Electronic Commerce: Unit V

Download as pdf or txt
Download as pdf or txt
You are on page 1of 25

ELECTRONIC COMMERCE

UNIT V
E-Commerce
• ”Electronic Commerce” commonly known as E-commerce.
• It is any business transaction done via internet.
• It is the process of buying and selling for exchange of products, services and information via
computer networks such as internet.
• E commerce draws on technologies such as mobile commerce, electronic fund transfer, inventory
management system and automated data collection.
• Companies like FlipKart, Amazon, Yatra, Make my Trip, Book my Show, Snap Deal etc. have
made a mark in the e-commerce sector in India.
Features of E-Commerce

 Ubiquity
Internet/web technology is available everywhere. Market place can be created so shopping can
happen anywhere.
 Global Reach
Technology reaches across national boundaries which makes marketspace potentially billions.
 Universal Standards
There is one set of technology standards namely internet standards. Standards that are set by all
nations around the world.
• Richness
It means that website can be made attractive for people to browse it. Video, audio and text
messages are possible.
• Interactivity
Technology that allows for two way communication between merchant and the consumer.
Categories Of E-Commerce

• Business to Business (B2B)


• Business to Consumer (B2C)
• Consumer to Consumer (C2C)
• Business to Government (B2G)
Some other categories can be:
• Government to Business(G2B)
• Consumer to Government(C2G)
• Government to Consumer (G2G)
❑ Business to Business (B2B)
B2B stands for Business to Business. It consists of largest form of Ecommerce.
This model defines that Buyer and seller are two different entities. It is similar to manufacturer
issuing goods to the retailer or wholesaler.
Dell deals computers and other associated accessories online but it is does not make up all those
products. So, in govern to deal those products, first step is to purchases them from unlike businesses i.e.
the producers of those products .

❑ Business to Consumer(B2C)
B2C stands for Business to Consumer as the name suggests, it is the model taking businesses and
consumers interaction.
Online business sells to individuals. The basic concept of this model is to sell the product online to the
consumers.
B2C is the indirect trade between the company and consumers. It provides direct selling through
online.
For example: if you want to sell goods and services to customer so that anybody ca n purchase any
products directly from supplier’s website.
❑ Consumer to Consumer(C2C)
C2C stands for Consumer to Consumer. It helps the online dealing of goods or services among people.
Though there is no major parties needed but the parties will not fulfil the transactions without the
program which is supplied by the online market dealer such as eBay.

❑ Business-to-Government(B2G)
B2G model is a variant of B2B model. Such websites are used by government to trade and exchange
information with various business organizations.
Such websites are accredited by the government and provide a medium to businesses to submit
application forms to the government.
❑ M-Commerce
M - Commerce is Mobile Commerce, it is a subset of e-commerce.
Buying & selling of goods with the help of handheld devices such as cellular phones,
PDA(Personal Digital Assistants),laptop.
It is essentially a way of carrying thousands and millions of retail shops in your pocket.
Nearly 70% of the online transactions that occur in India happen from mobile phones.
Some applications of M-commerce example can be: Mobile Banking, Mobile ticketing, Auctions
Advantages Of E-Commerce
 Access to global market
It provides a global market place. Increased potential market share and global reach.
 Time saving
It saves time, money and efforts.
 Easy Comparison
Price and product comparisons are available online.
 Wide range of options
Ecommerce provides more choices for products and services online.
 Easy to find reviews
With every product and service online we get the ratings and the reviews for it.
 Coupons & Deals
Customers enjoy the benefits they get online. There are many sales, coupons and deals available online.
 Cash on Delivery
E-commerce provides with improved buying experience and the delivery processing. Consumer gets the product or the service at
the doorstep.
 24x7
It enables 24x7 access to the online market place. We can access the e-commerce sites at anytime and from anywhere.
Limitations Of E-Commerce
➢ Initial cost of setup
There is a high start up cost. Some components required for ecommerce are the connection cost to
internet, hardware, software, maintenance, etc.
 Lack of internet access
For an ecommerce site internet is the most important thing required. Limitation of internet is also a major
disadvantage as it still has not touched the lives of every individual.
 Security & Privacy
The biggest drawback of e-commerce is the issue of security. Certain websites do not have capabilities to
conduct authentic transactions.
 Absence of physical touch
People have to rely on electronic images to purchase products. Sometimes when it is delivered it may
not match the product ordered.
 Perishable commodities
Ecommerce is not suitable for perishable goods and food items. Perishable products are those which
require proper storage.
 Taxation
Incase of different geographical locations, sales taxes become an issue.
 User resistance
People fear to operate in a paperless and faceless electronic world.
Value Chain & Strategy in E Commerce
E Business
• E Business is known as Electronic Business.
• E-Business is the conduct of business on the Internet.
• It has broader implications because it refers to not only buying and selling
but also servicing customers and collaborating with business partners.
• E-Business means connecting critical business systems directly to
customers, vendors and suppliers- via the Internet, Extranet and Intranets.
• One of IBM’s most important inventions wasn’t an invention at all. It was a
game changing insight, which company famously coined “E-BUSINESS” in
October 1997.
Strategy to launch an E-Business

➢ Choosing a product
1. Finding a product to sell
There are several things you need to consider when deciding what your product offering
will be. You will want to find something that has a large global demand, high margins and can
be easily warehoused and fulfilled.
2. Evaluating your idea
Evaluating an idea involves careful examination of the feasibility, the uniqueness, market
analytics, and costs involved in launching and maintaining the business.

