106 Digital Business

Chapter 1 : Electronic Commerce

Prof : Manav Agarwal

9823962733
[email protected]
 Unit I: Electronic Commerce
The Digital Revolution and Society, The Digital and Social Worlds - The Digital Economy,

The Digital Enterprise, Virtual Communities, Online Communities, Defining Electronic Commerce,
Emerging E-Commerce Platforms.

E-Business, Electronic Markets and Networks; The Content and Framework of E-Commerce,
Classification of E-Commerce by t he Nature of the Transactions and the Relationships Among
Participants,

E-Commerce Business Models, Integrating the Marketplace with the Marketspace, Web 2.0.
Drivers, Benefits and Limitations of E-Commerce,

Impact of E-Commerce on business, government, customers, citizens and society

The Digital Revolution (also known as the Third Industrial Revolution) is the shift from mechanical and analogue
electronic technology to digital electronics which began in the latter half of the 20th century, with the adoption and
proliferation of digital computers and digital record-keeping, that continues to the present day. Implicitly, the term also
refers to the sweeping changes brought about by digital computing and communication technologies during this period.
Analogous to the Agricultural Revolution and Industrial Revolution, the Digital Revolution marked the beginning of the
Information Age.

Central to this revolution is the mass production and widespread use of digital logic, MOSFETs (MOS transistors), and
integrated circuit (IC) chips, and their derived technologies, including computers, microprocessors, digital cellular
phones, and the Internet. These technological innovations have transformed traditional production and business
techniques
 Electronic Commerce:
Definitions and Concepts

electronic commerce (EC)

The process of buying, selling, or exchanging products, services, or information via computer

e-business

A broader definition of EC that includes not just the buying and selling of goods and services,
but also servicing customers, collaborating with business partners, and conducting electronic
transactions within an organization
Definitions and Concepts

 MAJOR EC CONCEPTS

 Pure Versus Partial EC

 EC Organizations

brick-and-mortar (old economy) organizations

Old-economy organizations (corporations) that perform their primary business offline, selling physical products by means of
physical agents

virtual (pure-play) organizations

Organizations that conduct their business activities solely online

click-and-mortar (click-and-brick) organizations
Organizations that conduct some e-commerce activities, usually as an additional marketing channel
ELECTRONIC MARKETS AND NETWORKS

Electronic market (e-marketplace)

An online marketplace where buyers and sellers meet

to exchange goods, services, money, or information

Intranet

An internal corporate or government network that uses

Internet tools, such as Web browsers, and Internet
protocols

Extranet

A network that uses the Internet to link multiple

intranets
 Digital Economy
• There are three main components of this economy, namely,
• e-business
• e-business infrastructure
• E- commerce
– Virtual Communities
– Online Communities
 Merits of Digital Economy
• Promotes Use of the Internet
•  Rise in E-Commerce
• Digital Goods and Services
•  Transparency

Demerits of Digital Economy

• Loss in Employment
• Lack of Experts
• Heavy Investment
Includes:
• Online business to business transactions

• Online business to consumer transactions

• Digital delivery of products and services

• Online merchandising

• Automated telephone transactions eg. phone banking

• POS and other automated transfer systems

 Emerging E-Commerce Platforms.
• what is an “e-commerce platform”?

• “An e-commerce platform is a piece of software that allows you to build

an online store and run a business online. It gives you the tools to create
and manage your site including products and day-to-day operations. Most
if not all e-commerce builders use drag and drop functions.”
 Emerging trends in E-commerce
# Dropshipping:
• It involves acting as the middleman between the manufacturer or supplier and the
customer.
• You process the purchase, but the product gets shipped directly to the buyer
without you actually handling the physical product.
• This platform connects you with verified suppliers from all over the world, making it
much easier to find products to sell.
• The best part is that you can ship the product straight from the warehouse to the
customer in a single click.
# Multi-Channel Selling
•To grow your business as online merchant, you need to make yourself
available across all of the channels that your shoppers use. Aside from your
own website, this could be on social media and brick-and-mortar stores as
well as other online stores.
• # Smarter Payment Processing

• # Omni-Channel Personalization: Omnichannel personalization is the act

of tailoring an experience or communication in one channel based on
information a company has learned about an individual from multiple
channels.

