SYLLABUS

UNIT 1:
Meaning, Concepts, Features, Functions, Categories of E-Commerce, Scope, Advantages and
Limitation of E-Commerce, E-Commerce practices v/s Traditional practices, E-Commerce and the
Trade Cycle.

E-Commerce simply means Electronic Commerce; E-commerce is the buying and selling of
goods, products, or services using the internet as a medium whereby the buyer gets to see the
products online, order it and make payment through the mode accepted by the seller. The
seller then delivers these products to the consumer via available and accepted means. E-
commerce is also known as internet commerce. Online stores like Amazon, Shopify, Ebay,
Olx are examples of E-commerce websites.
Ecommerce is better understood with the concepts of the 5Cs, the 5C model consists of:
• Commerce which is like a market place that consist of the buyers and sellers, transaction
terms and facilities to perform business transactions. This helps create and strengthen a
universal supply chain.
• Collaboration: the internet being a network of networks supports interrelationships among
businesses and individuals in a manner that is not limited by space, time, national or
organizational constraints.
• Communication: the internet technology and the world wide web provides a great
interactive medium for self-expression (as in reviews or comments of clients) and self-
presentation (as a means for businesses to showcase their products or services; a kind of
marketing)
• Connection: it is likely that different businesses use different software platforms to run their
business processes, leveraging on the advantages of the internet, it is achievable to
incorporate the different software platforms of different businesses that want to collaborate.
• Computation: large scale sharing of resources is paramount to a successful business
transaction. The internet technology facilitates this to ease successful completion of business
processes.

There are many definitions and understanding about ECommerce. They are as follows:
1. According to the editor-in-chief of International Journal of Electronic Commerce,
Vladimir Zwass, ‘Electronic commerce is sharing business information, maintaining business
relationships and conducting business transactions by means of telecommunications
networks’.
2. Electronic Commerce is where business transactions take place via telecommunications
networks, especially the Internet – E. Turban, J. Lee, D. King and H.M. Chung,
3. Electronic commerce is about doing business electronically – P. Timmers
4. Electronic commerce or e-commerce refers to a wide range of online business activities for
products and services – Anita Rosen

E-Commerce – Features
Electronic commerce, or e-Commerce, refers to the purchasing and selling of goods or
services via electronic means, such as the Internet or mobile phone applications. It may also
refer to the process of creating, marketing, servicing and paying for services and goods.
Businesses, governments and the public can participate in e-Commerce transactions The
unique features of e-commerce technology include:
Ubiquity: e-Commerce is ubiquitous, It is available just about everywhere and at all times
by using internet and Wi-Fi hotspot such as airport, coffee cafe and hill station places..
Consumer can connect it to the Internet at any time, including at their homes, their offices, on
their video game systems with an Internet connection and mobile phone devices. E-
Commerce is ubiquitous technology which is available everywhere
Global reach: The potential market size is roughly equal to the size of the online population
of the world. E-Commerce Technology seamlessly stretches across traditional cultural and
national boundaries and enables worldwide access to the client. E-Commerce website has
ability to translate the multilingual websites as well as allow the access to visitors all over the
world, purchase products and make business interactions.
Universal standards: The technical standards of the Internet are shared by all of the nations
in the world.
Richness: Users can access and utilize text messages and visual and audio components to
send and receive information. An individual may see information richness on a company's
blog if a post contains a video related to a product and hyperlinks that allows him to look at
or purchase the product and send information about the post via text message or email.
Interactivity: E-commerce technologies allow two-way communication between the
merchant and the consumer. As a result, e-Commerce technologies can adjust to each
individual’s experience. For example, while shopping online, an individual is able to view
different angles of some items, add products into a virtual shopping cart, checkout by
inputting his payment information and then submit the order.
Personalization: Technologies within e-Commerce allow for the personalization and
customization of marketing messages that groups or individuals receive. An example of
personalization includes product recommendations based on a user's search history on a Web
site that allows individuals to create an account.
Information density: The use of e-Commerce reduces the cost to store, process and
communicate information, At the same time, accuracy and timeliness increase; thus, making
information accurate, inexpensive and plentiful. For example, the online shopping process
allows a company to receive personal, shipping, billing and payment information from a
customer all at once and sends the customer's information to the appropriate departments in a
matter of seconds.
 Social technology: E-Commerce technology has tie up the social media networking
application to provide the best source of content sharing technology and e-Marketing
systems. You can share your content or data easily in just one click.
User-Generated Content: Social networks use e-Commerce technologies to allow members,
the general public, to share content with the worldwide community. Consumers with accounts
can share personal and commercial information to promote a product or service. When a
company has a professional social networking account, a member of the same social network
has the option of associating himself with the company or a product by saying he likes or
recommends it. When an individual update his status on a social networking account, he may
also mention a product or company by name, which creates word-of-mouth advertising.

