Unit-1:

Syllabus -----1 Introduction to E– commerce: 1.2 Meaning and concept – E– commerce 1.3 E–
commerce v/s Traditional Commerce 1.4 E– Business & E– Commerce – History of E– Commerce 1.5
EDI – Importance, features & benefits of E– Commerce 1.6 Impacts, Challenges & Limitations of E–
Commerce

E Commerce Definition
 E-commerce stands for electronic commerce. E-commerce is the activity of purchasing or selling
products via the internet.
 E-commerce offers almost everything to buy, making it extremely competitive.
 Some notable examples of successful e-commerce businesses are Amazon, Flipkart, eBay, and
Myntra.
 E-commerce utilizes technology like mobile commerce, electronic funds transfers, supply chain
management, inventory management systems, internet marketing, online transaction processing,
EDI, and automated data collection mechanisms.

Advantages of E-commerce:
 E-commerce enables fast and secure shopping.
 It is making digitalized world.
 E-commerce also enables to choose different goods and services according to your choice.
 It is a simple way of selling and buying products and services.
 E-commerce replaced the paper work as all transactions are through internet today.
 It provides better management system, as it has a centralized database.
 E-commerce via internet covers a large number of customers worldwide.
 E-commerce has several payment modes.

Disadvantages of E-commerce:
 E-commerce has no universal standard for quality and reliability.
 E-commerce works through internet, it is possible that navigation on internet itself may be
slow.
 Strong security is required in e-commerce as all transactions are through internet.
 There is high risk of buying unsatisfactory products through e-commerce.
 It uses public key infrastructure which is not safe.
 Customers also trap in banking fraud which is quite frequent.
 Hackers also try to get access of data or to destroy data in e-commerce

Traditional Commerce v/s E-Commerce

Sr.
Traditional Commerce E-Commerce
No.

Information sharing is made easy via

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

2 Communication/ transaction Communication or transaction can

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

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

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

In e-Commerce or Electronic
Communications of business
4 Market, there is no human
depends upon individual skills.
intervention.

Unavailability of a uniform
E-Commerce website provides user
platform as traditional
5 a platform where al l information is
commerce depends heavily on
available at one place.
personal communication.

No uniform platform for

E-Commerce provides a universal
information sharing as it
6 platform to support commercial /
depends heavily on personal
business activities across the globe.
communication.