• # Custom Packaging
AN EC FRAMEWORK

EC applications are supported by

infrastructure and by the following five
support areas:

1.People

2.Public policy

3.Marketing and advertising

4.Support services

5.Business partnerships

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CLASSIFICATION OF EC BY THE NATURE OF THE
TRANSACTIONS AND THE RELATIONSHIPS
AMONG PARTICIPANTS

• business-to-business (B2B)

• E-commerce model in which all of the participants

are businesses or other organizations
• business-to-consumer (B2C)

• E-commerce model in which businesses sell to

individual shoppers
• e-tailing

• Online retailing, usually B2C

 business-to-business-to-consumer (B2B2C)

E-commerce model in which a business

provides some product or service to a client
business that maintains its own customers

 consumer-to-business (C2B)

E-commerce model in which individuals use the

Internet to sell products or services to
organizations or individuals who seek sellers to
bid on products or services they need
 intrabusiness EC

E-commerce category that includes all internal organizational activities

that involve the exchange of goods, services, or information among
various units and individuals in an organization
 business-to-employees (B2E)

E-commerce model in which an organization delivers services,

information, or products to its individual employees
• consumer-to-consumer (C2C)

E-commerce model in which consumers sell directly to other consumers

• collaborative commerce (c-commerce)

E-commerce model in which individuals or groups communicate or collaborate online

• e-government

E-commerce model in which a government entity buys or provides goods, services, or

information from or to businesses or individual citizens
3 Successful E-commerce
• Target the Un-Targeted
Target the
Un-Targeted
 Know your customers thoroughly
 Target needs that are unseen by
Strong your competitors
Business
Planning • Strong Business Planning
Business  Know your source of revenue, break-even and the
Friendly E- strategic details
commerce  Decide on the future goals that you want to
Software achieve
• Business Friendly E-commerce Software
 Choose software that is easy to manage and
allows you to focus on core business activities
 Successful
E-
4
commerce
• Create a Web Store with a Difference
Create a
Web Store
 Branding is important for the success of your
online business
with a
Difference
 Attractive domain name can play an important
role in branding
Make your • Make your “Hot Sellers” most Visible
“Hot Sellers”  Create your Specialty
most visible  Show your best product/service first
Do not let • Do not let your Customers forget you
your  Pamper your customers to generate
Customers permanent sales
forget you  Customer Relationship Management is
important(especially small and building a
permanent customer base)
 Successful
E-
5
commerce
Increase
• Increase your Web Presence
your Web
 Perform search engine optimization for your
Presence site.
 Associate with web sites that provide
Build complimentary products or services (help to
Robust increase web presence for search engines
Backend and customers)
Operations
• Build Robust Backend Operations
Backend operations are the backbone of the
online shop
 Choice of e-commerce solution determine
the strength of the backend operations
 Successful
E-
6
commerce
Learn Faster
• Learn Faster and Better
and Better Be prepared to spot your mistakes and