Scope of E-Commerce
Listed below are the reasons that guarantee the future prospect of E-commerce in India. 
Enhancing domain registrations  Rising internet users  Easy access to internet 
Awareness about internet even in rural areas  Rising number of cyber cafes  Growing
need for E-commerce
a) Cash on delivery (COD) Indian e-commerce industry has evolved over a period of time
with innovations that have changed the rules of the game globally. COD is one such example.
In a country where credit card penetration is much lower than other developed markets and
where e-commerce companies are still working hard to build trust among shoppers,
introducing cash on delivery has been one of the key factors for the success of the segment.
At present, COD is the preferred payment mode for close to 55-60% of all online transactions
in the fashion and lifestyle segment in India. Executing COD efficiently and painlessly for
the customer is critical to the success of any ecommerce player in the country.
b) Delivering experiences E-commerce needs to focus on customer experience to build trust
and confidence. Customer experience encompasses every interaction of a customer from
placing an order to interacting with customer service team, to the actual delivery experience.
Providing a great delivery experience is one of the core aspects to delighting customers. This
not only mean faster deliveries but also consistency and reliability. The more faith the
customer has in your delivery service, the more likely he is to buy again. Besides, it builds a
good brand image and word-ofmouth publicity.
c) Growing the base India has more than 130 million online users at present, out of which as
many as 10% are engaging in online transactions. The online user base is expected to cross
300 million in the next 2 – 3 years and a larger percentage of people are expected to transact
online by the end of 2015. This large base will provide vast scope for e-commerce businesses
to establish themselves in India.
d) Growing opportunities The e-commerce industry is growing at a rapid pace and changing
the dynamics of the retail industry. In the coming years, e-commerce is expected to contribute
close to 8-10% of the total retail segment in India. This growth is bound to continue provided
e-commerce companies focus on innovating, building strong technology infrastructure and
delivering the best customer experience.
 e) Online Travel Segment The online travel segment has seen a CAGR of 55.5% from 2007-
2012. The is due to rise of disposable income, surge in demand for domestic travel and the
boom of the tourism industry. Domestic travel contributed to as much as 50% of the total
market, followed by railways tickets, international air tickets, hotel bookings and bus tickets.
f) E-Tailing E-tailing encompasses buying consumer items like apparels, electronic devices,
home and kitchen appliances, jewellery, online. Competition is intense due to low entry
barrier of this segment. However, Amazon.com, flipkart, snapdeal.com,jabong.com, and
myntra.com are some of the major players. This segment is expected to grow further as
people become more pressed for time. Also the choice that e-tailing sites offer to customers
will drive demand for this 13 segment. However, there will be intense price based
competition in this sector and consolidations are in the order.
g) Online Financial Services The financial services segment includes applying for insurance,
paying online bills, and premiums and online transactions for financial services. The costs of
these insurance policies are lesser with premiums being 40%-60% cheaper. This is a win-win
situation for both the insurance provider and the customers. Also the convenience provided
by online portals has led to more customers choosing the online route for bill payment.
h) Classifieds It is in a very promising stage and has lot of scope for growth. Online
advertising is lot cheaper than conventional methods and unlike the latter, it is not
constrained to a geographic location. The growth is mainly fuelled by services like online job
(60% of the segment), online matrimony, B2C classifieds and B2B classifieds. Naukri.com,
timesjob.com, monster.com are the major players in the job market while jeevansathi.com,
shaadi.com are the major matrimonial sites.
i) Other online Services These include sites offering online services like buying entertainment
tickets, food and grocery.

