Fundamentals of E-Commerce PDF

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Fundamentals of Ecommerce Programs Offered ne i Post Graduate Programmes (PG) l Master of Business Administration Master of Computer Applications Fundamentals n Master of Commerce (Financial Management / Financial Technology) O Master of Arts (Journalism and Mass Communication) of Ecommerce Master of Arts (Economics) Master of Arts (Public Policy and Governance) Master of Social Work Master of Arts (English) Master of Science (Information Technology) (ODL) Master of Science (Environmental Science) (ODL) i t y Diploma Programmes Post Graduate Diploma (Management) r s e Post Graduate Diploma (Logistics) Post Graduate Diploma (Machine Learning and Artificial Intelligence) Post Graduate Diploma (Data Science) i v Undergraduate Programmes (UG) Bachelor of Business Administration Bachelor of Computer Applications Bachelor of Commerce Bachelor of Arts (Journalism and Mass Communication) U n Bachelor of Social Work i Bachelor of Science (Information Technology) (ODL) y Bachelor of Arts (General / Political Science / Economics / English / Sociology) t A m c )DIRECTORATE OF Product code ( DISTANCE & ONLINE EDUCATION Amity Helpline: 1800-102-3434 (Toll-free), 0120-4614200 AMITY For Distance Learning Programmes: [email protected] | www.amity.edu/addoe DIRECTORATE OF For Online Learning programmes: [email protected] | www.amityonline.com DISTANCE & ONLINE EDUCATION  e in nl O ty Fundamentals of Ecommerce r si ve ni U ity m )A (c  e in © Amity University Press All Rights Reserved nl No parts of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the publisher. O SLM & Learning Resources Committee ty Chairman : Prof. Abhinash Kumar si Members : Dr. Divya Bansal Dr. Coral J Barboza Dr. Monica Rose r Dr. Apurva Chauhan ve Dr. Winnie Sharma Member Secretary : Ms. Rita Naskar ni U ity m )A (c Published by Amity University Press for exclusive use of Amity Directorate of Distance and Online Education, Amity University, Noida-201313  Contents e Page No. in Module - I: E-Commerce - A Revolution 01 1.1 Traditional Commerce 1.1.1 Traditional Commerce – An Overview nl 1.1.2 Growth of Internet and the Web 1.1.3 Comparison between Traditional and Electronic Commerce O 1.2 E-Commerce 1.2.1 What is E-Commerce? 1.2.2 Origin and Growth of E-Commerce ty 1.2.3 Advantages and Issues in E-Commerce 1.2.4 Relation Between E-Commerce and E-Business si 1.2.5 Digital Convergence 1.2.6 Unique Features of E-Commerce Technology 1.2.7 Introducing Types of E-Commerce r ve Module - II: E-Commerce Business Models and Concepts 58 2.1 Eight Key Elements of a Business Model 2.1.1 Value Proposition ni 2.1.2 Revenue Model 2.1.3 Market Opportunity U 2.1.4 Competitive Environment 2.1.5 Competitive Advantage 2.1.6 Market Strategy ity 2.1.7 Organisational Development 2.1.8 Management Team 2.2 Business-To-Consumer (B2C) Business Model m 2.2.1 Business-To-Consumer (B2C) Business Model 2.2.2 Business-To-Consumer (B2C) Business Model (E-Tailer) 2.3 Business-To-Business (B2B) Business Model )A 2.3.1 Business-To-Business (B2B) Business Model 2.3.2 E-Distributor, E-Procurement 2.3.3 Supply Chain Management (SCM) - Introduction (c 2.4 Consumer-To-Consumer (C2C) Business Model  2.4.1 Consumer-To-Consumer (C2C) Business Model 2.5 M-Commerce Business Models e 2.5.1 Introduction to M-Commerce Business Models in Module - III: E-Commerce Infrastructure Framework 125 3.1 Terms Related to Internet Technology nl 3.1.1 E-Commerce Framework 3.1.2 Internet Protocols, DNS, and URLs 3.1.3 Client/Server Computing, and Markup Languages O 3.1.4 Web Servers and Clients, Web Browsers and Search Engine 3.1.5 Intelligent Agents (Bots), Online Forums and Chat ty 3.1.6 Blogs, Podcasting 3.1.7 Internet Telephony, Video Conferencing 3.2 Information Superhighway si 3.2.1 Information Superhighway - Concept 3.2.2 Components of I-Way (Information Super Highway) r 3.2.3 Public Policy Issues Shaping the I-Way ve 3.2.4 Internet, Intranet and Extranet 3.2.5 How and Why Wireless Technology is Employed? 3.2.6 Wireless Application Protocol Benefits and Limitations ni 3.2.7 Mobile Banking 3.3 E-Banking U 3.3.1 E-Banking - Meaning 3.3.2 Importance and Types of E-Banking Services 3.3.3 Traditional vs. E-Banking ity 3.3.4 Process of E-Banking 3.3.5 Advantages and Disadvantages of E-Banking 3.3.6 Status of E-Banking in India m 3.4 E-Trading 3.4.1 E-Trading - Meaning 3.4.2 Importance of E-Trading )A 3.4.3 Traditional Trading vs. E-Trading 3.4.4 Operational Aspects of E-Trading 3.4.5 Advantages of E-Trading (c 3.4.6 Status of E-Trading  3.5 Advertising and Marketing on Internet 3.5.1 New Age of Information-Based Marketing e 3.5.2 On-Line Advertising Paradigms in 3.5.3 Active or Push-Based Advertising 3.5.4 Passive or Pull-Based Advertising nl 3.5.5 E-Cycle of Internet Marketing 3.5.6 Personalisation 3.5.7 Search Engine Optimisation O 3.5.8 Tracking Customers - Log Files, Forms, Cookies 3.5.9 E-CRM 3.6 On-Demand Education and Digital Copyrights ty 3.6.1 Online Education and Virtual Classrooms 3.6.2 Distance Education and E-Learning si 3.6.3 Training on Demand 3.6.4 Changing Roles of Institutions- Universities & Colleges, Publishers, Authors r 3.6.5 Technological