Surprise assess the business with no biasness

your  Learn the loopholes and mistakes and
Customers rectify them
• Surprise the Customers
 Have incentives by providing offers,
discounts etc
 Make changes that do not sway away
from the brand image that has been
created in your customer’s mind.
 Failure of
7
E-commerce
Trying to sell
• Trying to sale wrong product online
the wrong  There are products are not appropriate
product to be sold online. Products, which are
online inexpensive and could be easily bought
from the local store, are not worth selling
Lack of
marketing
on the internet. Products that need
trying would be difficult to sell.
• Lack of marketing
 Marketing of the site is needed for both
online and offline. Identify your
competitive advantage and to show the
customers the best price that can be
offer.
 Failure of
8
E-commerce
• A poorly designed website
A poorly  Overcrowding is a major issue for this. A professional
designed website need to feature the items clearly with photos
website and descriptions. Another issue is too much color,
flash animation or graphics that slowed down the
Falling downloading process.
behind time • Falling behind time
 The infrequent updating of website would be easily
Poor overtaken by competitors and customer’s visitation
checkout would fall. In order to stay at the top, updating is
procedures needed to feature any new products or news.
• Poor Checkout Procedures
 When a customer has decided to purchase an item, it
should be easily linked to the shopping cart and play
with ease.
 Failure of
9
E-commerce
Not testing
• Not testing your site
your site
 Testing of links is very important to make
sure that they are functioning properly.
A hard -to- • A hard-to-find or nonexistent privacy
find or
nonexistent
policy
privacy  Most people would read the privacy policy,
policy but there would be some who want to know
whether there is protected.
Poor order • Poor order fulfillment
fulfilment
 Information on the Internet spreads like wild
fire. If words of unhappiness were being
spread around to potential customers, the
reputation would be damaged. Therefore, do
leave a good impression on your
customers.
 Failure of
10
E-commerce
Straying from
• Straying from your objective
your objective  Do not lose your primary focus, Stick
Poor to your area of expertise.
customer
service • Poor Customer Service
 Poor customer service would send
your customers running away. Provide
excellent service would not only satisfy
your customer, but also bring in
potential customers.
 E-Commerce 2.0:
From Social Commerce to Virtual Worlds
social computing
An approach aimed at making the human–computer
interface more natural
Web 2.0
The second generation of Internet-based services that lets
people collaborate and share information online in new
ways, such as social networking sites, wikis,
communication tools, and folksonomies

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 E-Commerce 2.0:
From Social Commerce to Virtual Worlds
social network
A category of Internet applications that help connect
friends, business partners, or individuals with specific
interests by providing free services such as photo
presentation, e-mail, blogging, and so on using a variety of
tools

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 Web 2.0
• Amazon.com was also a leader in adopting user-created content.
One of the appeals to shopping at Amazon’s site was the inclusion
of amateur book reviews, with users being able to leave personal
perspectives and interact with other reviewers.

• An even more successful business example of user-created

content came from electronic games .
 E-Commerce 2.0:
From Social Commerce to Virtual Worlds
•  social networking service (SNS)

• A service that builds online communities by providing an online space for

people to build free homepages and that provides basic communication and
support tools for conducting different activities in the social network

•  social networking

• The creation or sponsoring of a social network service and any activity, such as
blogging, done in a social network (external or internal)
 E-Commerce 2.0:
From Social Commerce to Virtual Worlds
ENTERPRISE SOCIAL NETWORKS
social commerce
The e-commerce activities conducted in social networks
and/or by using social software (i.e., Web
2.0 tools)

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Electronic Commerce Business Models
TYPICAL EC BUSINESS MODELS
1.Online direct marketing
2.tendering (bidding) system
Model in which a buyer requests would-be sellers to submit
bids; the lowest bidder wins.
3.Electronic marketplaces and exchanges
4.Viral marketing
5.Group purchasing