Differences between Traditional Commerce and E-Commerce

Point Of E-commerce Traditional Commerce
difference
Cost Effective E-commerce is cost effective. The cost Cost has to be incurred for
incurred on middlemen is eliminated as the role of middlemen to sell
there is direct link between the the company’s products. The
business and the customers. . The total total overhead cost is more.
overhead cost required to run ebusiness Running a traditional
is comparatively less. Running an e- business require a head
business require only a head office. office with several branches
Overhead cost can be eliminated by to cater to the needs of
hosting a website customers situated in
different places.
Time A lot of valuable time for both the It takes a lot of time
consumers and business is saved. A to complete a transaction.
product can be ordered and the
transaction can be completed in few
minutes through internet
Convenience It provides convenience to both It is not so convenient
customers and business. It provides method as that of E-
better connectivity for its prospective commerce. Customers have
and potential customers as the website to move away from their
can be accessed virtually from home or work place to
anywhere, anytime through internet. It locate and purchase a
is not necessary to move away from desired product.
their work place or home to locate and
purchase a desired product
Accessibility It is easy to expand the size of the It may not be easy to expand
market from regional to international the size of the market from
level. By hosting a website, a business regional to national level.
can penetrate into global market. It is Business organizations have
quite easy to attract customers from to incur a lot of expenses to
global markets at a marginal cost enter international market.
Profit It helps the organization to enjoy The cost incurred on the
greater profits by increasing sales, middlemen, overhead,
cutting cost and streamlining operating inventory and limited sales
processes. pulls down the profit in
traditional commerce
Physical It does not allow physical inspection of It is possible to physically
Inspection goods inspect goods before the
purchase.
Time Round the clock service is available. Business is open only for a
accessibility limited time.

Product It not suitable for perishable goods and It is suitable for perishables
suitability high value items such as jewellery and and ‘touch and feel’ items.
antiques. It is mostly suitable for
purchasing tickets, books, music and
software
Human resources It requires technically qualified staff It does not have such
with an aptitude to update themselves problems associated with
in the ever changing world. It has human resources.
difficulty in recruiting and retaining
talented people.
Customer The interaction between the business The interaction between the
interaction and the customer is screen-to-face. business and the consumer is
a face-to-face.
Process Automated processing of business There are chances of clerical
transactions helps to minimize the errors to occur as there is
clerical errors. manual processing of
business transactions.
Fraud Lot of cyber frauds take place in Fraud in traditional
ecommerce transaction. People commerce is comparatively
generally fear to give credit card less as there is personal
 information. Lack of physical presence interaction between the
in markets and unclear legal issues give buyer and the seller.
loopholes for frauds to take place in
ebusiness transactions
Information Little dependency on person to person Heavy dependency on
sharing information exchange. It provides a information exchange from
universal platform to support business person to person. No
activities across the globe. uniform platform for
information sharing as it
depends heavily on personal
communication.
Method of Communication can be done in Communication is done in
Communication asynchronous way. Electronics system synchronous way. Manual
automatically handles when to pass intervention is required for
communication to required person or each communication or
do the transactions. transaction.
Strategy A uniform strategy can be easily It is difficult to establish and
established and maintain. maintain standard practices.

