-mall) is a collection

of individual shops under one Internet address.

• Referral malls in which you are transferred to a

participating storefront
• Electronic shopping cart enables you to gather items from
various vendors and pay for them in one transaction.
Business-to-business (B2B)

Most of Electronic Business

today is of this type. It includes the IOS transactions
(An IOS involves information flow among two or more organizations.
Its major objective is efficient transaction processing, such as transmitting
order, bills and payments using Electronic Data Interchange (EDI) and
Electronic Market transactions between organizations .)
• Sell-side marketplaces are where organizations attempt to
sell their products or services to other organizations
electronically from their own private e-marketplace.
• Buy-side marketplaces are where organizations attempt to
buy needed products or services from other organizations
electronically.
Business-to-business (B2B) cont…

• E-Procurement is using electronic support to

purchase goods and materials, sourcing, negotiating
with suppliers, paying for goods and making delivery
arrangements.

• Group purchasing is when the orders of many

buyers are combined so that they constitute a large
volume.
Consumer-to-Consumer (C2C)
In this category consumer sells directly to consumers.
Examples are individuals selling in classified ads (
www.classified2000.com) and selling residential
property, cars and so on. Advertising personal services
on the Internet and selling knowledge and expertise is
an other example of C2C
Consumer to Business (C2B)

This category includes individuals who sell products

or services to organizations, as well as individuals
who seek sellers, interact with them and conclude a
transaction.
Non-business Electronic Business
An increased number of non-business institutions
such as academic institutions, non-profit
organizations, religious organizations, social
organizations and government agencies are using
various types of Electronic Commerce to reduce
their expenses. e.g. improve purchasing or to
improve their operations and customer services
Intrabusiness (organizational) EC
In this category we include all internal organizational
activities, usually performed on intranets, that
involve exchange of goods, services or information.
Activities can range from selling corporate products
to employees to online training and cost-reduction
activities.
BENEFITS OF ELECTRONIC Business

The global nature of the Technology, low cost, opportunity to reach

hundreds of millions of people, interactive nature, variety of
possibilities, and resourcefulness and rapid growth of the
supporting infrastructures (especially the web) result in many
potential benefits to:

1) Organizations
2) Consumers
3) Society
BENEFITS OF ELECTRONIC Business
Benefits to organizations
1) Provide opportunity to expends the marketplace to
national and international markets. With minimal
capital outlay, a company can easily and quickly
locate more customers, the best suppliers and most
suitable business partners worldwide.

2) Decreases the operating cost. EC decreases the cost

of creating, processing, distributing, storing, and
retrieving paper-based information. For example, by
introducing an electronic procurement system,
companies can cut the purchasing administrative
costs by as much as 85 per cent.
BENEFITS OF ELECTRONIC BUSINESS
Benefits to organizations

• Provide new platform for specialized business. For example,

dog toys which can be purchased only in pet shops or
discount stores in the physical world, are sold now in a
specialized www.dogtoys.com

• Reduces inventories and overhead by facilitating “pull” type

Supply Chain Management (SCM). In this system the
process starts from customer orders and uses Just-in-time
manufacturing. The pull-type processing enables expensive
customization of products and services which provides
competitive advantage to its implementers. A class example
is DELL Computer Corporation.
 BENEFITS OF ELECTRONIC BUSINESS Benefits to organizations

• Reduces the time between the outlay of capital and the receipt of products and
services.

• Initiates business processes reengineering projects. By changing processes

productivity of salespeople, knowledge workers and administrators can increase
100% or more.

• Improved image, customer services, new-found business partners, simplified

processes, compressed cycle and delivery time, increased productivity, eliminating
paper, expediting access to information, reduced transportation costs and
increased flexibility.
BENEFITS OF ELECTRONIC BUSINESS Benefits to
consumers
1. No restriction on shopping time. EC enables customers to
shop or do other transactions 24 hours a day, thought-out the
year and from almost any location.

2. Increased choices, EC provides customers with more choices:

they can select from many vendors and from move products.