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 Drivers of Ecommerce –Economic
forces
• Internet rates dropped
• Easy payment options
• The cost of installing and maintaining a website is
much cheaper than owning a physical store. This
motivates the growth of e-commerce
• Third-party logistics
• E-commerce generates greater profits due to less
human intervention, lower overhead cost, few
clerical errors and more efficiency.
• Growth of Big Data
Drivers of Ecommerce –Technological
forces
• Smartphones
• Increase in competition and the rise in
consumer power, ‘globalization wave’ have
forced the business organizations to penetrate
into internet world.
• Big Data
•  Easy and safe electronic payments
 Drivers of Ecommerce –Market forces
•  E-commerce enables customers to make product
comparison, place orders, track orders and make
payments at ease. Due to convenience, customers
prefer to purchase their desired goods or services over
internet in the online marketplace.
• E-commerce also allows the customers to choose and
order products according to their personal and unique
specifications. It paves way for mass customization
• The great variety of commodities available online and
reliable payment methods are regarded as
contributors to the increase of e-business
 E- Commerce Benefits
• New Customers
• Lower Setup and Maintenance Costs
• Globally Acceptable
•  organization can expand their market to national and
international markets with minimum capital investment
• helps organization to provide better customer services
•  helps organization to reduce the cost by digitizing the
information. • improves the brand image of the company
•  helps to simplify the business processes and make them
faster and efficient
• 24x7 support
• provides user more options and quicker delivery of
products
• provides user more options to compare and select the
cheaper and better option
• A customer can put review comments about a product
and can see what others are buying or see the review
comments of other customers before making a final
buy
• increases competition among the organizations and as
result organizations provides substantial discounts to
customers
•  Customers need not to travel to shop a product thus
less traffic on road and low air pollution
• E-Commerce helps reducing cost of products so less
affluent people can also afford the products
•  E-Commerce has enabled access to services and
products to rural areas as well which are otherwise not
available to them
• E-Commerce helps government to deliver public
services like health care, education, social services at
reduced cost
 DISADVANTAGES TO CUSTOMERS
• Delay in receiving goods
• Chances of product loss
• Delivery to wrong address
• Quality
• Cannot touch or feel the product until delivered. 
• Hidden costs
• Extra handling cost in case of international
purchase
There are various Benefits that e commerce have on business , governments , customers
,citizens and society:
•E-commerce enables businesses to get an access over million customers , according to the
location and product categories.
•E-commerce offers the various trading ways and earn huge profit from the.
•Online presence of business makes it easy to access products and services  by customers ,
audience, citizens , and society.
•E-commerce enables to reduce the transaction  costs. and enhances customer empowerment
•Offers of various Job Opportunities for the people.
•Better and accessible education facility.
•Expand the source of business around.
•Better prices, offers , easy access of services and less transportation cost
•Less Cold storage expenses.
Types Of Ecommerce Business Revenue Models
The next most important thing to think about is how you want to handle inventory management and sourcing products. Some people
like the idea of making their own products and others hate the idea of their garage full of boxes.
1. Drop Shipping
The simplest form of ecommerce, drop shipping lets you set up a storefront and take the customers’ money through credit cards or
PayPal. The rest is up to your supplier. This frees you from managing inventory, warehousing stock, or dealing with packaging, but
there’s a major caveat.
2. Wholesaling And Warehousing
Wholesaling and warehousing ecommerce businesses require a lot of investment at the start – you need to manage inventory and stock,
keep track of customer orders and shipping information, and invest in the warehouse space itself.
DollarDays is an online wholesaler with a massive product catalog that includes more than 260,000 products. They employ a key strategy
for retailers in this space – by offering case prices AND piece prices, they can sell to the general public and to retailers. This gives them a
higher profit margin than a strictly wholesale model.
3. Private Labeling And Manufacturing
If you’ve got an idea for the perfect product, but don’t have the cash or desire to build your own factory, this might be the right business
model for you. Companies that manufacture products offsite for sale send the plans or prototypes to a contracted manufacturer who
produces the product to meet customer specifications and can either ship directly to the consumer, to a third party such as Amazon, or to the
company selling the final product.
On-demand manufacturing allows you to quickly change suppliers if you encounter problems with product quality. The startup costs are
minimal, and if you’re interested in potentially opening your own production facilities later, this is a good way to test a new product or
concept.
4. White Labeling
White labeling is similar. You choose a product that is already successfully sold by another company, but offers white label options, design
your package and label, and sell the product. This is common in the beauty and wellness industries, but more difficult to encounter in other
niches.
One problem with white labeling is demand. You’re stuck with whatever you order, and most of these companies set a minimum production
quantity. If you can’t sell it, you’ll have to live with it. Consider this option when you’re willing to work full time on your business and know
your product is in demand.
5. Subscription
One of the most popular and successful pure ecommerce brands is the Dollar Shave Club. Other examples of subscription services include
Stitch Fix, Blue Apron, and Nature Box. On the local level, community-supported agriculture boxes are popular.
Thank you