➢ Research and Prepare


1. Research your competition
2. Tools to research your competition
➢ Prepare business plan
⚫ Your business plan is the foundation of your business. It’s a roadmap for how to structure, run, and
grow your new business.
⚫ You’ll use it to convince people that working with you — or investing in your company — is a smart
choice.
⚫ A business model is a plan for the successful operation of a business , identifying sources of revenue,
the intended customer base , products and details of financing.
⚫ A business model is a description of the how company creates ,delivers and captures value for itself
as well as customer.
⚫ A business model for anew enterprise should cover projected start-up costs and sources of financing
,the target customer base for business, marketing strategy ,expenses ,revenue ,etc.
➢ Naming Business and creating a logo
• If you want to start a successful business, you need a brand that connects with your persona.
• It’s not easy to pick the perfect name.
• You’ll want one that reflects your brand and captures your spirit. You’ll also want to make sure your
business name isn’t already being used by someone else.
• Your brand name needs to be not only memorable and appealing to your target audience, but it also
needs to be available in the form of a domain name and social media handles.
➢ Registration of your business
• Choose a business name and register your company. There are legal protections and
tax benefits for incorporating, so don’t skip it.
• Get Your Business Licenses
• Operating an online store does not exclude you from needing certain business
licenses and permits. Check with your city, country, and state to see what sorts of
sales tax licenses you need, and get those approved before you start operating.

➢ Setting up business
• Here setup business means to set up the website for business.
• To get your website up and running, you’ll need to purchase web hosting, which is
typically offered by the same companies that provide domain registration. Hosting
gives your website a place to live on the Internet.
➢ Understanding SEO (Search Engine Optimization)
• Before you jump into building store, you should understand the basics of search engine
optimization so that you can properly structure your site and pages for Google and other search
engines.
• Ranking in the first search results for targeted commercial search queries is the outcome of a
detailed Ecommerce SEO strategy.