3. Easy to get less expensive product or services. EC frequently

provides with less expensive products and services by
allowing them to shop in many places and conduct quick
comparisons.
BENEFITS OF ELECTRONIC BUSINESS Benefits to consumers

4. EC provides quick delivery of products

( in case of digitized products)

5. Transformation of information from

manufacture or services provider to
customers in seconds of time, rather than
days or weeks.
Benefits to Consumer
6. Provides customers to participate in virtual auctions.

7. Customers can interact with other customers in electronic

communities and exchange ideas as well as compare experiences.

8. Facilities competition, which results in substantial discounts.

Outline
• What is E-Business
• What the different beween E-business and E-commerce
• Evolution of e-business
• E-Business Model
• Impact of E-Business on Business
• Advantages
• E-Business challenges
• References
What is E-Business
• Electronic business, or e-business, is the application of information and
communication technologies ICT in support of all the activities of
business.
• E-Business refers to a broader definition of e-commerce, not just the
buying and selling of goods and services, but also servicing customers,
collaborating with business partners, conducting e-learning, and
processing electronic transactions.
• Electronic business methods enable companies to link their internal and
external data processing systems more efficiently and flexibly, to work
more closely with suppliers and partners, and to better satisfy the
needs and expectations of their customers.
What the different beween E-business
and E-commerce

E-business E-commerce
1. Ebusiness is superset of Ecommerce. 1. Ecommerce is subset of Ebusiness.
2. Ebusiness includes all kinds of pre-sale and post- 2. Ecommerce just involves Buying and selling of
sale efforts products and services.

3. E-business covers internal processes such as 3. Ecommerce covers outward facing processes that
production, inventory management, product touch customers,suppliers and external partners.
development, risk management, finance etc.

4. Ebusiness involves the use of CRM’s, ERP’s that 4. Ecommerce usually requires the use of just a
connect different business processes. Website.
Evolution of e-business

• 1997: Introduction of an brand new phrase- e- business. IBM was

one of the first companies to use the term when, in October 1997,
it launched a thematic campaign built around e-business.
• 1999: The emphasis of e-business shifted from B2C to B2B.
• 2001:The emphasis of e-business shifted from B2C to B2B, c-
commerce,e-government, e-learning, and m-commerce.
• 2004: Total online shopping and transactions in the United States
between $3 to $7 trillion.
• E-business will undoubtedly continue to shift and change.
E-Business Model
Impact of E-Business on Business
Direct sales to customer.
Anytime access from anywhere.
Customization of products.
Quicker time to market.
Lower stock outs.
Price discrimination.
Automated and convenient process.
Advantages of E-Business

1)Worldwide Presence.
2)Cost-effective Marketing and Promotions.
3)Better Customer Service.
4)Developing a Competitive Strategy.
5)Curtailing of Transaction Cost.
6)Overhead Costs Are Reduced.
E-Business challenges
Cost
Value
Security
Leverage existing system
Interoperability
eCommerce Business Strategies
Strategic Management Process
• Strategy - a course of action, including the specification of resources
required to achieve a specific objective.
• Concerned with the Decisions
• Enhance the Competitiveness

Scope

Cost Time
A Strategy
• “Based on current performance in marketplace”
• “Defines how we will meet our objectives”
• “Sets allocation of resources to meet goals”
• “Selects preferred strategic options to compete within a market”
• “Provides a long-term plan for the development of the organization”
No e-Strategy?
• Missed Opportunities
• Inappropriate Direction
• Isolation of information in different systems.
• Resource wastage
eBusiness Strategy Development
Step by Step

Planning
• e-Business
strategy
Implementation Operation
• Implementa
tion plan
Planning

What type of eBusiness?

eBusiness
Strategy Why you want to develop
that type of e-business ?

Implementation How to develop the

Plan chosen eBusiness type?
Propose Your Future Situation
• Should be specific (time and figures)
• Profit Oriented (Improve Revenue Models)
• Cost Oriented (Be efficient)
• Client Oriented (Improve customer services)

“Reduce cost
by 20% in 1
“Increase client year”
satisfaction by 50%
in 2 years” “Increase revenue
by 30% in 2 years”
To be a First Mover rather
than a Follower?

