E-commerce Unit -1 PDF

Understanding E-commerce E-commerce is the process of buying and selling tangible products and services online. It involves more than one party along with the exchange of data or currency to process a transaction. It is part of the greater industry that is known as electronic business (e-business),...

Understanding E-commerce E-commerce is the process of buying and selling tangible products and services online. It involves more than one party along with the exchange of data or currency to process a transaction. It is part of the greater industry that is known as electronic business (e-business), which involves all of the processes required to run a company online. E-commerce has helped businesses (especially those with a narrow reach like small businesses) gain access to and establish a wider market presence by providing cheaper and more efficient distribution channels for their products or services. Target (TGT) supplemented its brick-and-mortar presence with an online store that allows customers to purchase everything from clothes and coffeemakers to toothpaste and action figures right from their homes. Providing goods and services isn't as easy as it may seem. It requires a lot of research about the products and services you wish to sell, the market, audience, competition, as well as expected business costs. What Is Electronic Commerce (E-commerce)? Electronic commerce (e-commerce) refers to companies and individuals that buy and sell goods and services over the internet. E-commerce operates in different types of market segments and can be conducted over computers, tablets, smartphones, and other smart devices. Nearly every imaginable product and service is available through e-commerce transactions, including books, music, plane tickets, and financial services such as stock investing and online banking. As such, it is considered a very disruptive technology. E-commerce is the buying and selling of goods and services over the internet. It is conducted over computers, tablets, smartphones, and other smart devices. Almost anything can be purchased through e-commerce today, which makes e-commerce highly competitive. It can be a substitute for brick-and-mortar stores, though some businesses choose to maintain both. E-commerce operates in several market segments including business-to-business, business-to-consumer, consumer-to-consumer, and consumer-to-business. Definition of E-Commerce E-commerce (electronic commerce) is the exchange of goods and services and the transmission of funds and data over the internet. E-commerce relies on technology and digital platforms, including websites, mobile apps and social media to make buying and selling possible. KEY DRIVERS OF E-COMMERCE Technological factors :- The degree of advancement provides access to the new technology for business and consumers Political factor :- Including the role of government in creating legislation, initiatives, and funding to support the use and development  Social factor :- Incorporated the level and advancement in IT education and training which will enable both potential buyers and workforce Economic factor :- The general wealth and commercial health of a nation and the elements that contribute to it. Organizational culture :- The firm must develop an attitude for research and development to enhance value through e-commerce. Commercial benefit :- The development of business leads to cost savings and improves efficiency. Skilled and committed workforce :-There is a requirement of a skilled and dedicated worker that understands, is willing and able to implement new technologies and processes. Requirements of customers and suppliers :- The nature and type of product and service will decide the motivation for e-commerce application. Competition :- Ensuring the organization stays ahead of or at least keeps up with competitors and industry leaders. The development of e-commerce also provides competitive advantage firms Goals Of E-Commerce Online Shopping: A revalent 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 includes 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. Revenue and Growth More than just increased sales volume, ecommerce opens the door to entirely new markets. Analyze your product – can it be shipped to customers outside your immediate area, expanding your reach nationally or even globally? Are existing customer needs going unmet due to geographic limitations that online sales could solve? Improved Margins While not a guarantee, ecommerce can reduce significant overhead costs compared to a traditional model. Rent on a prime retail space, potentially large staff, and utilities can be minimized or even eliminated. However, it is essential to be realistic: shipping, platform fees, and digital marketing will incur their own costs, but a careful analysis might reveal improved profitability potential. Customer Experience Online tools offer personalization on a scale difficult to achieve in person. Recommendation engines ("Customers who bought this also like..."), targeted promotions based on past purchase history, and streamlined feedback mechanisms can enhance satisfaction and loyalty. Additionally, online accessibility aids customers with disabilities or who face geographic barriers to shopping in person. Data & Analytics Ecommerce generates a wealth of data that brick-and-mortar stores often struggle to capture. From browsing behavior to abandoned cart insights, this data can fuel better business decisions, targeted marketing, and even product development. Geographic Reach Ecommerce casts a wider net. Evaluate your business: are there potential customers outside your physical store's usual draw who would be interested in your products if shipping were an option? Niche Markets The internet makes finding niche communities easier. If your product has a highly specific appeal, finding enough customers to sustain a physical location can be challenging, while an online store removes that geographic constraint. 