INTRODUCTION

TO ECOMMERCE
Introduction to E-Commerce
MGT-644

E-Commerce
The use of the Internet and the Web to
transact business. More formally, we focus
on digitally enabled commercial
transactions between and among
organizations and individuals. Digitally
enabled transactions include all
transactions mediated over the Internet
and the Web.

Meaning of E-Commerce
E-Commerce is defined by different ways
Communication perspective - electronic commerce is the delivery
of information, products/services, or payments via telephone lines,
computer networks or any other digital mean,
Business perspective application of technology toward the
automation of business transactions or workflows
Service perspective a tool that addresses the desire of firms,
consumers and management to cut service cost and improve
quality of goods and increasing the speed of service delivery
Online perspective the capability of buying and selling products
and information on the internet and other online services

Major E-Commerce Concepts

Pure Versus Partial EC
EC Organizations
brick-and-mortar (old economy) organizations
Old-economy organizations (corporations) that perform their primary
business offline, selling physical products by means of physical agents
virtual (pure-play) organizations
Organizations that conduct their business activities solely online
click-and-mortar (click-and-brick) organizations

Organizations that conduct some e-commerce activities, usually as

an additional marketing channel

Traditional VS Electronic
Heavy dependency on information exchange
Information sharing is made easy via
fromCommerce
person to person.
electronic communication channels making a
little dependency on person to person
information exchange.

Communication/transactions are done in

synchronous way. Manual intervention is
required for each communication or
transaction.

Communication or transactions can be done

in asynchronous way. The whole process is
completely automated.

It is difficult to establish and maintain

standard practices in traditional commerce.

A uniform strategy can be easily established

and maintained in e-commerce.

Communications of business depends upon

individual skills.

In e-commerce, there is no human

intervention.

Unavailability of a uniform platform, as

traditional commerce depends heavily on
personal communication.

E-commerce websites provide the user a

platform where all the information is available
at one place.

No uniform platform for information sharing,

as it depends heavily on personal

E-commerce provides a universal platform to

support commercial/business activities across

Difference between E-Commerce

and E-Business
We use the term e-business to refer primarily to the digital
enablement of transactions and processes within a firm, involving
information systems under the control of the firm.
E-commerce include commercial transactions involving an exchange
of value across organizational boundaries

For example: online inventory

control

a companys online inventory control mechanisms are a component of

e-business, but such internal processes do not directly generate
revenue for the firm from outside businesses or consumers, as ecommerce, by definition, does. It is true, however, that a firms ebusiness infrastructure provides support for online e-commerce
exchanges; the same infrastructure and skill sets are involved in both
e-business and e-commerce.
Ecommerce and e-business systems blur together at the business firm
boundary, at the point where internal business systems link up with
suppliers or customers, for instance. E-business applications turn into
e-commerce precisely when an exchange of value occurs

Forces Fueling E-Commerce

Forces fueling e-commerce are
Economic forces,
Marketing forces and
Technology forces

Economic Forces
economic efficiency resulting from the reduction in
communications costs,
low-cost technological infrastructure,
speedier and
more economic electronic transactions with suppliers,
lower global information sharing and advertising costs,
and cheaper customer service alternatives.
Economic integration is either external or internal.
External integration refers to the electronic networking of corporations,
suppliers, customers/clients, and independent contractors into one community
communicating in a virtual environment (with the Internet as medium). Internal
integration, on the other hand, is the networking of the various departments
within a corporation, and of business operations and processes.
Among the companies with efficient corporate intranets are Procter and
Gamble, IBM, Nestle and Intel.

Marketing Forces
Corporations are encouraged to use e-commerce in marketing and
promotion to capture international markets, both big and small.
The Internet is likewise used as a medium for enhanced customer
service and support. It is a lot easier for companies to provide their
target consumers with more detailed product and service information
using the Internet.

Technology Forces
The development of ICT is a key factor in the growth of ecommerce.
For instance, technological advances in digitizing content,
compression and the promotion of open systems technology have
paved the way for the convergence of communication services
into one single platform.
This in turn has made communication more efficient, faster, easier,
and more economical as the need to set up separate networks for
telephone services, television broadcast, cable television, and Internet
access is eliminated.
From the standpoint of firms/businesses and consumers, having only
one information provider means lower communications cost

Types/Classification of ECommerce
Business-to-business (B2B)
Business-to-Consumer (B2C)
Business-to-government (B2G)
Consumer-to-consumer (C2C)
Consumer-to-Business (C2B)
Government to consumer (G2C)
Government-to-business (G2B)

What is B2B e-commerce?

B2B e-commerce is simply defined as ecommerce between
companies. Business to business web sites sell the product to the
intermediate buyer who takes the products to the final consumer.
In this type of web sites a wholesaler places an order through the
companies web sites and then sells the supplies to the final
consumer. About 80% of e-commerce is of this type.
Examples:

Intel selling microprocessor to Dell

Heinz selling ketchup to McDonalds

B2B E-commerce

What is B2C e-commerce?