Advantages Disadvantages
• Chance to capture large • High Cost
markets • Chance of failure is high
• Establishing a brand • System may be obsolete
name • No support services at
• Exclusive strategic the beginning
alliances • Competitors may follow
the strategy quickly
SWOT Analysis

Internal
External Factors
Factors

Strength Weaknesses Opportunities Threats

(2009 - 2015) Case Study is given to carry a SWOT Analysis

SWOT Analysis
• What is your business sector?
• Who are the customers?
• What are the current practices of selling and buying?
• Who are the major competitors?
• How intense is the competition?
• What e-strategies are used, by whom?
• What are the existing and potential partnerships for developing e-
Business?
SWOT Analysis for a General
Organization
 Strength  Weaknesses
Internal
Factors  Original product  Lack of IT expertise
 Popular product  No WEB presence
 Reputation for high
quality

• Opportunities • Threats
• Easy Accessibility for global
External

• Competitors
Factors

market
• New trends
• Availability of B2B market
places
SWOT Diagram
Internal Strength (S) Weaknesses (W)
External
SO Strategies WO Strategies
Generate strategies Generate strategies here
here that use that take advantage of
Opportunities strengths to take opportunities by
(O) advantages of
opportunities
overcoming weaknesses

ST Strategies WT Strategies
Generate strategies Generate strategies
here that use here that minimize
Threats (T) strengths to avoid weaknesses and
threats avoid threats
What should consider when joining
with an eBusiness Portal
• Benefits?
• Costs?
• Limitations?
• Marketing?
• Infrastructure? (Sell side & Buy side)
• Which portal to join?
Identify Organization’s Position
• Survival -Companies in deep trouble and need re-engineering, they
have no choice.
• Sustainability - Not yet in trouble, but, has the foresight to see
trouble coming. They need to be proactive.
• Growth - Ambitious and aggressive. Reengineering is an opportunity
to further their lead over the competitors.
Critical Success Factors which give
the Competitive Advantage
State-of-the-Art Technology

Competitive

High Productivity

Delivery
On time
Pricing
High Quality

Effective Business
Processes
SWOT Analysis

Cost – Benefit – Risk Analysis

Porter’s 5 Forces
Analysis
Virtual Colloboration
Business A
Customer Information

Virtual Business B
Customer Information
Organization

Customer Business C
Information
For SME, is it difficult to trade
internationally?
• When a small company plans to import or export products for
the first time they often face a range of complicated
procedures, regulations, legislation and other barriers.
• Small companies with 5-10 employees do not have the
resources to support a dedicated foreign trade department
• As a result, many SMEs feels trading internationally is very
discouraging.
• They may be forced to use an external consultant (very expensive)
or lose a potentially valuable business opportunity.
 An Innovative Global Trade Platform For SMEs, Giordana Bonin

