E-Commerce

Module 1 E-commerce, or electronic commerce, refers to the buying and selling of goods and
services over the internet.

1.
Various Categories of E-Commerce:

E-commerce businesses can be grouped into two main categories based on their presence:

1. Pure Click Companies:

These businesses operate only online and have no physical stores. Customers can only
shop through their websites or apps. Examples include online-only retailers like Amazon
and services like PayPal.

2. Brick and Click Companies:

These businesses have both online and physical stores. Customers can choose to shop
in person or online. Examples include retailers like Shoppers Stop and Tata CLiQ, which
provide a mix of both shopping experiences.

Sub-Categories of E-Commerce:

1. Retail:

This involves selling goods directly to consumers without any middlemen. For instance,
Titan sells its watches directly on its website.

2. Wholesale:

In this model, businesses sell products in large quantities to retailers, who then sell them
to individual customers. Alibaba is a well-known example that connects buyers and
suppliers worldwide.

3. Drop Shipping:

Here, a company sells products that are made and shipped by a third party. Zappos
started as a drop shipping company, meaning they didn't keep products in stock.

4. Crowd Funding:

This method allows businesses to collect money from customers before delivering
products. Catapooolt is an example that helps startups raise funds for their projects.
5. Subscription:

In this model, customers automatically receive products or services on a regular basis

until they cancel. Birchbox, which sends monthly beauty product samples to subscribers,
is a good example.

6. Aggregator:

These platforms collect information about products or services from various sources and
present them in one place for easy comparison. Examples include Uber and Oyo, which
help users find rides and accommodations.

7. Affiliate:

In this system, businesses pay individuals or other companies (affiliates) to promote their
products through ads or links. Flipkart has an affiliate program that allows partners to
earn money by promoting their products.
2.
Traditional Commerce vs. E-Commerce
3.
Advantages of E-Commerce:

1. Global Reach:

E-commerce enables businesses to reach customers worldwide, allowing purchases

anytime and anywhere. This global presence maximizes convenience and minimizes
physical limitations for product delivery.

2. Lower Cost and Greater Profit:

E-commerce reduces costs associated with physical office space and real estate.
Additionally, fewer intermediaries in the online supply chain lead to lower logistics costs,
which can increase overall profitability.

3. Customer Insights:

E-commerce platforms track customer behavior, enabling businesses to analyze user

journeys and gain insights on search keywords, user experience, and pricing strategies.
This data helps optimize marketing efforts and improve sales.

4. Information Availability:

Unlike physical stores, e-commerce websites can provide extensive product information,
including demo videos, reviews, and customer testimonials. This wealth of information
can significantly enhance sales and inform customer decisions.

5. Customization:

E-commerce utilizes artificial intelligence and algorithms to deliver personalized content

and product recommendations to users. By showing relevant products, businesses can
effectively increase sales and enhance customer satisfaction.

6. Easy Scaling Up:

E-commerce businesses can expand their operations without the constraints of physical
space. They can easily adjust their inventory and logistics in response to market trends
and consumer demands, making scaling more manageable compared to traditional
businesses.
4.
Limitations of E-Commerce:

1. Security Concerns:

E-commerce sites collect sensitive customer information, making them targets for
hackers. Data breaches can lead to legal issues and loss of customer trust, impacting
business reputation.

2. Lack of Personal Touch:

E-commerce lacks the personal interaction found in physical stores. Many consumers
appreciate face-to-face interactions with sales associates, which enhances the shopping
experience and helps in product inspection.

3. IT Infrastructure Requirements:

A reliable IT infrastructure is crucial for e-commerce transactions. However, issues like

poor internet connectivity and lack of access to computers or mobile devices can hinder
the consumer experience.

4. Quality Concerns:

There is often a discrepancy between what is advertised and what is delivered, leading
to consumer dissatisfaction. Issues like counterfeit or low-quality products can deter
potential buyers from shopping online.