➢ Building the store


• Whatever design you chose needs to be compatible with your ecommerce software, too.
• There are literally hundreds of ecommerce shopping cart platforms.
• Choosing the right ecommerce software is not easy.
• You need to carefully evaluate things like loading speed, features, compatibility with different
payment gateways, compatibility with your business structure, your web developer skills, SEO-
friendly features, and more.
• Setting up your online store is much more than adding your products and content.
➢ Preparing the launch
• As you prepare for the launch of your new business, there are several shipping
and fulfillment elements you need to prepare for.
• Do not wait until you think it is perfect to launch. You are going to need to
constantly split-test and make changes -- it’s never going to be perfect.
• To prepare a launch of the website you need to be prepared with some things
prior like the products to be loaded, some reviews of the product or service ,
then the notifications, FAQs , etc.
DATA WAREHOUSE
 The concept of data warehousing was introduced in 1988 by IBM researchers Barry Devlin and Paul Murphy.
 The need to warehouse data evolved as computer systems became more complex and handled increasing
amounts of data.
 Data warehousing is the electronic storage of a large amount of information by a business or organization.
 Data warehousing is used to provide greater insight into the performance of a company by comparing data
consolidated from multiple heterogeneous sources.
 A data warehouse is designed to run query and analysis on historical data derived from transactional sources.
 Once the data has been incorporated into the warehouse, it does not change and cannot be altered since a
data warehouse runs analytics on events that have already occurred by focusing on the changes in data over
time.
 Warehoused data must be stored in a manner that is secure, reliable, easy to retrieve and easy to manage.
 Features of Datawarehouse:
• Subject Oriented
• Integrated
• Time Variant
• Non Volatile
CRM (Customer Relationship Management)
 CRM stands for customer relationship management.
 It's a category of integrated, data-driven software solutions that improve how you interact and do
business with your customers.
 CRM systems help you manage and maintain customer relationships, track sales leads, marketing, and
deliver actionable data.
 One important aspect of the CRM approach is the systems of CRM that compile data from a range of
different communication channels, including a company's website, telephone, email, live chat,
marketing materials and more recently, social media.
 Through the CRM approach and the systems used to facilitate it, businesses learn more about their
target audiences and how to best cater to their needs.
 Features of CRM:
 Marketing Automation
 Sales force Automation
 Contact Center automation
 Geolocation Technology, location based services
SCM(SUPPLY CHAIN MANAGEMENT)
 Supply chain management is the management of the flow of goods and services and includes all
processes that transform raw materials into final products.
 SCM represents an effort by suppliers to develop and implement supply chains that are as efficient and
economical as possible.
 Supply chains cover everything from production to product development to the information systems
needed to direct these undertakings.
 A supply chain is the connected network of individuals, organizations, resources, activities, and
technologies involved in the manufacture and sale of a product or service.
 A supply chain starts with the delivery of raw materials from a supplier to a manufacturer and ends
with the delivery of the finished product or service to the end consumer.
 Supply chain management can be divided in three flows:-
 The Product flow
 The information flow
 The finances flow
Enterprise Resource Planning(ERP)
 ERP stands for Enterprise Resource Planning and refers to software and systems used to plan and manage
all the core supply chain, manufacturing, services, financial and other processes of an organization.
 ERPs connect every aspect of an enterprise. An ERP software system allows for better performance and
project management that helps plan, budget, predict and accurately report on an organization’s
financial health and processes.
 The main purpose of an ERP system is to increase organizational efficiency of an organization by
managing and improving how company resources are utilized.
 Improving and/or reducing the number of resources necessary without sacrificing quality and
performance are keys to effectively improving business growth and profitability.
 Instead of standalone databases with an endless inventory of disconnected spreadsheets, ERP system
bring order to the chaos.
 With a secure and centralized data repository, everyone in the organization can be confident that data is
correct, up to date and complete.
 Other common ERP features include a portal or dashboard to enable employees to quickly understand
the business performance on key metrics.
EPS(Electronic Payment System)
 E-commerce sites use electronic payment, where electronic payment refers to paperless monetary
transactions. Electronic payment has revolutionized the business processing by reducing the
paperwork, transaction costs, and labor cost.
 Being user friendly and less time-consuming than manual processing, it helps business organization to
expand its market reach/expansion.
 Listed below are some of the modes of electronic payments −
 Credit Card
 Debit Card
 Smart Card
 E-Money
 Electronic Fund Transfer (EFT)
Credit Card
 Payment using credit card is one of most common mode of electronic payment.
 Credit card is small plastic card with a unique number attached with an account. It has also a
magnetic strip embedded in it which is used to read credit card via card readers.
 When a customer purchases a product via credit card, credit card issuer bank pays on behalf of the
customer and customer has a certain time period after which he/she can pay the credit card bill.
 It is usually credit card monthly payment cycle.
 Following are the actors in the credit card system.
• The card holder − Customer
• The merchant − seller of product who can accept credit card payments.
• The card issuer bank − card holder's bank
• The acquirer bank − the merchant's bank
• The card brand − for example , visa or Mastercard.
 Debit Card
o Debit card, like credit card, is a small plastic card with a unique number mapped with the bank
account number. It is required to have a bank account before getting a debit card from the bank.
The major difference between a debit card and a credit card is that in case of payment through
debit card, the amount gets deducted from the card's bank account immediately and there should
be sufficient balance in the bank account for the transaction to get completed; whereas in case of a
credit card transaction, there is no such compulsion.
o Debit cards free the customer to carry cash and cheques. Even merchants accept a debit card
readily. Having a restriction on the amount that can be withdrawn in a day using a debit card helps
the customer to keep a check on his/her spending.

 Smart Card
o Smart card is again similar to a credit card or a debit card in appearance, but it has a small
microprocessor chip embedded in it. It has the capacity to store a customer’s work-related and/or
personal information. Smart cards are also used to store money and the amount gets deducted after
every transaction.
o Smart cards can only be accessed using a PIN that every customer is assigned with. Smart cards are
secure, as they store information in encrypted format and are less expensive/provides faster
processing.
 E-Money
o E-Money transactions refer to situation where payment is done over the network and the amount gets
transferred from one financial body to another financial body without any involvement of a middleman. E-
money transactions are faster, convenient, and saves a lot of time.
o Online payments done via credit cards, debit cards, or smart cards are examples of e money transactions.
Another popular example is e-cash. In case of e-cash, both customer and merchant have to sign up with the
bank or company issuing e-cash.

 Electronic Fund Transfer


o It is a very popular electronic payment method to transfer money from one bank account to another bank
account. Accounts can be in the same bank or different banks. Fund transfer can be done using ATM
(Automated Teller Machine) or using a computer.
o Nowadays, internet-based EFT is getting popular. In this case, a customer uses the website provided by the
bank, logs in to the bank's website and registers another bank account. He/she then places a request to
transfer certain amount to that account. Customer's bank transfers the amount to other account if it is in
the same bank, otherwise the transfer request is forwarded to an ACH (Automated Clearing House) to
transfer the amount to other account and the amount is deducted from the customer's account. Once the
amount is transferred to other account, the customer is notified of the fund transfer by the bank.
 Digital Wallets
• A digital wallet (or e-wallet or virtual wallet) is a software-based system that securely
stores users' payment information and passwords for numerous payment methods and
websites.
• By using a digital wallet, users can complete purchases easily and quickly with near-
field communications technology.
• They can also create stronger passwords without worrying about whether they will be
able to remember them later.
• Digital wallets can be used in conjunction with mobile payment systems, which allow
customers to pay for purchases with their smartphones.
• A digital wallet can also be used to store loyalty card information and digital coupons.
• Eg.:- Google pay, Paytm, Airtel Money, Mobikwik
• There are two types of E- wallets:- Closed & Semi-closed

You might also like