UNIT-1

INTRODUCTION TO E-COMMERCE:

Definition: E-commerce, or electronic commerce, is a business model that enables the buying and selling of
goods and services over the internet.

 It involves maintaining relationships and conducting business transactions that include selling
information, services, and goods by means of computer telecommunications networks.
 It differs form the traditional commerce in the way that it enables the trading of goods, money and
information electronically from computer to computer. Business is done electronically and there is no
longer a need for physical currency or goods to conduct business.

Scope of E-commerce
The scope of e-commerce refers to the extent and range of online business activities that involve buying and
selling products or services over the internet. It encompasses various business models, market reach,
technological advancements, payment solutions, logistics, and regulatory considerations.

Key Areas:

1. Types of E-commerce:

o Online Retail: Selling products through digital storefronts.

o Marketplaces: Platforms like Etsy that connect buyers and sellers.

o Digital Goods: Intangible products like software and e-books.

2. Technology:

o Mobile Commerce: Shopping via mobile devices.

o Social Commerce: Selling through social media platforms.

o AI Integration: Personalization and chatbots for customer service.

3. Payment Solutions:

o Digital Wallets: Systems like PayPal.

o Cryptocurrency: Using digital currencies like Bitcoin for transactions.

4. Logistics:

o Drop shipping: Selling without holding inventory.

o Same-Day Delivery: Fast delivery options.

5. Security:

o Data Privacy: Protecting consumer information.

o Compliance: Adhering to laws and regulations.

E-commerce based activities: -

Under the e-commerce umbrella there exist a variety of activities. These include:
Online Shopping: A prevalent example of e-commerce is shopping via the internet. Virtual stores are
created online, often boasting more variety of choices than are available at physical stores. There are also
stores that exist only online, and benefit from the lack of investment into physical infrastructure.

Electronic Payments: Payment systems for utility bills, phone, cable and internet bills, as well as online
shopping are an important aspect of e-commerce. Here, security needs to be ensured regarding credit card
and personal information.

Virtual Auctions: One version of e-commerce is the online auction popularized by eBay. These websites
offer customers the benefit of selling to others at the best possible price.

Internet Banking: E-commerce has allowed many people to forego frequent visits to the bank and instead
perform their regular banking activities online via secure banking services.

Online Ticketing: Ticketing for almost all types of activities is now done online. This include travel ticketing
such as air travel, bus and trains, as well as tickets for entertainment and sports events. This allows people to
avoid queues and just go on the day of the event.

The technical components of e-commerce are essential elements that ensure smooth and efficient operation
of online business activities. Here are the main technical components:

Technical Components of E-commerce: -

1. Web Server:

o Hosts the e-commerce website and manages incoming and outgoing web traffic.

o Ensures the website is accessible to users 24/7.

2. E-commerce Platform:

o Software application that provides the framework for building and managing an online store
(e.g., Shopify, Magento, WooCommerce).

o Offers tools for product management, order processing, and customer management.

3. Database:

o Stores and manages data related to products, customers, orders, and transactions.

o Ensures data integrity, security, and quick retrieval.

4. Payment Gateway:

o Facilitates secure online payments by connecting the e-commerce website to a payment

processor (e.g., PayPal, Stripe).

o Handles various payment methods like credit/debit cards and digital wallets.

5. Security Protocols:

o SSL (Secure Socket Layer): Encrypts data transmitted between the user's browser and the
web server.

o Firewalls: Protects the website from unauthorized access and cyber threats.
 o Two-Factor Authentication: Adds an extra layer of security for user accounts.

6. Content Management System (CMS):

o Enables easy creation and management of website content without requiring technical
expertise (e.g., WordPress, Joomla).

o Allows for updates and changes to product listings, blog posts, and other content.

7. Inventory Management System:

o Tracks and manages stock levels, ensuring accurate product availability.

o Integrates with the e-commerce platform to update inventory in real-time.

8. Shipping and Fulfillment System:

o Manages order processing, shipping, and delivery logistics.

o Provides real-time tracking information to customers.

9. Customer Relationship Management (CRM) System:

o Manages customer interactions, preferences, and purchase history.

o Helps improve customer service and retention through personalized communication.

10. Analytics and Reporting Tools:

o Tracks website performance, user behavior, and sales metrics.

o Provides insights for data-driven decision-making.

11. Mobile Optimization:

o Ensures the e-commerce website is responsive and accessible on mobile devices.

o Enhances user experience for mobile shoppers.