5. Delivery Issues:

Inefficient physical infrastructure can result in delayed deliveries or limited service areas.
Additional delivery charges can also offset the benefits of lower prices, frustrating
consumers.

6. Unsuitable for Certain Products:

Some products, like high-value items or those requiring family input, may not lend
themselves to online shopping. Consumers often prefer physical stores for products that
need thorough inspection or consultation before purchase.
5.
Factors affecting E-Commerce:

1. Technological Infrastructure:

The availability and quality of technology (internet access, bandwidth, security, etc.)
directly affect the ease and efficiency of e-commerce transactions.

2. Payment Systems:

Secure and efficient online payment methods, such as credit cards, e-wallets, and
payment gateways, are essential for successful e-commerce operations.

3. Logistics and Delivery:

The effectiveness of delivery services and logistics infrastructure plays a crucial role in
customer satisfaction and e-commerce growth.

4. Government Policies and Regulations:

Legal frameworks around data protection, taxation, online consumer rights, and other
regulatory factors can significantly impact e-commerce.

5. Trust and Security:

Customers are more likely to engage in e-commerce when there are strong measures in
place for data protection, privacy, and fraud prevention.

6. User Experience:

The design, navigation, and overall ease of use of e-commerce platforms can influence
customer engagement and conversion rates.

7. Market Competition:

The level of competition between e-commerce businesses influences pricing, product

diversity, and the overall user experience.

8. Consumer Behavior:

Trends in online shopping habits, preferences, and demand for convenience can drive
e-commerce growth.

9. Globalization:

E-commerce businesses often cater to a global audience, so international shipping,

currency exchange, and cross-border regulations can affect operations.
 10. Digital Marketing:

Effective online marketing strategies, such as SEO, social media, and email marketing,
play a critical role in attracting and retaining customers.

The success of e-commerce is influenced by a combination of technological, economic,

regulatory, and consumer-related factors. Understanding and addressing these factors are
essential for businesses to thrive in the competitive online marketplace.
6.
Reasons for the Growth of E-Commerce

1. E-Portals for E-Commerce Operations:

The Indian government has launched e-portals to help with various business functions,
such as online applications, payments, and auctions. For example, eBiz allows
businesses to handle tasks like obtaining industrial licenses and registering companies
online, making it easier for e-commerce to thrive.

2. Digital India Initiative:

This government project aims to transform India into a digitally advanced country. It
focuses on building digital infrastructure, improving services to the public, and
empowering citizens with digital tools, which supports the growth of e-commerce.

3. Start-Up India Program:

This initiative promotes entrepreneurship by offering financial support, tax breaks for new
businesses, and resources for start-ups. By creating a favorable environment for new
companies, it encourages more people to start e-commerce businesses.

4. Make in India Initiative:

Aimed at boosting industrial growth, this program improves the overall business
environment and allows foreign investment in key sectors. A stronger manufacturing
base supports e-commerce by ensuring a reliable supply chain for products.

5. Increasing Internet and Smartphone Penetration:

More people have access to the internet and smartphones, especially with the spread of
3G and 4G networks. E-commerce companies are improving their online shopping
experiences through better website performance and detailed product listings, attracting
more customers.

6. Changing Consumer Mindset:

Indian consumers are becoming more comfortable with online shopping. Busy lifestyles,
a desire for luxury items, and easy access to global products encourage more people to
shop online instead of going to physical stores.

7. Curated E-Commerce:
The rise of social media has led to a new trend where users can browse, save, and
share their favorite products before purchasing. This “curated” approach makes it easier
for consumers to discover new items and influences their buying decisions.
8. Remarketing Strategies:
Remarketing helps convert potential customers who visited a website but didn’t buy
anything. Companies use targeted ads to remind these customers about the products
they viewed, encouraging them to return and make a purchase.