Global Trade Platform for SMEs

Ref :
https://books.google.lk/books?id=TzUYxvwW51EC&l
pg=PP1&pg=PA1380#v=onepage&q&f=false
An Innovative Global Trade Platform For SMEs,
Giordana Bonini
Often LOCs that are compiled by hand/manually often contain errors. GTP will facilitate the
exchange of LOCs using traditional paper documents as well as by electronic means.
Architecture
• System architecture is based on modules that will allow a range of
actors from the foreign trade value chain to integrate with the
portal.
• Involving different types of users such as import and export companies, banks
and other foreign trade sector operators
• The service providers (transport and logistics companies, credit institutions,
insurance companies, lawyers/legal consultants, foreign trade advisors,
inspection institutions, forwarding agents, customs offices/agents, public
authorities, financial institutions, etc.) can dynamically integrate to the
platform through on-line interactive web tools.
Architecture
• Allows participant companies that use any kind of application software to
be easily integrated with the system. (From web services which uses XML)
• High level of flexibility where features can be either be partly or wholly
used.
• Well organized portal and contents are clear and precise.
• Provide effective support to companies who wish to trade internationally.
• The main characteristic of this managerial software is the integration into
a unique technological platform of all the actors involved in the
import/export cycle.
Characteristics
• It is an innovative web based portal dedicated to foreign
trade
• Provides solutions to the major problems faced by
organizations when they are carrying out import/export
transactions.
• GTP is for SMEs who intend to start or expand international
trade activities by guiding them through the stages of
importing or exporting a product and highlighting any
relevant regulations and taxes that apply.
• It allows organizations (SMEs) to manage and carry out
their B2B transactions on the Internet
Characteristics
• It is a easy to use support tool to improve SMEs foreign trade
activities because it fully integrate the foreign trade value chain.
• Through a user-friendly interfaces, the portal supplies both the types
of SMEs; who wish to start trading internationally as well as those
who want to enter new markets.
Business Processes Facilitate
• Includes the business processes involved in the
import-export cycle.
• This web based portal supports the SMEs to manage the
whole import/export process by integrating all the steps
from order to payment to delivery.
• Deal with all the information regarding taxation
calculations and details of service providers necessary to
carryout a foreign trade transaction.
• It also includes order confirmation, price determination,
digital transfer of documents, agreement of the
transaction’s terms and conditions, and selection of service
providers.
Success Factors
• Should be based on state of the art technologies as
well as intelligent technologies.
• Should incorporate all the necessary security features
to achieve data protection, integrity and security.
• It should not be just a simple marketplace.
• Should be easy to use to retrieve information,
especially by non expert users such like SMEs.
• Should include following major functional areas;
• marketing, legal, informatics, international payment and
logistics.
Features
• Offer buyer/seller contacts and related information to
obtain the best available offer.
• Intelligent systems that highlights the most
competitive service providers
• Calculate total price for a product when it arrives at
the export destination taking into account charges
such as insurance, freight, import taxes, port fees.
Features
• Users can obtain export advice on the tax, customs
duties, legal and administrative requirements for a
specific product depending on the country of origin
and destination.
• The exporter/importer can select relevant delivery
and payment terms.
• Facilities to negotiate and manage different payment
methods and manage foreign exchange.
• Produce and manage all the necessary transport
documents
• Easily manage shipment requests
Value Addition
• Could provide number of value added
features(negotiation and consultancy) that will attract
and retain SMEs and allow suppliers to gain market
access and reduce transactions costs by ensuring the
transparency and security of international
transactions.
• Additional facilities include such as e-learning facility
to learn the process, foreign trade related discussion
forums.
Value Addition
• Facilities to overcome language barrier
• Support from an online export guide containing export assistance,
operational tools, financing, information sources and commercial
information about potential foreign customers.
• Consultancy support to help organizations overcome the key barriers
which prevent them from entering to the international markets.
Security
• Need high security environment both physical & digital.
• Digital security mechanisms should be properly in place
(protocols [HTTPS/ SSL], encrypted information
transmission, password protection, user id system, digital
signatures and acquire necessary digital certificates.)
• CIA Features in Digital Security
• Confidentiality – ensure that information is not accessed by
unauthorized parties
• Integrity – ensure that information is not altered by unauthorized
people in a way not detectable by authorized users
• Authentication – ensure that users are the people they claim to
be
Security and Data Protection
• Security is an important issue for the successful implementation of
the portal.
• To guarantee the maximum level of trust, the system should take the
necessary measures to ensure both high performance and system
protection.
• Digital signatures and proper mechanisms to allow users to manage and
exchange electronic documents. (in order to certify the validity, the
authenticity and the ownership of any document transmitted over the
platform)
• Security of the sensitive data
Benefits to Seller / Manufacture
• The SMEs get virtual participate in bigger global market. Could be a
global provider easily.
• No marketing needed individually
• Improve the competitiveness of exporters involved in foreign trade
• Facilitate exporters to create and publish their product catalogue
online, thus increasing their company visibility.
• With dashboards which display current customer order status, new
orders, new quotation requests, previous orders.. etc., exporters can
easily get an overview of their business performance.
Benefits to the Buyer
• One stop shop concept
• Users can obtain a list of approved suppliers as well as competitive
service providers who can provide the necessary export services such
as shipping, hauliers, insurance, etc.
• Importers can request a price quotation for the displayed products
and once the offer request is received, exporters can generate a
counter offer through the portal.
• Facility to posting an offer and carry out the international sale
contract in a coordinated manner which conforms with international
legislation.
Benefit Areas
• Costs Savings
• Portal provide the most competitive quote from a range of service providers.
• Portal simplifies the international trade process.
• Reduction in the risk related to the loss or delay documents
• Savings in customs costs because goods will remain in customs for a shorter
period of time.
• Time Savings
• Enable users to speed up the exchange of documents and streamline their
foreign trade business processes.
Benefit Areas
• Reduction of errors
• Platform supports the secure integrated and coordinated management of
documents necessary for the execution of any foreign trade transaction.
• The system ensures the authenticity and accuracy of every document
exchanged online.
• In particular users will be able to create, amend and change LOCs online, thus
reducing the costs of using external consultants to prepare and dispatch such
documents.
• Another major benefit is achieved in the reduction of errors in LOCs missing
documents or delays in presenting the correct paperwork which were often
experienced by importers and exporters.
Conclusion
• GTP will provide an important contribution because it meets a large
number of identified user needs and provides a complete export
service to SMEs
• Provide importers/ exporters with the contacts and references to
obtain the best available offer and to better integrate the value chain
of their import/export operation.
 REGULATORY
ASPECTS OF E-
COMMERCE
INTRODUCTION
 Entry of E-commerce in the business scenario has changed the rules of the
game and it has affected the economic relations between and within different
countries and companies.
 Hence, it becomes very important to create a policy and regulatory
environment that favors the development of e-commerce and harmonizes
national approaches in diverse areas such as telecommunications, trade,
intellectual property, privacy etc.
 So, here we’ll discuss about legal and policy issues which are associated with
e-commerce along with the laws and environments effective to deal with
them, with special reference to the laws applicable in India.
 REGULATORY ASPECTS
OF E-COMMERCE

