Introduction to E-Commerce

Definitions
What is meant by the term e-commerce?

“The concept of electronic commerce

can be defined as using an electronic
network to simplify and speed up all
stages of the business process, from
design and making to buying, selling
and delivering”.
 Further definitions
“at its simplest, e-commerce is the
buying or selling of goods and services
of any kind on the Internet”
e-commerce at its simplest
“E-commerce is the term used to
describe the electronic creation of a
contract, normally which is for goods or
services”
History
 1970-1989
• 1970s: Electronic Funds Transfer (EFT)
– Used by the banking industry to exchange account
information over secured networks
– 1979: Michael Aldrich demonstrates the first online
shopping system
• Late 1970s and early 1980s: Electronic Data
Interchange (EDI) for e-commerce within
companies
– Used by businesses to transmit data from one
business to another
Note:EDI replaced traditional mailing and faxing of
documents with a digital transfer of data from one
computer to another.
 1980s Cont..
• The growth and acceptance of credit
cards
• Automated teller machines (ATM)
• Telephone banking
• Airline reservation system
 Why do e-commerce?
There is only one reason why
businesses like e-commerce.

Profits
 Why do e-commerce?
Profits are increased because of the benefits
of Internet shopping for consumers. These
are:

24/7 opening which means utter flexibility;

Worldwide market; and
Cost/price of the goods.
 Why do e-commerce?
There is a belief that goods bought from
the Internet are cheaper.

This is not always so.

However, business overheads are often

lower.
 Why do e-commerce?
Why are overheads lower? These
apply to internet only businesses.

- No shop space required – saving

rent, insurance, lights, heating.

- Fewer staff required – saving

wages, staff training, insurance.
 Differences between Electronic
Commerce
and traditional commerce
The major difference is the way information is exchanged and
processed:
Traditional commerce:
• Face to face, telephone lines , or mail systems
• manual processing of traditional business transactions
• individual involved in all stages of business transactions
E-Commerce:
• using Internet or other network communication technology
• automated processing of business transactions
• individual involved in all stages of transactions
• pulls together all activities of business transactions, marketing
• and advertising as well as service and customer support
 The Traditional
Commerce Scenario
1. Buyer and seller meet
2. Buyer chooses product and places
order
3. Seller delivers product
4. Buyer pays for product
The process of E-commerce
 The process of E-commerce
• A consumer uses Web browser to connect to the
home page of a merchant's Web site on the Internet.
• The consumer browses the catalog of products
featured on the site and selects items to purchase.
The selected items are placed in the electronic
equivalent of a shopping cart.
• When the consumer is ready to complete the
purchase of selected items, she provides a bill-to and
ship-to address for purchase and delivery
 The process of E-commerce
• 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.

• The Commerce Server site then forwards the

order to a Processing Network for payment
processing and fulfilment.
 Different types/models of e-
commerce
• B2B – The process where buying and selling of goods and
services between businesses is known as Business to
Business. Example: Oracle, Alibaba, Qualcomm, etc.
• B2C – The process whereby the goods are sold by the
business to customer. Example: Intel, Dell etc.
• C2C – The commercial transaction between customer to
customer. Example: OLX, Quickr etc.
• C2B – The commercial transaction between customer to
the business.
 What is B2B e-commerce?
• B2B e-commerce is simply defined as
ecommerce between companies. About 80%
of e-commerce is of this type.

• Examples:
– Intel selling microprocessor to Dell
– Heinz selling ketchup to Mc Donalds
B2B E-commerce
 What is B2C ecommerce?
• Business-to-consumer e-commerce, or
commerce between companies and
consumers, involves customers gathering
information; purchasing physical goods or
receiving products over an electronic
network.
• Example:
– Dell selling me a laptop
B2C E-commerce
 What is B2G ecommerce?
• Business-to-government e-commerce or B2G
is generally defined as commerce between
companies and the public sector. It refers to
the use of the Internet for public procurement,
licensing procedures, and other government-
related operations
• Example:
– Business pay taxes, file reports, or sell
goods and services to Govt. agencies.
B2G E-commerce
 What is C2C ecommerce?
• Consumer-to-consumer e-commerce or C2C
is simply commerce between private
individuals or consumers.
• Example:
– Mary buying an iPod from Tom on eBay
– Me selling a car to my neighbour
C2C E-commerce
 G2C E-commerce
• This Model is also a part of e-governance.
• The objective of this model is to provide good
and effective services to each citizen.
• The Government provides the following
facilities to the citizens through website.
• Information of all government departments,
• Different welfare schemes,
• Different application forms to be used by the
citizens.
G2C E-commerce
 G2B E-commerce
• Government-to-business (G2B) is a business model that refers
to government providing services or information to business
organization.

• Government uses B2G model website to approach business

organizations. Such websites support auctions, tenders and
application submission functionalities.
G2B e-commerce
 ADVANTAGES OF E-COMMERCE

• Faster buying/selling procedure, as well as easy to

find products.
• Buying/selling 24/7.
• More reach to customers, there is no theoretical
geographic limitations.
• Low operational costs and better quality of services.
• No need of physical company set-ups.
• Easy to start and manage a business.
• Customers can easily select products from different
providers without moving around physically.
 DISADVANTAGES OF E-
COMMERCE
• Unable to examine products personally.
• There is the possibility of credit card number
theft.
• There are many hackers who look for
opportunities, and thus an ecommerce site,
service, payment gateways, all are always
prone to attack.
• Mechanical failures can cause unpredictable
effects on the total processes.
 Traditional Commerce v/s E-Commerce
Sr. No. Traditional Commerce E-Commerce

Information sharing is made easy via

Heavy dependency on information exchange electronic communication channels making
1
from person to person. little dependency on person to person
information exchange.

Communication or transaction can be done

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

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

3
practices in traditional commerce. established and maintain in e-commerce.

Communications of business depends upon In e-Commerce or Electronic Market, there

4
individual skills. is no human intervention.

Unavailability of a uniform platform as E-Commerce website provides user a

5 traditional commerce depends heavily on platform where al l information is available
personal communication. at one place.

E-Commerce provides a universal platform

No uniform platform for information sharing as
6 to support commercial / business activities
it depends heavily on personal communication.
across the globe.