CHAPTER ONE

E-COMMERCE DEFINITION AND CONCEPT

WHAT IS E-COMMERCE

• E-commerce consists of the buying and selling of products or services over electronic
systems such as the Internet and other computer networks.
• Electronic commerce commonly known as e-commerce or eCommerce.
• Electronic commerce was identified as the facilitation of commercial transactions
electronically, using technology such as Electronic Data Interchange (EDI) and
Electronic Funds Transfer (EFT).
• What is EDI?
• What is EFT?
WHAT IS EDI

• EDI is the structured

transmission of data between
organizations by electronic
means. It is used to transfer
electronic documents or
business data from one
computer system to another
computer system.

• EFT is the electronic exchange

or transfer of money from one
account to another

• EDI is still in place, and is so

effective at reducing costs
and improving efficiency that
an estimated 95% of Fortune
1,000 companies use it.
HISTORY OF E-COMMERCE

• Early EC was pioneered by Internet companies that didn't (and still don't)
perform traditional retail. Called Pure Plays.
• such as [Link] and CDNow.
• More recently click and mortar stores have moved online
• like Barnes and Noble, Best Buy, the Gap, and Wal-Mart
• Tesco, Pizza Hut,Domino Pizza , Jakel
HISTORY OF E-COMMERCE

• The growth and acceptance of credit

cards, automated teller machines
(ATM) and telephone banking in the
1980s were also forms of electronic
commerce.
• Another form of E-Commerce was the
airline reservation system, for
example Sabre in the USA and
Travicom in the UK.
HISTORY OF E-COMMERCE: [Link]

• Early in 1994, working for D.E. Shaw in New York City, Jeff Bezos, a restless,
30-year-old hedge fund manager began researching the commercial
possibilities of the Net.
• A year later, Bezos drove west, raising venture funds for a new small online
book shop (originally called [Link]), to be launched from his garage in
Bellevue, Wash.
• Running on a Website and a warehouse, by its third year Bezos's precocious
[Link] toppled $150 million in annual sales — a milestone that Wal-
Mart founder Sam Walton needed 12 years (and 78 stores) to reach.
HISTORY OF E-COMMERCE: STOCKS

• Electronic stock trading debuted 30 years ago with Instinet, Reuters' computer
network that allowed after-hours trading.
• Charles Schwab first offered a dial-up trading service called The Equalizer in 1985.
• E*Trade founded in 1982 as an institutional trading service began offering consumer
trading in 1992 through America Online and CompuServe.
• True Web-based trading arrived in 1994 with Chicago-based NET Investor,
which offered 15-minute delayed quotes and charged $35 per trade.
• Ameritrade, Datek Online, and others followed, eventually driving commissions
to as low as $8 per trade, and forcing the implementation of free, real-time
stock quotes in 1998.
HISTORY OF E-COMMERCE: TRAVEL

• Booking a trip over the Web back in 1995 meant going to a travel site and
requesting a fare.
• In early 1997, Travelocity offered a paging service to its Web customers that
alerted them if their flight was delayed.
• In the fall of 1997, [Link] launched its innovative, bid-based market for
discount airfares.
• Today you can bid on empty seats, name your price, choose a seat from a diagram,
and know of fare bargains often before agents have that information.
HISTORY OF E-COMMERCE: ADS

• In 1994, the first national consumer brand site - [Link] - was

launched for the Coor's owned beverage Zima.
• In October of 1994, Wired magazine's HotWired, dished up the first banner
ads from 12 advertisers, including AT&T, Club Med, and Volvo. Sales for the
entire online ad industry were $1 million that year, and HotWired owned 40
percent of it.
• In 1998, online ad revenues reached $2 billion, topping the $1.6 billion spent
on "outside" ads, such as billboards. General Motors alone pumped in $12.7
million. Online ad revenue is expected to reach $11.5 billion by 2003 that’s 5
percent of the total U.S. ad market.
HISTORY OF E-COMMERCE

• By the end of 2000, many European and American business companies

offered their services through the World Wide Web.
• Since then people began to associate a word “E-Commerce" with the ability
of purchasing various goods through the Internet using secure protocols and
electronic payment services.
E-BUSINESS

• Electronic Business, shortly known as e-business, is the online presence of

business.
• e-business is not confined to buying and selling of goods only, but it includes
other activities that also form part of business like providing services to the
customers, communicating with employees, client or business partners can
contact the company in case if they want to have a word with the company, or
they have any issue regarding the services, etc.
EXAMPLES OF E-BUSINESS