LEGAL LIABILITY SECURITY CONSUMER

INTELLECTUAL
PROTECTION
PROPERTY ISSUES
ISSUES ISSUES ISSUES ISSUES

CONTENT
JURISDICTION TAXATION REGULATIO
ISSUES ISSUES N ISSUES
 1. LEGAL ISSUES

▫ Every business has to operate within the legal boundaries and it seems quite
easy in case of E-Commerce, but there are political difficulties in collecting,
storing and appreciating Digital Evidence.

▫ Cyber laws are the savior to combat cyber crime. It is only through stringent
laws that unbreakable security could be provided to the nation’s
information.

▫ While performing the activities of E-Commerce, there is highest possibility

for the occurrence of legal issues and the basic issue is of the Formation of
 TYPES OF E-CONTRACTS FORMED IN E-
COMMERCE

3. Shrink Wrap
Agreement:
1. Click wrap Here, the contracting
contract party can read the
(the contracting party terms and conditions
acceptance is taken by a 2. Browse Wrap only after opening the
click on the “I Accept” Agreement:
option or tab.)
box within which the
It is binding on the party
by mere use or browsing commodity license is
of the website. packed.
 SOME OF THE IMPORTANT REQUIREMENTS

▫ Here all the rules regarding the Indian Contract Act, 1872 will be applicable. For instance:
free consent of the parties, lawful consideration, competence of parties and lawful object
etc.

▫ Along with the Indian Contract Act, 1872, other legal acts such as Intellectual property
acts (Copyright Act, 1957, Patents Act, 1999 etc.) and Information Technology Act, 2000,
Indian Penal code, 1860and Reserve Bank of India Act, 1934 will also be applicable.
 2. LIABILITY ISSUES

▫ Liability issues are raised when a customer purchases a product over

internet and it is found to be defective.

▫ Intermediary Liability:

▫ As per IT Act, Intermediary is:

Any person, who on the behalf of other person
Receives, stores and transmits any record or provides
service (telecom service, network service, web hosting
such as payment sites, cyber cafes etc.)
 LIABILITY ISSUES
(cont.)