9. Diverse Payment Options:

The growth of digital wallets and payment systems like Unified Payments Interface (UPI)
has made online payments easier and more secure. As more consumers trust electronic
payments, they are more likely to shop online.

10. Price Sensitivity:

Indian shoppers are generally looking for good deals. E-commerce companies offer
discounts, cashbacks, and referral bonuses to attract price-conscious consumers and
keep them engaged with online shopping.
7.
Trends in E-Commerce Across Various Sectors

E-Commerce Trends in Retail

1. AR and VR:

Augmented Reality (AR) and Virtual Reality (VR) let customers see and try products
online before buying. Brands like IKEA and Amazon have used these technologies to
improve shopping experiences, especially for furniture, clothing, and cosmetics.

2. Voice Commerce:

Voice commerce allows people to shop by speaking to their devices. In 2017, 41% of
Amazon Echo and Google Home users used this feature. By 2020, it was expected that
half of all searches would be voice-based.

3. Modern Delivery Systems:

Delivery services are improving, with companies like Amazon using drones and
subscription services for faster shipping. Customers can expect quicker deliveries, such
as two-hour or same-day shipping.

4. Interactive Chatbots:

AI-powered chatbots can chat with customers naturally, helping them find information,
qualify leads, and make purchases, which boosts sales and helps businesses
understand customer preferences.

5. Omnichannel Marketing:

This approach uses multiple channels to reach customers. Studies show that
multi-channel communications have much higher engagement than single-channel
marketing. Businesses need to ensure consistent messaging across all platforms.

6. On-Site Personalization:

Many consumers prefer companies that offer personalized experiences. Businesses that
focus on personalization are likely to see higher sales.

7. Mobile Commerce:

Shopping on mobile devices continues to grow, as it's more convenient than using a
computer.
 8. Rise of Subscription E-Commerce:

Many consumers enjoy subscription services that deliver products regularly. In 2017,
15% of online shoppers signed up for these services, valuing personalized offerings.

E-Commerce Trends in Banking

1. Website Sales:

Bank websites are evolving from simple information sites to sales platforms, with a focus
on achieving business goals. Banks now present their products similarly to online shops.

2. Product Comparison:

Some banks have started using product comparison tools to help customers evaluate
different banking products, although this is more complex than comparing typical
consumer goods.

3. Search Engine on Home Page:

Many banks now include a search feature on their websites, making it easier for
customers to find specific products. This also helps banks understand what customers
are looking for.

4. Omnichannel Banking:

Customers often start their banking journey online and may wish to continue in-person or
over the phone. Banks are working to ensure that customer service representatives can
assist customers seamlessly across channels.

5. Cloud Services:

Many banks are adopting cloud computing to take advantage of technologies like
blockchain and AI, which are transforming the industry.

6. Mobile Banking:

Mobile banking is speeding up processes and improving user experiences with features
like password-free biometrics and real-time updates.
E-Commerce Trends in Tourism

1. Online Booking:

Travelers can now book their trips online, making planning easier and more convenient.

2. Automation and Networking:

GPS technology and app-based travel aggregators simplify the travel experience by
allowing users to plan trips from anywhere.

3. Global Market Access:

E-commerce allows travel companies to reach customers worldwide and offer

competitive pricing.

4. Accessibility:

Travel companies can monitor competitor offerings and adjust their services accordingly,
improving accessibility for customers.

5. Empowering Customers:

Customers can now create their own travel plans online, including flights and hotel
bookings.

E-Commerce in Government

E-commerce in government uses technology to make services more accessible and efficient for
citizens. This includes:

● Accountability:

Transparency in government services helps citizens monitor public organizations. The

more information available, the more accountable the government is to its citizens.

● Interactivity:

Governments are working to engage citizens through their websites and social media,
making it easier for people to access information and provide feedback.
E-Commerce in Education

E-commerce is transforming education in India:

● E-Learning Growth:

With technology, many education portals now offer a range of learning opportunities,
from basic to advanced.

