Overview of E-Commerce Module-1 Overview of E-Commerce

Introduction Commerce – Trade + Aids to Trade Traditional Commerce – Brick & Mortar market place Virtual Market E-Commerce

What is E-Commerce ? E-Commerce is the process of searching, choosing, buying and selling of products and services on the electronic network. E-Commerce uses the computer and telecommunication networks for promoting products,selling,delivery,collecting and customer services. It is the online exchange of goods, services and money between firms between firms and customers.

Definition of e-commerce The WTO has defined E-Commerce as “the production ,distribution, marketing, sale or delivery of products or services by electronic means” E-Commerce is defined as “the process of buying, selling or exchanging products ,services and information through computer network”

EXAMPLES of e-commerce Online shopping - Amazon, Flipkart, Ebay etc. Electronic Payments - Master card, Maestro ,Visa , PayPal ,Discover etc. Online Auctions - Ebay, Ubid, Mastibid etc. Internet Banking - SBI, HSBC, Standard Charted, ICICI, HDFC etc. Online Ticketing – IRCTC ,Make my trip, Yatra, Redbus, Make my show etc.

CLASSIFICATION OF E-COMMERCE .. ELECTRONIC COMMERCE TRADITIONAL COMMERCE INTERNET COMMERCE MOBILE COMMERCE BUSINESS FOCUSED E-COMMERCE CONSUMERFOCUSED E-COMMERCE

E-commerce strategies of companies Brick and Mortar Companies Click Only “Virtual” Companies Click and Mortar Companies

Traditional vs electronic commerce Basis Traditional Commerce E-Commerce Market Place Physical Virtual Relationship Direct personal contact E- relationship Mode of Payment Paper currency Electronic Payment Availability Only on working hours 24×7 Convenience Less More Cost High Presence of Middlemen Middlemen essential No Middlemen

Features of e-commerce Ubiquity Global Reach Universal Standards Richness Interactivity Information Density Personalization/Customization Interdisciplinary nature

Advantages/ Benefits of e-commerce Benefits for Consumers Allows shopping 24×7 Shopping from Anywhere Elimination of Middlemen Wide variety of Choices Allow quick price and product comparison before making the final selection Quick delivery of products Auction facility

Benefits for Business Lower cost to E-Merchant Expansion of Market place beyond Geographical boundaries Economy Reduced inventory and Overheads Allow quick price and product comparison before making the final selection Higher Margins Better Customer Service Quick Comparison Shopping

Benefits for Society Social Welfare Less traffic , Less Pollution

Limitations of e-commerce The Cost factor Lack of Standardization Security Heavy Competition Internet Access Non Suitability Lack of Personal Touch Lack of Faith Server Capacity

Process of E-commerce Customer Visit Choosing the product Product Catalog Shopping List Check Out System Online payment Third Party Payment Processing Internet Merchant Accounts Manual Credit Card Processing Product Delivery Customer Feedback

Third Party Payment Processing

Internet Merchant Accounts

Manual Credit Card Processing

Functions of E-commerce Electronic Marketing It is a form of product promotion and customer relations conducted with the use of electronic media Electronic Selling It involves both B2B and B2C selling process on internet It comprises order management, sale contract, receiving online payment and delivery of products. 3. Electronic Service E- Services offer online facilities to the customers to post a complaint, request a service, request information, or register a product. It also enables customers to check the order status, order tracking, managing accounts and resolving product problems.

Applications of e- commerce Direct Marketing and Selling Value Chain Integration 3. Supply Chain Management 4. Corporate Purchasing 5. Financial and Information Services

Applications of e- commerce Direct Marketing and Selling

Applications of e- commerce 2. Value Chain Integration The concept of Value Chain was introduced by Michael Porter in 1985.Value chain is a chain of activities that a firm performs in order to deliver something valuable Definition “A high-level model of how a business receive raw material as input, add value to the raw materials through various processes and sell finished products to customers”

Applications of e- commerce According to Michael Porter the value chain model consists of Primary Activities and Support Activities Primary activities Inbound logistics Operations Outbound logistics Marketing and Sales Services

Applications of e- commerce Support Activities Procurement Technology Development Human Resource Management Infrastructure

Applications of e- commerce 3. Supply Chain Management SCM is the management of materials, information and finance as they move in a process from supplier to manufacturer to wholesaler to retailer to customer. SCM flow can be divided into three Product Flow – movement of goods from supplier to customers Information Flow- Transmitting orders and updating the status of delivery Finance Flow- Credit terms, payment schedules and consignment

Applications of e- commerce 4. Corporate Purchasing/Procurement It deals with buying of products and services by an organization for its operational and functional needs. Best example for Corporate Purchasing/Procurement is B2B E.g.

Applications of e- commerce 5. Financial and Information Services Online Banking Online Billing Online Information Distribution

Infrastructure for e-commerce Physical Layer Logical Layer Network Service Layer Messaging Layer Middleman Service Layer Application Layer

Infrastructure for e-commerce Physical Layer By physical layer we mean the physical infrastructure such as cables , wires, satellites and mobile phone system. In fact without high speed reliable electronic communication e- commerce is not possible. Logical Layer The logical layer defines the protocols to communicate logically between computer connected by the physical network. E.g. TCP/IP, SSL, SET 3. Network Service layer It provides services which can be carried out conveniently using the internet infrastructure. The most important services include WWW, E-mail, browsers and search engines.

Infrastructure for e-commerce 4. Messaging Layer As the internet is accessible to everyone, there is always the danger of messages and documents being altered by unscrupulous persons. Thus there is a need to send messages in a coded form using a secret code. We require languages to compose messages which can be interpreted by computers. HTML and XML provide this facility.

Infrastructure for e-commerce 5. Middleman Service Layer This layer provides services to e-commerce participants to make their dealings easier. Some middleman services are secure payments using Debit/Credit cards, authentication of digital signature, electronic catalogs etc.

Infrastructure for e-commerce 6. Application layer The top layer is the application layer, which consists of B2C, B2B, C2C and mobile commerce. All the services provided by the other five layers are to support these applications B2C- B2B- C2C

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