The IT Act provides exemptions to the liability of intermediaries if

certain requirements have been fulfilled such as;
a) The intermediary merely provides access to the communication system
over which information is transmitted.

b) The intermediary does not initiate the transaction or alter any information
contained in the transmission process.

c) The intermediary observes the guidelines issued by the Central

Government.
 LIABILITY ISSUES
(cont.)

• Some of the important aspects regarding publication of information on the

communication portals are:
 The intermediary should publish all the information on the web regarding privacy policy
and user agreements; while this information should be updated after certain period of
time.
 The portals must also contain the policies regarding the publication of false or
prohibited information on the web, in case of any discrepancy, the this information
should be deleted within the period of 36 hours of the knowledge regarding the same.
 3. SECURITY ISSUES

▫ Security issues deal with the taking care of all the sensitive information
which may have a threat of unauthorized access or data loss due to virus or
spyware attacks.

▫ These issues are generally related with the recreation and modification of
personal information, so that, data remains safe with the contracting parties
only.

▫ The major security issues can be found while the process of E-payment.
 SECURITY ISSUES
(CONT.)

1. Authentication and Identification

▫ As there is no personal contact between the contracting parties, hence, the

users must have authentic means to have access across the web.

▫ Digital Signatures are supposed to be the best measure for ensuring the
authenticity and legitimacy of the users.

▫ The IT Act provides for a penalty of Rs. 1 Lakh or 3 years imprisonment in

case of discrepancies.
 SECURITY ISSUES
(CONT.)

2. Privacy
▫ Some of the E-commerce platforms indirectly ask from their users regarding their personal
preferences regarding certain goods and services, hence they need to maintain a certain level of
privacy policies.

▫ As IT Act, does not provide for the direct actions in this regard, but the clause of “Right to life and
personal liberty” has been added in the constitution of India and when it is mentioned in the
Constitution, any suitable legal actions can be taken in case of discrepancies.

▫ Hence, two major concerns of E-Commerce platforms are:

a) Unauthorized access to personal information

b) Misuse of the personal information by these E-Commerce applications.

 SECURITY ISSUES
(CONT.)

3. Data Protection:
▫ It means safeguarding users’ information against all types of thefts and misuse, as users have to
pass certain personal information to the E-Commerce platforms in order to complete the
transactions.
▫ IT Act divides the information into 2 categories:
A. Personal Information: This means information related to the person, which may either directly
or indirectly is capable of identifying a person.
B. Sensitive Personal Data or Information: It may include an information like USER-ID or
passwords, bank information (Card No., Account No. etc.), medical details and personal
preferences.
 Penalty: IT Act Provides for the penalty of Rs. 5 Lakhs or imprisonment up to 3 years.
 Reasonable security practices and procedures in accordance with the requirements of the data
protection rules should be maintained.
 SECURITY ISSUES
(CONT.)

4. Security of Systems: The main concern here lies with the internal security
systems of the organization. Which means that the information should be
protected from the unauthorized intrusion (internal threat) and hacking and
virus attacks (External threats).
5. Security isuues in payment mechanisms: Banks have to provide online alerts
to the cardholders for all the transactions irrespective of the amount, involving
usage of cards at various channels.

 Bitcoins: These can also be used as the traditional currency or transferred like E-mail and
can be used to pay for the goods and services, if these are accepted by the owner.
 4. CONSUMER PROTECTION ISSUES

▫ All the provisions of Consumer Protection Act, 1986 are applicable in case of
an online transaction and user and the distributor, both come under the
purview of the Act.

▫ Some of the penalties imposed under the CPA are:

Removal of defects/ deficiencies
Replacement of goods
Return of paid price
Pay compensation
Discontinuance of unfair trade practices.
 5. INTELLECTUAL PROPERTY ISSUES

▫ There are certain intellectual property rights available for ensuring the
security of one’s own created work and inventions.

▫ Copyrights are there to safeguard all kinds of artistic or literary work.