FUNCTIONS OF E _COMMERCE

the four important functions of e-commerce are:

1. Communication Function: Communication is a fundamental aspect of e-

commerce, enabling efficient exchange of information between various parties
involved in business transactions. It plays a pivotal role in bridging the gap
between buyers, sellers, and other stakeholders. This function encompasses
several key elements:
• Quick Information Exchange: E-commerce platforms leverage
communication tools like emails, instant messaging, and notifications to
swiftly deliver important information, documents, and updates to parties
engaged in business interactions. This speed enhances the responsiveness
and agility of transactions.
• Real-time Communication: Through real-time communication channels,
businesses can engage with customers in live chats, addressing their
queries promptly and enhancing customer satisfaction.
• Digital Documentation: E-commerce relies on digital documentation to
streamline processes. Contracts, invoices, purchase orders, and other vital
documents can be exchanged electronically, reducing paperwork, errors,
and delays.
• Global Reach: Communication in e-commerce transcends geographical
boundaries, enabling businesses to interact with customers, suppliers, and
partners across the world, fostering a global marketplace.
 • Enhanced Connectivity: Communication tools facilitate networking and
collaboration between different departments within an organization,
leading to improved coordination, decision-making, and overall efficiency.
2. Process Management Function: Process management within e-commerce
involves automating and optimizing various business processes to enhance
productivity and operational efficiency:
• Automation: E-commerce platforms integrate technology to automate
repetitive tasks such as inventory management, order processing, and data
entry. This reduces human errors, saves time, and ensures consistency.
• Workflow Improvement: Through process management, businesses can
identify bottlenecks, optimize workflows, and streamline operations. This
leads to smoother interactions, faster order fulfillment, and improved
customer experiences.
• Resource Allocation: Effective process management helps allocate
resources more efficiently, allowing businesses to focus on core activities,
innovate, and allocate resources strategically.
• Data Insights: By analyzing data generated from various processes, e-
commerce platforms gain insights into customer preferences, sales trends,
and operational efficiency. This information guides informed decision-
making and business growth.
• Sustainability: Process management can contribute to sustainability
efforts by optimizing supply chain logistics, minimizing waste, and reducing
energy consumption in various operational aspects.
3. Service Management Function: Service management in e-commerce is centered
around leveraging technology to enhance the quality of services offered to
customers:
• Customer Support: E-commerce platforms utilize technology to provide
efficient customer support through various channels, including chatbots,
help centers, and ticketing systems. This ensures timely assistance and
issue resolution.
• Personalization: By analyzing customer data and behavior, e-commerce
businesses can offer personalized recommendations, product suggestions,
and tailored experiences that cater to individual preferences.
• Quality Assurance: Service management involves implementing
mechanisms to monitor and improve the quality of products and services.
This includes feedback collection, reviews, and continuous improvement
initiatives.
• Feedback Utilization: E-commerce platforms actively gather feedback
from customers and use this valuable information to refine products,
services, and operational processes, fostering an environment of
continuous enhancement.
• Loyalty Programs: Through service management, businesses can develop
loyalty programs, rewards, and incentives that encourage customer
retention and repeat purchases.
4. Transaction Capabilities Function: Transaction capabilities within e-commerce
focus on facilitating secure and convenient buying and selling experiences:
 • Secure Transactions: E-commerce platforms integrate robust security
measures, such as encryption and secure payment gateways, to protect
sensitive financial information and ensure secure transactions.
• Online Payments: Transaction capabilities enable customers to make
payments using a variety of methods, including credit cards, digital wallets,
and online banking. This flexibility enhances convenience and customer
trust.
• E-commerce Platforms: Platforms like Flipkart.com provide a
comprehensive infrastructure for businesses to list products, manage
inventory, process orders, and handle payments, creating a seamless end-
to-end transaction experience.
• Virtual Marketplaces: Online marketplaces bring together various sellers
and buyers, offering a diverse range of products and services in one
centralized location, providing consumers with a convenient one-stop
shopping destination.
• Mobile Commerce: Transaction capabilities extend to mobile devices,
allowing customers to make purchases through mobile apps and mobile-
responsive websites, enabling shopping on the go.