● Infrastructure Needs:

India's traditional education system is struggling to keep up with its growing population,
making e-learning a viable solution.

● Technology Integration:

Technology plays a key role in education, from online courses to educational videos,
making learning more accessible.

● Popularity of E-Learning:

Many people prefer online learning options that fit into their busy lives, allowing them to
earn degrees or certifications without interrupting their jobs or studies.

Example: Byju's, India's largest ed-tech company, has made online learning popular with its
app, which had millions of downloads and paid users by 2017.
8.
M-COMMERCE

Mobile commerce, or m-commerce, is when people buy and sell things using their smartphones
and tablets.

The term was created in 1997 by Kevin Duffey. The first mobile payment system was introduced
in Finland, where Coca-Cola vending machines accepted text messages as payment. After the
iPhone came out in 2007, m-commerce switched from texting to using apps. In India,
m-commerce made up about 66% of all online shopping by 2020 and is expected to be worth
$357.2 billion by 2026.

Examples of m-commerce include buying things in apps and using mobile banking. Digital
wallets like PayTm, Google Pay, and Apple Pay help make m-commerce easier. The Amazon
app is another example of m-commerce for shopping.

BENEFITS OF M-COMMERCE

1. Global Reach:

M-commerce allows brands to reach new customers around the world. By the end of
2019, it was expected that many adults would own smartphones, providing lots of
potential customers.

2. Better Customer Information:

M-commerce gives businesses better insights into what customers want. It helps brands
connect with customers from the moment they find a product to when they buy it.

3. Quick Growth:

Brands can explore new markets to avoid competition and find more sales opportunities.

4. Easier Scaling:

Brands can easily adjust their inventory and marketing based on how interested
customers are.

5. Timing:

M-commerce helps brands reach customers at the right time, whether they are shopping
while traveling or during lunch. Technology can help businesses connect with customers
just before they decide to buy.
LIMITATIONS OF M-COMMERCE

1. If the buying process is difficult, customers may not complete their purchases.

2. Mobile payment options might not be available everywhere or may not work with all
payment apps.

3. Some people worry about security and data breaches, making them hesitant to use
m-commerce.

4. If websites are not easy to use on mobile devices, it can limit sales.

5. Businesses must understand tax laws in all the countries they sell to, which can be
complicated.

WAYS TO IMPROVE M-COMMERCE

● Fast Websites: Websites should load quickly to help increase sales.

● Simple Checkout Process: The checkout process should be easy so customers can
enter their payment information quickly, especially using mobile wallets.

● Mobile-Friendly Websites: Many websites should be improved to work better on mobile

phones.

TRENDS IN M-COMMERCE

1. More Mobile Traffic:

More people are using smartphones for shopping. Many people keep their phones close
by all the time.

2. Growing Mobile Transactions:

More sales are happening through mobile devices. In the U.S., over half of online
shopping was done on mobile in 2016.
3. Smartphone Usage:

People spend most of their time on their phones using apps rather than browsers. The
time spent on shopping apps has increased a lot.

4. Preference for Apps:

Many people like using mobile apps instead of websites because they are faster and
more convenient. Apps can offer more features, like notifications. New users of shopping
apps are more likely to come back compared to those using mobile websites.
9.
Myths of E-Commerce

E-commerce has grown significantly, but many myths surround it, often giving businesses and
customers a misguided view of its operations. Here are some common myths associated with
e-commerce, along with the realities that dispel them:

1. Myth: Customers flock to a website as soon as it is launched.

Reality: Customers won’t automatically know about a website's existence. Businesses

must promote it through various channels like social media, online networking, and
digital marketing to drive traffic. Making a website mobile-friendly and easily accessible
helps as well.

2. Myth: Online shoppers are easy to please.

Reality: Experienced online shoppers are discerning. If they encounter a poor user
experience or can’t find what they’re looking for, they will quickly leave for other
websites. A well-designed, easy-to-navigate website with relevant content is crucial for
retaining customers.