Components of Education on Demand ve Module - IV: E-Commerce Security Environment 206 4.1 Security Threats in the E-Commerce Environment 4.1.1 Dimensions of E-Commerce Security ni 4.1.2 Malicious Code 4.1.3 Unwanted Programs U 4.1.4 Phishing and Identity Theft 4.1.5 Hacking and Cyber Vandalism 4.1.6 Credit Card Fraud/Theft ity 4.1.7 Spoofing, Spamming, Sniffing 4.1.8 Insider Attacks 4.1.9 Denial of Service (DOS) and Distributes Denial of Service (DDos) Attacks m 4.2 Introducing Technology Solutions 4.2.1 Encryption 4.2.2 Secure Socket Layers (SSL) )A 4.2.3 Firewalls Module - V: E-Commerce Payment Systems 264 5.1 E-Commerce Payment Systems (c 5.1.1 Traditional Payment Methods  5.1.2 Online Credit Card Transactions 5.1.3 Credit Card E-Commerce Enablers e 5.1.4 Digital Wallets in 5.1.5 Digital Cash 5.1.6 Digital Signatures nl 5.1.7 Electronic Billing Presentment and Payment 5.1.8 Introduction to Electronic Data Interchange (EDI) O ty r si ve ni U ity m )A (c  Fundamentals of Ecommerce 1 Module - I: E-Commerce - A Revolution Notes e Learning Objectives: in At the end of this topic, you will be able to understand: Traditional Commerce – An Overview nl Growth of Internet and the Web Comparison Between Traditional and Electronic Commerce O What is E-Commerce? Origin and Growth of E-Commerce Advantages and Issues in E-Commerce ty Relation Between E-Commerce and E-Business Digital Convergence Unique Features of E-Commerce Technology si Introducing Types of E-Commerce Introduction r ve The world’s producers and consumers have become more proximate thanks to technological advancements, creative thinking, and entrepreneurship. The widespread use of standardised cargo containers changed worldwide shipping in the 1970s and 1980s, drastically lowering the cost of transportation and distribution and paving the ni way for large-scale international trade. The widespread use of the internet, mobile phones, and associated technologies in the 1990s and 2000s reduced the cost of communications and information, paving the way for the development of more flexible U and effective manufacturing techniques. The current supply-side revolution is only now beginning to pay off for the American economy. Massive investments made in e-commerce infrastructure and design in the 2010s and 2020s are assisting in lowering barriers to entry for companies of all sizes. ity As a result, markets are growing and there is more room for specialisation, economies of scale, and cooperation. Gains in productivity as a result are lowering company expenses, regulating consumer prices, and promoting investment and growth. E-commerce has revolutionised the world of retail. More than two billion individuals m will shop online for products and services in 2020. In 2020, global e-commerce retail sales exceeded $4.2 trillion, or 17.8% of all retail sales worldwide, up from 7.4% in 2015. By 2025, that percentage is anticipated to increase to 24.5% from 21% in 2022. )A E-commerce platforms are giving companies easy access to billions of consumers throughout the world, much to how Walmart, Target, and other large retailers were able to use their size to make bulk purchases and give the benefits of reduced costs to American customers. The majority of global e-commerce retail purchases are made (c through online “marketplaces,” such as Amazon and eBay. However, Taobao and Tmall, which are both run by Alibaba Group, are also significant online marketplaces, with American businesses greatly profiting from those platforms’ widespread use. Amity Directorate of Distance & Online Education  2 Fundamentals of Ecommerce In 2020, U.S. firms sold goods to Chinese customers on Alibaba’s e-commerce Notes e platforms, generating direct revenues of $40 billion, according to a new analysis from NDP Analytics. These sales supported 256,000 American employment, increased the country’s GDP by $39 billion, and produced $21 billion in pay for American employees. in To put those numbers in perspective, the U.S. International Trade Commission predicted in 2016 that the Trans-Pacific Partnership (TPP), a trade deal to lower nl tariffs and other administrative trade barriers, would boost GDP by $42.7 billion and generate 128,000 new jobs by the time it first went into effect. Alibaba’s e-commerce infrastructure is therefore performing admirably as a tool to promote cross-border trade by removing obstacles and cutting costs for American businesses. O 1.1 Traditional Commerce When the barter system was implemented in the early millions of years ago, ty traditional commerce started. When there was no money available back then, the barter system was used to swap items for other goods. This is the origin of traditional commerce, which still exists today in the form of exchanging money for things rather si than just products. Due to the early 20th century arrival of e-commerce, traditional commerce is no longer as popular and has decreased. r 1.1.1 Traditional Commerce – An Overview ve Traditional commerce-Traditional commerce is the practise of selling goods and services to customers who are part of the same industry and, in certain cases, the same geographic region. Traditional commerce depends on keeping open for a set time period, housing inventory, or running a retail space. Traditional commerce frequently ni depends on in-person interactions with customers and thrives on word-of-mouth, networking, and repeat business from existing customers. U Advantages 1. Easy access to products: All the necessities for daily life are readily available in the neighbouring stores, and they may be easily acquired. ity 2. Simple to approach: Traditional markets pose less challenges. The buyer only needs to provide a method of payment and visit the store of their choice. 