ADVANTAGES OF E -COMMERCE
Electronic commerce can increase sales and decrease costs. Advertising done well on the
web can get even a small firm’s promotional message out to potential consumers in every
country in the world. A firm can use electronic commerce to reach narrow market
segments that are geographically scattered. The web is particularly useful in creating
virtual communities that become ideal target markets for specific types of products or
services. A virtual community is a gathering of people who share a common interest, but
instead of this gathering occurring in the physical world; it takes place on the internet.
Some key benefits of e-commerce are summarized below:
• By becoming e-commerce enabled, businesses now have access to people all
around the world. In effect all e-commerce businesses have become virtual
multinational corporations.
• The cost of creating, processing, distributing, storing and retrieving paper-based
information has decreased.
• Enables reduced inventories and overheads by facilitating ‘pull’-type supply chain
management – this is based on collecting the customer order and then delivering
through JIT (just-in-time) manufacturing.
• Software and music/video products can be downloaded or e-mailed directly to
customers via the Internet in digital or electronic format.
• Businesses can be contacted by or contact customers or suppliers at any time.
 • 24/7 access: Enables customers to shop or conduct other transactions 24 hours a
day, all year round from almost any location.
• Customers not only have a whole range of products that they can choose from and
customize, but also an international selection of suppliers.
• Customers can ‘shop’ around the world and conduct comparisons either directly
by visiting different sites, or by visiting a single site where prices are aggregated
from a number of providers and compared
• This can range from the immediate delivery of digitized or electronic goods such as
software or audio-visual files by downloading via the Internet, to the on-line
tracking of the progress of packages being delivered by mail or courier.
• An environment of competition where substantial discounts can be found or value
added, as different retailers view for customers. It also allows many individual
customers to aggregate their orders together into a single order presented to
wholesalers or manufacturers and obtain a more competitive price.
• Enables more flexible working practices, which enhances the quality of life for a
whole host of people in society, enabling them to work from home.
• Enables people in developing countries and rural areas to enjoy and access
products, services, information and other people which otherwise would not be so
easily available to them.
• Facilitates delivery of public services like health services available over the Internet
(online consultation with doctors or nurses), filing taxes over the Internet through
the Inland Revenue website.
• A business can reduce the costs of handling sales inquiries, providing price quotes,
and determining product availability by using electronic commerce in its sales
support and order-taking processes.
• Electronic commerce can also make products and services available in remote
areas.

DISADVANTAGES OF E -COMMERCE
• Return-on-investment is difficult to calculate
• Difficulty of integrating existing databases and transaction-processing software
designed for traditional commerce into the software that enables electronic
commerce.
• Rapidly evolving and changing technology, so there is always a feeling of trying to
‘catch up’ and not be left behind.
• Facing increased competition from both national and international competitors
often leads to price wars and subsequent unsustainable losses for the
organization.
 • Computing equipment is needed for individuals to participate in the new ‘digital’
economy, which means an initial capital cost to customers.
• A basic technical knowledge is required of both computing equipment and
navigation of the Internet and the World Wide Web.
• Cost of access to the Internet, whether dial-up or broadband tariffs.
• Cost of computing equipment. Not just the initial cost of buying equipment but
making sure that the technology is updated regularly to be compatible with the
changing requirement of the Internet, websites and applications.
• Lack of security and privacy of personal data. There is no real control of data that
is collected over the Web or Internet. Data protection laws are not universal and so
websites hosted in different countries may or may not have laws which protect
privacy of personal data.
• Physical contact and relationships are replaced by electronic processes.
Customers are unable to touch and feel goods being sold on-line or gauge voices
and reactions of human beings.
• A lack of trust because they are interacting with faceless computers.

The e-Commerce Trade Cycle:

• A trade cycle is the series of exchanges, between a customer and supplier, that
take place when a commercial exchange is executed. A general trade cycle consists
of:
Pre-Sales: Finding a supplier and agreeing the terms.
Execution: Selecting goods and taking delivery.
Settlement: Invoice (if any) and payment.
After-Sales: Following up complaints or providing maintenance.