HISTOTY OF ECOMMERCE
The history of e-commerce, or electronic commerce, encompasses the evolution of buying and
selling goods and services over the internet. Here’s a brief overview of its development:
Early Beginnings (1960s-1980s)
 Electronic Data Interchange (EDI): In the 1960s, EDI was developed, allowing
businesses to exchange documents like purchase orders and invoices electronically.
 Early Online Shopping: In the 1970s and 1980s, platforms such as Minitel in France and
CompuServe in the United States allowed users to access online shopping and
information services.
The Internet and World Wide Web (1990s)
 Tim Berners-Lee and the Web: The World Wide Web was invented by Tim Berners-Lee
in 1989, becoming publicly available in 1991.
 First Online Stores: The first online transactions started to take place. In 1994, Pizza Hut
offered online ordering, and Netscape introduced SSL encryption for secure data transfer.
 Amazon and eBay: Amazon was founded by Jeff Bezos in 1994, initially as an online
bookstore. eBay, founded by Pierre Omidyar in 1995, started as an online auction site.
Expansion and Growth (2000s)
 Payment Systems: PayPal, founded in 1998 and acquired by eBay in 2002, became a
widely used online payment system.
 Retail Expansion: Traditional retailers like Walmart and Best Buy began establishing
online stores.
  Online Marketplaces: Platforms like Alibaba, founded in 1999, expanded significantly,
facilitating international trade
Mobile and Social Commerce (2010s)
 Mobile Commerce (m-commerce): With the advent of smartphones and apps, mobile
commerce grew rapidly. Platforms like Apple Pay and Google Wallet facilitated mobile
payments.
 Social Media Integration: Social media platforms such as Facebook and Instagram
introduced shopping features, allowing users to buy products directly through social
media.
Present and Future Trends (2020s)
 COVID-19 Impact: The pandemic accelerated the shift to online shopping, with
significant increases in e-commerce sales across the globe.
 Technological Advancements: Innovations such as artificial intelligence, augmented
reality, and block chain are influencing e-commerce, enhancing customer experiences
and securing transactions.
 Sustainability and Ethics: There is a growing focus on sustainable and ethical e-
commerce practices, driven by consumer demand for environmentally friendly and
socially responsible products.
E-BUSINESS
E-business, short for electronic business, refers to the use of internet technologies to conduct business
processes and functions. It encompasses a wide range of activities that go beyond the simple buying and
selling of goods and services (which is the domain of e-commerce). Here’s a more detailed breakdown of
what e-business includes:
Key Components of E-Business
 E-Commerce: The buying and selling of goods and services online, including online retail (B2C),
business-to-business transactions (B2B), and consumer-to-consumer sales (C2C).
 Online Marketing and Advertising: Utilizing the internet to promote products and services,
including search engine marketing (SEM), search engine optimization (SEO), social media
marketing, email marketing, and online advertising.
 Customer Relationship Management (CRM): Using digital platforms to manage and analyze
customer interactions and data throughout the customer lifecycle, with the goal of improving
business relationships, customer retention, and sales growth.
 Supply Chain Management (SCM): Managing the flow of goods, information, and finances as
they move from supplier to manufacturer to wholesaler to retailer to consumer, often through
integrated digital systems.
 Enterprise Resource Planning (ERP): Using software and systems to integrate and manage core
business processes such as finance, HR, manufacturing, supply chain, services, procurement, and
others.
 Online Collaboration and Communication: Tools and platforms that facilitate communication and
collaboration among employees, partners, and stakeholders. Examples include email, video
conferencing, collaboration software like Slack or Microsoft Teams, and project management
tools like Asana or Trello.
 E-Learning and Training: Online platforms and tools that provide educational content and
training programs to employees or customers, enhancing skills and knowledge through digital
means.
  Digital Transactions and Payments: Electronic payment systems and financial transactions
conducted over the internet, including online banking, mobile payments, digital wallets, and
crypto currencies.
 Content Management: Managing digital content across various platforms and channels, ensuring
that information is accurate, up-to-date, and accessible. This includes content creation, storage,
and distribution.
 Data Analytics: Collecting, analyzing, and leveraging data to make informed business decisions.
This includes web analytics, customer data analysis, market research, and business intelligence.

Benefits of E-Business
 Global Reach: Ability to reach a global audience without the constraints of geographical
boundaries.
 Cost Efficiency: Reduction in operational costs through automation and digital processes.
 Enhanced Customer Experience: Personalized and efficient customer interactions and
services.
 Improved Collaboration: Streamlined communication and collaboration within and
outside the organization.
 Data-Driven Decisions: Leveraging data analytics for strategic decision-making and
gaining competitive advantage.

EDI(Electronic Data Interchange model.)

EDI stands for Electronic Data Interchange model. It is the exchange of documents
between companies through computers in a standard format using networks, such as the
internet. It replaces the paper-based exchange of business documents. In EDI a standard
format is used because the computer will be able to read and understand the documents as
it is a computer-based data exchange method. It is widely used for ecommerce purposes.
The Various benefits of this model are:
o This model reduced the cost.
o It increased the processing speed.
o This model provides information security.
o This model reduced errors.
o This model helps in improved relationship between business partners.

EDI Model:
The basic process of EDI-based transactions is the same as their manual. The only difference that EDI
makes is that its transactions are done electronically, and data packets are formatted according to the
standards of EDI. The following figure describes the basic process of the EDI model:

o In EDI model, firstly the sender must generate the application file using its business application
system. This file contains the processed documents. The document sent by the sender has to be
 translated into an agreed EDI standard format. The process of translating EDI documents into
EDI standard format is called mapping.
o The translation software uses this mapping to translate the transaction of EDI so that it can easily
understand y the receiving organization.
o The document file is sent electronically either through a value-added network using EDI
software, a web-based EDI tool, or outsourcing with an EDI service provider.
o The trading partner receives the file. The receiver translates the file from the EDI standard format
to a file usable by their Business Application Software.
o An acknowledgement document is generated to the originating organization.
EDI Documents:
The most common documents exchanged via EDI model are:
o Invoices
o Purchase Orders
o Financial Information letters
o Transaction Bills
o Shipping requests and notifications
o Acknowledgement and Feedback
o Transcripts
o Claims
o Business Correspondence letters
EDI Users:
The most common EDI users are:
o Central and state government agencies
o Industry
o Banking
o Retailing
o Manufacturing
o Insurance
o Healthcare
o Automotive
o Electronics
o Grocery
o Transportation
o Central and state government agencies
o Industry
o Banking
o Retailing
o Manufacturing
o Insurance
o Healthcare
o Automotive
o Electronics
o Grocery
o Transportation
 Impacts, Challenges & Limitations of E– Commerce
E-commerce, the buying and selling of goods and services over the internet, has significantly
transformed the business landscape. Here are its impacts, challenges, and limitations:
Impacts of E-Commerce
Economic Growth:
 Global Reach: E-commerce enables businesses to reach a global audience, expanding
market access beyond geographical boundaries.
 Job Creation: It creates jobs in various sectors, including IT, logistics, customer service,
and digital marketing.
 Cost Reduction: Reduces overhead costs related to physical stores, such as rent and
utilities, allowing for competitive pricing.
Consumer Behavior:
 Convenience: Provides consumers with 24/7 shopping options, home delivery,
and a wide range of products.
 Personalization: Uses data analytics to offer personalized shopping experiences
and recommendations.
Business Operations:
 Efficiency: Streamlines operations with automated inventory management, order processing, and
customer service.
 Data Insights: Businesses can leverage customer data for targeted marketing and strategic
decision-making.
Innovation:
 Technology Adoption: Promotes the use of advanced technologies like AI, machine learning,
and blockchain in commerce.
 New Business Models: Facilitates innovative business models such as subscription services,
dropshipping, and digital products.
Challenges of E-Commerce
Security Concerns:
 Cybersecurity: High risk of data breaches, hacking, and online fraud. Ensuring robust
cybersecurity measures is essential.
 Privacy Issues: Handling and protecting consumer data in compliance with regulations
like GDPR.
Logistics and Supply Chain:
 Timely Delivery: Ensuring timely and cost-effective delivery, especially for international
shipments.
 Inventory Management: Efficiently managing stock levels to avoid overstocking or stockouts.
Customer Trust and Retention:
 Trust Building: Establishing trust through reliable service, secure transactions, and transparent
policies
 .Customer Service: Providing excellent customer service to handle inquiries, complaints, and
returns.
Market Competition
 :High Competition: The e-commerce market is highly competitive, with low barriers to entry,
leading to intense price wars and the need for continuous innovation.
 Limitations of E-Commerce
Digital Divide:
 Accessibility: Not all consumers have equal access to the internet and digital devices, limiting
market reach.
 Tech Savviness: Requires a certain level of digital literacy, which not all consumers possess.
Product Experience:
 Tangible Inspection: Consumers cannot physically inspect or try products before purchasing,
which can lead to dissatisfaction.
 Returns and Refunds: Managing returns and refunds can be challenging and costly.
Legal and Regulatory Issues:
 Compliance: Navigating different countries' legal and tax requirements can be complex.
 Intellectual Property: Protecting intellectual property rights and dealing with counterfeit
goods.
Dependence on Technology:
 Technical Glitches: Susceptible to technical issues like website crashes, payment failures,
and software bugs.
 Maintenance Costs: Ongoing costs associated with website maintenance, updates, and
cyber security.

Uses of E-commerce :
1. Online retail: One of the most well-known uses of e-commerce is online retail, where
businesses sell products directly to consumers through their online store, website, or mobile
app.
2. Digital products and services: E-commerce is also commonly used for the sale of digital
products and services, such as music, e-books, software, and online courses.
3. Business-to-business transactions: E-commerce can be used for B2B transactions, where
businesses sell products or services to other businesses.
4. Online marketplaces: E-commerce marketplaces, such as Amazon and eBay, provide a
platform for businesses and individuals to sell their products to a large audience.
5. Auction sites: Online auction sites, such as eBay, allow users to bid on and purchase items
from other users.
6. Online banking and financial services: E-commerce is used extensively for online
banking and financial services, including payment processing, bill payment, and money
transfers.
7. Online booking and reservations: E-commerce is used for booking and reservations of
flights, hotels, rental cars, and other travel-related services.
8. Food delivery: E-commerce platforms are used for online ordering and delivery of food
from restaurants.
9. Online advertising: E-commerce is also used for online advertising, where businesses can
advertise their products and services to a large audience