▫ Trademarks are there to protect the words and taglines whereas Patents are
used to protect the scientific inventions.

▫ Some countries also provide patents for the software programs but there is
no such provision in India.
 INTELLECTUAL PROPERTY ISSUES
(CONT.)

• Liabilities for Infringement of

Issues related to intellectual Intellectual Properties:
properties in E-Commerce:
• Injunction (temporary or
• Designing an Application permanent)
• Use of third party content on • Damages
website
• Order for presentation / seizure
• Hyperlinking and meta tagging or destruction of accounts
• Domain Names
 6. CONTENT REGULATION

▫ An E-Commerce organization should be aware regarding the laws and regulations related
to the content regulation so that no objectionable content is published on the web.

▫ The organizations should take care of the following things:

a) Obscenity Issues: No offensive content should be posted on the website, and in case of
any discrepancy the provisions of Indian Penal Code and IT Act will be applicable.

b) Defamation Issues: No such content should be publishes which can cause damage to a
person’s reputation or personal life.
 7. JURISDICTION ISSUES

▫ As internet is a virtual world, growing rapidly, therefore it is quite difficult to

set territorial jurisdiction.

▫ But at present in India the rules and provisions of Indian Penal Code and It

Act are applicable in case of any emerging issue.

 8. TAXATION ISSUES

▫ Direct Taxes: All the provisions of Income Tax Act,1961 will be applicable. As

the law states all the residents will have to pay tax on the income from

worldwide, whereas non-residents have to pay tax only on their Indian

source income.

▫ Indirect Taxes: all the provisions of GST, Service Tax, Custom Duties and sales

tax will be applicable in case of E-Commerce transactions also.