24/7 Availability Unlike a traditional store with set operating hours, your digital storefront is always open for business. This caters to customers in different time zones, allowing them to browse and purchase products at their convenience. It also benefits those who prefer to shop late at night or early in the morning, and individuals with busy schedules who struggle to make it to a physical store during standard hours. Every hour becomes a potential sales opportunity, maximizing your reach without the need to increase staffing or overhead costs. Price Flexibility Ecommerce empowers businesses to react swiftly to market dynamics. Competitor price changes, flash sales, or testing promotional pricing is often far easier to implement online than across physical locations. Reduced Marketing Overhead While digital advertising comes with its own expenses, it offers precision targeting that traditional methods (billboards, print ads) often lack. This allows for more efficient use of marketing budgets by focusing on reaching the most likely customers. Direct Customer Relationships Ecommerce cuts out the middleman. Building a direct connection with buyers fosters brand loyalty. This relationship also offers valuable first-party data unfiltered by a third-party retailer, aiding in future marketing and product development. Rapid Testing & Scaling Experimenting with a new product, a different price point, or a targeted promotion is easier online. Successes can be scaled up quicker than ordering more inventory, hiring staff, etc., for physical locations. Adapting to Demand If demand spikes (think viral products), ecommerce can potentially handle a higher volume faster than brick-and-mortar, assuming the supply chain is robust. It can also weather sudden downturns better, as online overhead is often less fixed. Lower Barrier to Entry Depending on the type of products, the initial investment in launching an ecommerce store can be significantly less than a physical location. This reduces risk for new businesses, allows for testing the market, or opens the door to side projects with less financial strain. Technical components of ecommerce Components of E-commerce E-commerce (electronic commerce) refers to the buying and selling of goods and services over the internet. It involves various components and elements that work together to create a seamless online shopping experience for customers and facilitate business transactions. Here are the key components of e-commerce: Website or Online Store: The foundation of e-commerce is the online platform where products or services are displayed, and customers can browse, search, and make purchases. This could be a simple website, a dedicated e-commerce platform, or a marketplace like Amazon or eBay. Product Catalog: This is a digital representation of the products or services available for purchase. It includes product images, descriptions, prices, and other relevant information to help customers make informed buying decisions. Shopping Cart: An essential feature of e-commerce websites, the shopping cart allows customers to add products they want to purchase. It keeps track of selected items and their quantities until the customer is ready to check out. Checkout and Payment Processing: The checkout process involves finalizing the purchase. Customers provide their shipping information, select a payment method, and enter payment details. Payment processing systems securely handle transactions, ensuring the safety of customer data. Payment Gateway: This is the technology that connects the e-commerce website to the financial networks to process payments. It encrypts sensitive payment information to ensure secure transactions. Security Measures: E-commerce platforms must implement robust security measures to protect customer data, including SSL certificates for secure connections, encryption for sensitive data, and measures to prevent hacking and data breaches. Inventory Management: Effective inventory management ensures that products are available when customers want to buy them. It involves tracking stock levels, restocking, and managing product variants. Shipping and Fulfillment: This component handles the logistics of getting products from the seller to the buyer. It includes options for shipping methods, tracking orders, and generating shipping labels. Customer Accounts: Creating accounts allows customers to store their information for future purchases, track order history, save favorite items, and manage their personal details. Customer Support: E-commerce businesses need to provide customer support to assist with inquiries, resolve issues, and address concerns. This can be through email, live chat, phone support, or self-service options. Reviews and Ratings: Customer feedback in the form of reviews and ratings adds credibility to products and helps other shoppers make purchasing decisions. Marketing and Promotion: E-commerce businesses use various digital marketing strategies like SEO, social media, email marketing, and online advertising to attract customers to their websites and promote their products. Analytics and Reporting: Monitoring and analyzing data related to website traffic, customer behavior, sales, and other metrics helps businesses understand their performance and make informed decisions. Mobile Optimization: As mobile usage continues to grow, ensuring that the e-commerce platform is responsive and optimized for mobile devices is crucial. Returns and Refunds: Providing clear policies and processes for returns, exchanges, and refunds contributes to a positive customer experience. Legal and Compliance: E-commerce businesses need to adhere to various legal and regulatory requirements related to data protection, privacy, taxation, and more, depending on the regions they operate in. Advantages of E-commerce There are many advantages to