• Email marketing to existing and/or prospective customers is an e-business activity, as it electronically

conducts a business process—in this case, marketing.
• An online system that tracks inventory and triggers alerts at specific levels is also e-business. Inventory
management is a business process, and when facilitated electronically, it becomes part of e-business.
• A content management system that manages the workflow between a content developer, editor,
manager and publisher is another example of an e-business. In the absence of an electronic workflow,
the physical movement of paper files would conduct this process. By electronically enabling it, it becomes
an e-business.
• Online tools for human resources ranging from job listings and application processes to collecting and
maintaining relative data about employees constitutes e-business.
E-COMMERCE VS E-BUSINESS
KEY DIFFERENCES BETWEEN E-COMMERCE AND E-
BUSINESS
• Buying and Selling of goods and services through the internet is known as e-commerce. Unlike e-business,
which is an electronic presence of business, by which all the business activities are conducted through the
internet.
• e-commerce is a major component of e-business.
• e-commerce includes transactions which are related to money, but e-business includes monetary as well
as allied activities.
• e-commerce has an extroverted approach that covers customers, suppliers, distributors, etc. On the other
hand, e-business has an ambivert approach that covers internal as well as external processes.
• e-commerce requires a website that can represent the business. Conversely, e-business requires a
website, Customer Relationship Management and Enterprise Resource Planning for running the business
over the internet.
• e-commerce uses the internet to connect with the rest of the world. In contrast to e-business, the internet,
intranet and extranet are used for connecting with the parties.
CHARACTERISTICS OF E-COMMERCE

• Seven basic features of e-commerce are:

• Ubiquity
• Global Reach and Security
• Universal Standards
• Richness
• Interactivity
• Information Density
• Personalization
UBIQUITY

• Ubiquity means that the commercial transaction or activity is available at any

time from anywhere in the world. And in today’s business environment, you
should ensure that your website is mobile-friendly as consumers continually
rely on mobile devices for their internet connectivity. Having a responsive
website ensures that your content intuitively adapts to whatever device is
accessing it to provide the most user-friendly experience.
GLOBAL REACH AND SECURITY

• E-commerce allows your company to reach consumers anywhere in the world.

Global reach is the highest number of potential consumers a business can
reach, essentially worldwide access. Of course, when working globally,
security is always key. You must protect customer information and ensure
privacy with a secure e-commerce platform. Security features should include
an SSL certificate that establishes secure connectivity, two-factor
authentication, a firewall and a privacy policy
UNIVERSAL STANDARDS

• Universal standards mean that e-commerce operates on standard platforms

with agreed methods and systems. This is where you should also look at the
ease of use of your e-commerce site and ensure that you are keeping it
simple in design and content. One study showed 76 percent of consumers say
the most important characteristic of a website is its ease of use. The objective
is to help shoppers get to what they want faster, and without running into the
unnecessary complexity that can clog up the path to purchase.
RICHNESS

• Richness refers to the content available on the e-commerce platform and how
it used by the consumer. In order to ensure richness to your site, provide a
variety of messages and means, such as videos, text, pictures, sound, links,
SMS and more to enhance customer experience. Make sure you have high-
resolution photos and video and feature multiple images to help customers get
a better feel for your products. Remember that images are what make the
sale, not the text, and ensure the images load quickly to the page.
INTERACTIVITY

• Interactivity is the relationship a consumer has with the site, which is similar to
a face-to-face customer meeting in a traditional business. Part of increasing
the amount of interactivity you have with a consumer lies in your ability to
connect with them on an emotional level. This creates brand trust and loyalty.
Make sure your social marketing efforts are linked to your e-commerce site.
Engage with your customers to show authenticity and they won’t feel like they
are being sold to all the time.
INFORMATION DENSITY

• Information density relates to the technological capabilities of e-commerce, in

that vast amounts of information can be stored and made accessible very
cheaply and without the need for bulky storage. In e-commerce banking, for
example, a customer can have access to a vast array of personal records and
the bank can store huge amounts of information as well.
PERSONALIZATION

• E-commerce takes personalized selling and marketing to a new level because

of the amount of information-gathering, interaction and engagement a
consumer has online. Products and messages can be personally targeted in a
much more efficient way, saving time and boosting the potential for sales.
Make sure you feature user-generated reviews and offer the option to create
wishlists, if applicable to your business. Personalizing a special offer can also
help increase the amount of time a consumer is spending on your site.
TYPES 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 ,
Ebay etc.
• C2B - – The commercial transaction between customer to business.
• G2C- The process where buying and selling of goods and services between Government to
Customer . Example MyEG
B2B

• B2B can be open to all interested parties or limited to specific, pre-qualified

participants (private electronic market).
• Companies doing business with each other such as manufacturers selling to
distributors and wholesalers selling to retailers
B2C

• Businesses selling to the general public typically through catalogs utilizing

shopping cart software.
• B2C is the indirect trade between the company and consumers.
• It provides direct selling through online.
• If you want to sell goods and services to customer so that anybody can
purchase any products directly from supplier’s website.
C2B

• A consumer posts his project with a set budget online and within hours
companies review the consumer's requirements and bid on the project.
• The consumer reviews the bids and selects the company that will complete the
project.
• C2B empowers consumers around the world by providing the meeting ground
and platform for such transactions.
C2C

• It facilitates the online transaction of

goods or services between two people.
• Though there is no visible intermediary
involved but the parties cannot carry
out the transactions without the
platform which is provided by the
online market maker such as eBay.
G2C

• Government providing services to customer

• Transaction takes place in G2C.
ADVANTAGES OF E-COMMERCE

• Ability to reach new markets

• Reduces costs (for some businesses)
• Increased purchasing opportunities
• More efficient (electronic payments, telecommuting, etc.)
DISADVANTAGES OF E-COMMERCE

• Incompatibility for certain industries

• Limitations of the medium
• Costs!!!
• Skills required
• Cultural and legal issues