IT Act 2000
IT Act 2000
• To made Electronic Governance possible and To
Facilitates Electronic Commerce In May 2000, both
the houses of the Indian Parliament passed the
Information Technology Bill.
• The Bill received the assent of the President in August
2000 and came to be known as the Information
Technology Act, 2000.
• Cyber laws are contained in the IT Act, 2000.
• The Information Technology Act, 2000 aims to provide for the legal
framework so that legal sanctity is accorded to all electronic records
and other activities carried out by electronic means.
Some highlights of the Act are listed
below:
• Contains Chapter – I to Chapter - XII
• Chapter – I : An acceptance of contract may be expressed by
electronic means of communication and the same shall have legal
validity and enforceability.
• Chapter-II: of the Act specifically stipulates that any subscriber may
authenticate an electronic record by affixing his digital signature. It
further states that any person can verify an electronic record by use
of a public key of the subscriber.
• Chapter-III : of the Act details about Electronic
Governance and provides inter alia amongst others
that where any law provides that information or any
other matter shall be in writing or in the typewritten
or printed form, then, notwithstanding anything
contained in such law, such requirement shall be
deemed to have been satisfied if such information or
matter is - rendered or made available in an electronic
form; and accessible so as to be usable for a
subsequent reference.
• Chapter-IV : of the said Act gives a scheme for
Regulation of Certifying Authorities. The Act
envisages a Controller of Certifying Authorities who
shall perform the function of exercising supervision
over the activities of the Certifying Authorities as also
laying down standards and conditions governing the
Certifying Authorities as also specifying the various
forms and content of Digital Signature Certificates.
• The Act recognizes the need for recognizing foreign
Certifying Authorities and it further details the
various provisions for the issue of license to issue
Digital Signature Certificates.
• Chapter –V : of the act details about secure
electronic records and secure digital signatures.
• Chapter – VI: is about regulation certifying
authorities. Appointment of Controller and other
officers, Functions of Controller, Recognition of
foreign Certifying Authorities, license to issue Digital
Signature Certificates, Application, Renewal,
Rejection, Suspension and Surrender of Licence.
• Chapter-VII of the Act details about the scheme of
things relating to Digital Signature Certificates like
Issuance, Suspension, Revocation of Digital Signature
Certificate. The duties of subscribers are also
enshrined in the said Act.
• Chapter – VIII is about the DUTIES OF SUBSCRIBERS
of Digital Signature Certificate
• Chapter-IX : of the said Act talks about penalties and
adjudication for various offences. The penalties for
damage to computer, computer systems etc. has been
fixed as damages by way of compensation not
exceeding Rs. 1,00,00,000 to affected persons. The
Act talks of appointment of who shall adjudicate
whether any person has made a contravention of any
of the provisions of the said Act or rules framed there
under. The said Adjudicating Officer has been given
the powers of a Civil Court.
• Chapter-X : of the Act talks of the establishment of
the Cyber Regulations Appellate Tribunal, which shall
be an appellate body where appeals against the
orders passed by the Adjudicating Officers, shall be
preferred.
• Chapter-XI of the Act talks about various offences
and the said offences shall be investigated only by a
Police Officer not below the rank of the Deputy
Superintendent of Police. These offences include
tampering with computer source documents,
publishing of information, which is obscene in
electronic form, and hacking.
• Chapter –XII deals with the non liability of Network service
providers.
Advantages of Cyber Laws
• The IT Act 2000 attempts to change outdated laws and provides ways
to deal with cyber crimes. We need such laws so that people can
perform purchase transactions over the Net through credit cards
without fear of misuse.
• The Act offers the much-needed legal framework so that information
is not denied legal effect, validity or enforceability, solely on the
ground that it is in the form of electronic records.
• The Act has also proposed a legal framework for the
authentication and origin of electronic records /
communications through digital signature.
• From the perspective of e-commerce in India, the IT
Act 2000 and its provisions contain many positive
aspects. Firstly, the implications of these provisions
for the e-businesses would be that email would now
be a valid and legal form of communication in our
country that can be duly produced and approved in a
court of law.
• Companies shall now be able to carry out electronic
commerce using the legal infrastructure provided by
the Act.
• Digital signatures have been given legal validity and
sanction in the Act.
• The IT Act also addresses the important issues of
security, which are so critical to the success of
electronic transactions. The Act has given a legal
definition to the concept of secure digital signatures
that would be required to have been passed through
a system of a security procedure, as stipulated by the
Government at a later date.
• Under the IT Act, 2000, it shall now be possible for corporates to have
a statutory remedy in case if anyone breaks into their computer
systems or network and causes damages or copies data. The remedy
provided by the Act is in the form of monetary damages, not
exceeding Rs. 1 crore.
IT Amendment Act, 2008- An act
to amend the IT Act 2000
• The Information Technology (Amendment) Act, 2008 an act to amend
the IT Act 2000 received the assent of the President on 5th February
2009. Several legal & security experts are in the process of analyzing
the contents and possible impacts of the amendments.
• 1. Data Protection
• 2. Information Preservation
Data Protection
• The Government introduced a separate bill called “Personal Data
Protection Act 2006”
• The ITA 2008 has introduced two sections which address Data
Protection aspects to an extent, which gives rise to certain key
considerations for the sector.
Information Preservation
• Across the amendments there are several references to “service
providers” or “intermediaries”, which in some form would apply to all
Indian companies.
• e.g. Section 67C: Preservation and Retention of information by
intermediaries.
• Intermediary shall preserve and retain such
information as may be specified for such duration and
in such manner and format as the Central
Government may prescribe”. Any intermediary who
intentionally or knowingly contravenes the provisions
shall be punished with an imprisonment for a term
which may extend to 3 years and shall also be liable to
fine.
• Apart from the two aspects discussed in this note, there are other
areas which could also be considerations for E.g.

• Sec 69: Power to issue directions for interception or monitoring or

decryption of any information through any computer resource.
• Sec 69B: Power to authorize to monitor and collect traffic data or
information through any computer resource for Cyber Security. etc.
• IT Risk management and response needs to be looked
at by all companies for various reasons including
customer assurance, compliance, customer
regulations, protection of information assets etc. The
ITA 2008 amendments provide us with few additional
factors for considerations which could have significant
impact on business.
• Information technology regulations and laws would
only get more stringent and defined; hence it’s
imperative for organizations to be aware and
prepared.