Applications of E-commerce: -
Following are some of the widely used e-commerce are as follows:

 E-Banking: Internet Banking, also known as net-banking or online banking, is an electronic payment system
that enables the customer of a bank or a financial institution to make financial or nonfinancial transactions
online via the internet. This service gives online access to almost every banking service, traditionally available
through a local branch including fund transfers, deposits, and online bill payments to the customers. Ex:
Account transfers, balance inquiries, bill payment etc.

 E- Advertising It is also known as online advertising it is a form of promotion that uses internet and WWW
to deliver marketing messages to attracts customers. Ex: Banner ads, social network advertising, online
classified advertising etc.

 M-Commerce: M-commerce (mobile commerce) is the buying and selling of goods and services through
wireless handheld devices such as smartphones and tablets. As a form of e-commerce, m-commerce enables
users to access online shopping platforms without needing to use a desktop computer. Ex: Ticketing, Mobile
banking, Advertising.

 E-Learning: It comprises all forms of electronically supported learning and teaching. Content is delivered
via. The internet, intranet/extranet,audio,video tape, satellite TV etc. Ex: Coursera, Khan academy, W3
school.

 Online Shopping: Online shopping is a form of electronic commerce which allows consumers to directly buy
goods or services from a seller over the Internet using a web browser.

Consumers find a product of interest by visiting the website of the retailer directly or by searching among
alternative vendors using a shopping search engine, which displays the same product's availability and
pricing at different e-retailers. Ex: EZmall, Croma Electronics

 Entertainment: Ex: Newspapers, Books, Online games/video, sports, Politics, fashion/clothes, technology.

E-commerce Framework: -
The e-commerce framework is a comprehensive structure that supports online business activities. It
encompasses various components and elements that work together to facilitate the buying and
selling of goods and services over the internet.
1. Technology Infrastructure
 Web Server:
o Hosts the e-commerce website and handles incoming and outgoing web traffic.
o Ensures the website is accessible to users 24/7.
 E-commerce Platform:
o Provides the framework for building and managing an online store (e.g., Shopify, Magento,
WooCommerce).
o Offers tools for product management, order processing, and customer management.
 Database:
o Stores and manages data related to products, customers, orders, and transactions.
o Ensures data integrity, security, and quick retrieval.
 Payment Gateway:
o Facilitates secure online payments by connecting the e-commerce website to a payment
processor (e.g., PayPal, Stripe).
o Handles various payment methods like credit/debit cards and digital wallets.
2. Website Design and User Experience
 Responsive Design:
o Ensures the e-commerce website is accessible and user-friendly on various devices, including
desktops, tablets, and mobile phones.
 User Interface (UI):
o Focuses on the visual elements of the website, making it easy to navigate and visually appealing.
 User Experience (UX):
o Enhances the overall experience of users while interacting with the website, ensuring
smooth navigation and a pleasant shopping experience.
3. Content Management
 Content Management System (CMS):
 o Enables easy creation, editing, and management of website content without requiring
technical expertise (e.g., WordPress, Joomla).
o Allows for updates and changes to product listings, blog posts, and other content.
 Product Information Management (PIM):
o Organizes and manages product data across various channels.
o Ensures accurate and consistent product information.
4. Order Management and Fulfillment
 Order Processing:
o Handles customer orders from placement to fulfillment.
o Ensures timely and accurate order processing.
 Inventory Management:
o Tracks and manages stock levels, ensuring accurate product availability.
o Integrates with the e-commerce platform to update inventory in real-time.
 Shipping and Logistics:
o Coordinates the shipment and delivery of products to customers.
o Provides real-time tracking information.
5. Customer Relationship Management (CRM)
 Customer Data Management:
o Stores and manages customer information, purchase history, and preferences.
o Helps improve customer service and retention through personalized communication.
 Personalized Marketing:
o Tailors marketing efforts based on customer behavior and preferences.
6. Digital Marketing and Sales
 Search Engine Optimization (SEO):
o Optimizes website content to rank higher in search engine results.
o Drives organic traffic to the website.
 Email Marketing:
o Sends targeted emails to customers for promotions, updates, and personalized offers.
 Social Media Marketing:
o Promotes products and engages with customers on social media platforms.

framework features which are vital for eCommerce businesses are:

1. Quality Search Functionality: This function plays a significant role in the market by helping improve
conversion rates. It processes keywords and helps users get precise results, thus enhancing sales.
2. Content Management System (CMS): A CMS makes your website unique in searches across global
markets. It highly impacts website efficiency and speed.
3. Multi-channel Functionality: In the current retail environment, it's essential for businesses to
manage products, listings, and orders across multiple channels to reach a global market.
4. Mobile Supported E-commerce: Mobile browsing is increasingly preferred. Having an efficient
mobile platform helps attract more users and customers.
5. Third Party Systems and Plug-ins: The ability to use third-party plug-ins provides adaptability,
customization, and innovation. These features can be crucial while developing a website, although
some may not be part of the standard package.
E-Commerce Supply Chain Management
It is significant to develop a system that would help you to deliver your products and goods to
the end, customers, without jeopardizing the quality and integrity of the product. The e-
commerce industry has become highly competitive because of the great number of stores.
Today, we’ll discuss e-commerce supply chain management; its definition, processes,
strategies, advantages, and disadvantages.

How it works: -
The process of e-commerce SCM begins with vendors and suppliers and finishes with end consumers. Along
with the value chain; the product or good moves from supplier, vendor, and manufacturer to the end
consumers. Money or cash moves from end consumers to the suppliers, and the information moves in both
directions.

PROCESS OF E-COMMERCE SCM – STAGES:

Some of the key stages in the process of e-commerce supply chain management are as follows:
PLANNING: It is the stage where you gather data about the SC process to know the needed
inventory that would help you to meet the market and customer demands.
SOURCING: Here, you find the manufacturers, suppliers, and vendors that would offer you the
needed inventory to satisfy the demands and wishes of customers.
PRODUCTION: It is the stage where you transform the raw material into finished goods; then
testing, packaging, storing, and then delivering the products to the end consumers.
LOGISTICS: It also goes by the name of product delivery. It comprises managing the flow of goods
and products to the end consumers.
REVERSE LOGISTICS: Here you manage the returned, expired, and defective goods and products
sent back from customers, and then send it back to the warehouse and suppliers.

STRATEGIES FOR E-COMMERCE SCM

Some of the main strategies for e-commerce SCM are as follows:

ALLIANCE WITH LOGISTICS COMPANIES

Establishing partnerships with delivery network service providers and logistic companies to decrease the
delivery time. It helps you to make sure that the product would reach customers on time and focus on other
areas of your business-like product development and marketing.

PROACTIVE AND FLEXIBLE

It comprises staying flexible, dynamic, and proactive relevant to the changing market demands and
expectations.

BARCODE TECHNOLOGY
It offers a clear insight into the type of product and answers questions of who, where, and when. It decreases
the processing time and cost, and paperwork accuracy.

WAREHOUSING CAPACITY

It comprises maximizing and amplifying the space utility of your warehouse to store more goods and
products.

CLEAR GUIDELINES

It means establishing clear rules, guidelines, and expectations between the manufacturer, supplier, and
vendor.

RESPONDING QUICKLY

It comprises responding to the changing customer needs and requirements in the market. You should make
sure that your delivery system has a quick and speedy delivery and shipment system.

OPEN COMMUNICATION

It allows you to develop open communication with various stakeholders in the SCM process. It offers you
real-time transparency and visibility so that you could make accurate decisions.

Advantages of SCM
TRANSPARENCY

 A well-optimized SCM system offers you complete transparency over the entire SC process in
real-time. It becomes easier to recognize bottlenecks and cracks in your SC system.
LIMITED DELAYS
 An efficient SCM system ensures the strategic positioning of warehouses, vendors, and
suppliers to quickly deliver products and goods to customers. This helps establish trust and
confidence with your brand and generate more revenue.
MULTI-CHANNEL SELLING
 Transparent SCM systems allow you to sell more goods and products through various
channels by integrating fulfillment centers, warehouses, and vendors.
RIGHT FORECASTING
 Transparency provides real-time data about customer needs, capacity logistics, product
lifecycle, and warehousing capacity. This allows you to accurately forecast customer
demands and buy inventory relevant to their requirements.
RESPONDING TO CHANGES
 Efficient SCM systems create open lines of communication among various stakeholders,
including suppliers, producers, dealers, manufacturers, and vendors. This allows for quick
responses to changing market conditions.

Disadvantages of SCM
Transportation Logistics:
Transportation and logistics are complex and costly. It requires managing delivery times, paying
truck drivers, and ensuring timely delivery of products to customers.

Warehouse Management:
Managing various warehouses and channels is difficult, especially when scaling up. It involves
locating and selecting appropriate warehouses and employing software solutions to track
distribution and inventory levels.

Inventory Management:
Managing an inventory system is challenging, particularly in distinguishing items for delivery from
those on-site. The complexity increases with business growth due to the high number of SKUs and
the need for managing replenishment.