e-commerce, including: Increases Sales and Revenue E-commerce always helps to increase sales and revenue as it widens the market by reaching out to new customers. It also allows businesses to offer discounts and incentives that are not possible in a physical store. There are also many opportunities for cross-selling and up-selling. Reduces Costs E-commerce also helps reduce business costs as it eliminates the need for a physical store and sales staff. It also reduces inventory costs and transportation costs. There are also many opportunities for cost-saving through online auctions and supply chains. Eliminates Geographic Barriers E-commerce also eliminates geographic barriers, as customers can buy goods and services from anywhere in the world. This allows businesses to sell to new markets and expand their customer base. It may also help to reduce the cost of doing business. Improves Customer services This is because e-commerce allows businesses to offer 24/11 customer service, which is not possible in a physical store. It also allows customers to compare prices and products from different retailers easily. Sometimes there are also additional services, such as customer reviews and ratings, that are not available in a physical store. Increases Efficiency Efficiency is increased as orders can be placed and processed quickly and easily through an e-commerce website. This eliminates the need for paperwork and reduces the chances of human error. It also allows businesses to track inventory levels and sales trends in real-time. Disadvantages of E-commerce However, there are also some disadvantages to e-commerce, including: Lack of Social Interaction One disadvantage is that there is a lack of social interaction, as people cannot see or touch the product before they buy it. This may lead to dissatisfaction with the purchase if the product is not what was expected. Security Risks Another disadvantage is that there are security risks, as sensitive financial information can be stolen by hackers. This can result in loss of money and identity theft. There may also be risks involved with buying and selling products online, as there is no guarantee of product quality or authenticity. Difficulties with Returns Another disadvantage is that it can be difficult to return products that have been bought online. This is because businesses often require the product to be returned in its original packaging, which may not be possible if the product has been used. There may also be shipping costs involved in returning the product. Lack of Trust There may be a lack of trust among consumers when it comes to buying goods and services online. This is because they may be afraid of being scammed or not receiving the product that they ordered. The Scope of Electronic Commerce: 1.Global Reach: One of the most significant advantages of E-commerce is its ability to transcend geographical boundaries. Businesses can reach a global audience without the constraints of physical location, enabling them to tap into diverse markets and customer bases. 2.Increased Convenience: For consumers, E-commerce provides unparalleled convenience. The ability to browse, compare, and purchase products from the comfort of their homes, 24/7, has revolutionized the shopping experience. 3.Diverse Business Models: E-commerce accommodates various business models, including Business-to-Consumer (B2C), Business-to-Business (B2B), Consumer-to-Consumer (C2C), and more. This versatility allows businesses to choose models that align with their goals and target audience. 4.Enhanced Customer Engagement: Digital platforms enable businesses to engage with their customers in real-time. Social media, personalized marketing strategies, and interactive websites contribute to building strong customer relationships and loyalty. 5.Data-Driven Decision Making: E-commerce platforms generate vast amounts of data that can be analyzed to gain insights into consumer behavior, preferences, and market trends. This data-driven approach empowers businesses to make informed decisions and tailor their strategies for optimal results & electronic commerce meaning. 6.Technological Advancements: As technology continues to advance, so does the scope of E-commerce. Innovations such as artificial intelligence, virtual reality, and augmented reality are being integrated into E-commerce platforms to enhance user experiences and drive sales. 7.Evolving Business Landscape: E-commerce has transformed traditional business models and given rise to new opportunities. Brick-and-mortar businesses are increasingly adopting online strategies to stay competitive, blurring the lines between physical and digital commerce. Electronic commerce and Electronic Business What is E-Commerce? E-Commerce is about conducting commercial transactions via the web or getting involved in selling and buying items over the internet. It also covers monetary transactions. Some other online e-commerce activities include: Ticketing over internet Paying different taxes Online payments Products purchased or sold online  Online Accounting Software Online Customer Support Meanwhile, also find examples of E-Commerce sites. They include Flipkart, Paytm Mall, Amazon, Myntra and more. What is E-Business? E-Business encompasses executing all types of business transactions and services via the web. This includes procuring raw materials, online education, commercial transactions, monetary transactions on the internet and more. This indicates an online presence of all types of businesses and services. Examples are E-Commerce companies and their additional internal business activities such as classifieds, auction sites, software or hardware developer sites, etc. The E-Business online activities, in the meantime, include: Setting up an online store Supply chain management Online commercial transactions (buying and selling products) Customer Education Monetary Business Transactions E-Mail Marketing