3. Myth: Making money online is easy.

Reality: Success in e-commerce requires strategic planning and effort. Understanding

the target audience and addressing their needs is key to running a profitable online
business.

4. Myth: Lowering prices and offering discounts guarantees success.

Reality: Deep discounts can harm a brand’s image, making it seem cheap. Instead,
focus on quality and value before offering price cuts. Discounts can attract customers,
but they shouldn’t be the only reason customers return.

5. Myth: If the product is good, there’s no need for marketing.

Reality: While word of mouth can help, it’s not enough. Without proper marketing, even
the best products will go unnoticed. A strong marketing strategy is essential for building
awareness and attracting customers to the website.
 6. Myth: Content marketing is a waste of time.

Reality: Content is a crucial part of marketing, especially for SEO. Quality content helps
attract targeted users, improves search engine rankings, and increases brand visibility.

7. Myth: Negative reviews will destroy the business.

Reality: Negative reviews can actually help businesses improve. They provide valuable
feedback for growth and show that the business is open to criticism. A well-handled
response to a negative review can even enhance brand credibility.

8. Myth: Online business is cheaper than offline business.

Reality: Running an online business can be costly due to IT infrastructure, supply chain
management, shipping, warehousing, and extensive marketing. These expenses can be
significant and should not be underestimated.

Conclusion
E-commerce comes with its set of misconceptions that can lead businesses astray if not
addressed. By understanding and debunking these myths, businesses can better navigate the
digital marketplace and make informed decisions to succeed online.
10.
Types of E-Commerce.

E-commerce, or electronic commerce, refers to the buying and selling of goods and services
over the internet. Different types of e-commerce models are used based on who is involved in
the transaction. Below are the main types of e-commerce.

1. Business to Business (B2B)

In B2B, businesses sell goods or services to other businesses. This often involves large
orders, such as manufacturers selling products to retailers. For example, Alibaba and
IndiaMart are popular B2B platforms.

2. Business to Consumer (B2C)

B2C is the most common form of e-commerce, where businesses sell directly to
consumers. This includes platforms like Amazon and Flipkart, where consumers buy
products online.

3. Consumer to Consumer (C2C)

C2C e-commerce allows consumers to sell goods or services to other consumers
through online platforms. Websites like eBay and OLX are examples, where users sell
items like used goods or cars to each other.

4. Consumer to Business (C2B)

In C2B, individuals sell products or services to businesses. This is common on freelance
platforms like Fiverr, where individuals offer services such as graphic design or writing to
companies.

5. Mobile Commerce (M-commerce)

M-commerce refers to transactions carried out via mobile devices. It encompasses all
forms of e-commerce transactions done through smartphones and tablets, such as
shopping, banking, or ticket booking apps like Amazon or Paytm.

6. Government to Business (G2B)

G2B involves governments interacting with businesses. This can include things like
businesses paying taxes online or applying for licenses.

7. Business to Government (B2G)

B2G happens when businesses provide goods or services to government entities, such
as technology or infrastructure.
 8. Government to Citizen (G2C)
In G2C, governments offer services to citizens online, such as paying taxes or renewing
a driver’s license. Government websites like tax filing portals are good examples.

9. Business to Employee (B2E)

B2E involves companies offering special services or products to their employees, like
discounts or online portals for work-related purchases.

10. Consumer to Government (C2G)

C2G e-commerce allows individuals to interact with the government online, such as
paying fines or taxes through official websites.

11. Social Commerce (S-Commerce)

This type of e-commerce happens through social media platforms like Instagram or
Facebook, where users can buy products directly from the app.

Conclusion
E-commerce comes in many forms, from businesses selling to other businesses (B2B) to
consumers selling to consumers (C2C). Each type of e-commerce serves a different purpose,
making it easier for businesses, consumers, and governments to interact and conduct
transactions online.