Business to consumer is a website where all transaction take
place between a business organization and the final consumer. In
this type of websites customer login to the organizations website
and place an order to buy the goods after receiving the order the
organization would complete the order and sends the goods to
the customer and the customer would receive the ordered goods.
Example:

Dell selling you a laptop

B2C E-commerce

What is C2C e-commerce?

In this category consumers sell directly to consumer. If an
individual have something to sell, then he get it listed at an
auction site, and others can bid for it.
For example:
at an auction site, customer located in Pakistan and in Washington can
register. A customer form Pakistan places an advertisement on the website.
A customer from Washington, while surfing, looks at the advertisement and
decides to purchase the product. Thus, the deal is finalized through the
web site without an actual meeting.
Mary buying an iPod from Tom on eBay
You selling a car to your neighbour

C2C E-commerce

What is C2B e-commerce?

In such sites, the consumer places an estimate of the amount of
money he is willing to spend for a particular service. Businesses
that can offer this service within the customers specified limit
get back to him with the offer. Such sites depend on proper
estimate by consumer.

C2B E-commerce

What is B2G e-commerce?

Business-to-government e-commerce or B2G is
generally
defined
as
commerce
between
companies and the public sector. It refers to the
use of the Internet for public procurement,
licensing procedures, and other governmentrelated operations
Example:

Business pay taxes, file reports, or sell goods and services to

Govt. agencies.

B2G E-commerce

G2C E-commerce
This Model is also a part of e-governance.
The objective of this model is to provide good and effective
services to each citizen.
The Government provides the following facilities to the citizens
through website.
Information of all government departments,
Different welfare schemes,
Different application forms to be used by the citizens.

G2C E-commerce

G2B E-commerce
Government-to-business (G2B) is a business model that refers to
government providing services or information to business
organisation.
Government uses B2G model website to approach business
organizations. Such websites support auctions, tenders and
application submission functionalities.

G2B e-commerce

Advantages of E-commerce
The advantages of
major categories:
Advantages to
Advantages to
Advantages to

e-commerce can be broadly classified into three

Organizations
Consumers
Society

Advantages to Organization
Using e-commerce, organizations can expand their market to national and
international markets with minimum capital investment. An organization can
easily locate more customers, best suppliers, and suitable business partners
across the globe.
E-commerce helps organizations to reduce the cost to create process, distribute,
retrieve and manage the paper based information by digitizing the information.
E-commerce improves the brand image of the company.
E-commerce helps organizations to provide better customer service.
E-commerce helps to simplify the business processes and makes them faster and
efficient.
E-commerce reduces the paper work.
E-commerce increases the productivity of organizations. It supports "pull" type
supply management. In "pull" type supply management, a business process
starts when a request comes from a customer and it uses just-in-time
manufacturing way.

Advantages to Consumers
It provides 24x7 support. Customers can enquire about a product or service
and place orders anytime, anywhere from any location.
E-commerce application provides users with more options and quicker
delivery of products.
E-commerce application provides users with more options to compare and
select the cheaper and better options.
A customer can put review comments about a product and can see what
others are buying, or see the review comments of other customers before
making a final purchase.
E-commerce provides options of virtual auctions.
It provides readily available information. A customer can see the relevant
detailed information within seconds, rather than waiting for days or weeks.
E-Commerce increases the competition among organizations and as a result,
organizations provides substantial discounts to customers.

Advantages to Society
Customers need not travel to shop a product, thus less traffic on road and
low air pollution.
E-commerce helps in reducing the cost of products, so less affluent
people can also afford the products.
E-commerce has enabled rural areas to access services and products,
which are otherwise not available to them.
E-commerce helps the government to deliver public services such as
healthcare, education, social services at a reduced cost and in an
improved manner.

Disadvantages of E-commerce
Technical Disadvantages
There can be lack of system security, reliability or standards owing to
poor implementation of E-Commerce.
Software development industry is still evolving and keeps changing
rapidly.
In many countries, network bandwidth might cause an issue as there is
insufficient telecommunication bandwidth available.
Special types of web server or other software might be required by the
vendor setting the e-commerce environment apart from network
servers.
Sometimes, it becomes difficult to integrate E-Commerce software or
website with the existing application or databases.
There could be software/hardware compatibility issue as some ECommerce software may be incompatible with some operating system
or any other component.

Disadvantages of E-commerce
Non-Technical Disadvantages
Initial cost: The cost of creating / building E-Commerce application inhouse may be very high. There could be delay in launching the ECommerce application due to mistakes, lack of experience.
User resistance: User may not trust the site being unknown faceless
seller. Such mistrust makes it difficult to make user switch from
physical stores to online/virtual stores.
Security/ Privacy: Difficult to ensure security or privacy on online
transactions.
Lack of touch or feel of products during online shopping.
E-Commerce applications are still evolving and changing rapidly.
Internet access is still not cheaper and is inconvenient to use for many
potential customers like one living in remote villages.