3. Personal contact: As there is more direct contact between the customer and the retailer, a more personal relationship develops. m 4. The most preferred choice for a backward location is the traditional method of purchasing goods because current technology is not readily available there. 5. Regional goods: Traditional markets are a good place to find well-liked goods from )A a particular region. 6. Products are readily available, allowing customers to really touch and examine the goods they have decided to purchase until they are completely happy with both the quality and quantity. (c 7. Credit availability: Because consumers and retailers typically develop a close connection based on trust, it is possible to purchase goods on credit in case of cash shortages. Amity Directorate of Distance & Online Education  Fundamentals of Ecommerce 3 8. Suitable for all socioeconomic structures: Anyone can start a firm in a conventional Notes e market, regardless of education level—whether they have a college degree or none. 9. Perishable goods: Products like milk, fruits, vegetables, and sweets that need to be in consumed quickly can be found in traditional markets. Disadvantages nl 1 Limited geographic area: The complicated city structures leave little room for market activities. 2 Less diversity of products is available because most merchants only carry the more O popular or niche brands, making it challenging to find a wide range of products. 3 Time-consuming and exhausting procedure – Making a purchase is a time- consuming and exhausting process because it takes a lot of time and effort to ty actually go to the market and buy things. 4 The conventional market must be taken into mind for the purchase because it takes a lot of time to acquire things, therefore time management becomes a crucial factor. si 5 Costlier – As a result of the hierarchy present in traditional markets, goods costs have gone up. 6 Weather-dependent - Because the purchasing and selling of goods is weather- r dependent, market activities are challenging to carry out in severe weather. ve 7 Lack of global items: In the traditional market, it is difficult to find global products because stores sell biassed goods. 8 Limited payment options: The majority of retailers prefer cash to all other payment methods. Thus, the consumer has few payment options. ni 9 More corruption: The majority of shops sell their goods without creating valid invoices and do not collect any sales tax, which ultimately leads to more corruption. U As a result, economic growth is decreased. 1.1.2 Growth of Internet and the Web Numerous aspects of our lives have been impacted by the internet. It began as ity something that would alter how we use computers, and as it spread, it had an effect on communication, research, sales, entertainment, and a plethora of other areas. Email addresses, websites, apps, and downloads are just a few examples of the new vocabulary that has emerged along with it and entered our everyday vocabularies. m The world we live in has changed as a result of the internet and the web, and as a result, it has continued to grow and evolve. )A The internet is sometimes seen as an ongoing, incomplete undertaking. There are many possible paths it could go, and many parties have an interest in directing or managing its course. It’s crucial to understand the origins of the web and where it might go in the future as a tool for profit and communication. (c The Internet or the Web It’s helpful to define two crucial concepts that we’ll use in this essay before moving Amity Directorate of Distance & Online Education  4 Fundamentals of Ecommerce on. Although the terms “internet” and “web” are frequently used interchangeably, we’re Notes e distinguishing them here to provide some clarification. The nomenclature used for the internet and the web is examined in this article. in We’ll look at the development of the web as well as the history of the web to understand how things got started. This knowledge will give us the best background for speculating about potential future developments and how we envision using the internet in the next nl years. The network of computers where you may access information, send emails, and share files is known as the “internet.” It’s a type of infrastructure that allows the web to O function. We refer to the internet as the global network of interconnected computers and routers. The pages and material you view when using a device make up the web, on the ty other hand. Although it is a programme or information system that you can access over the internet, it is also an infrastructure. The world wide web is another moniker for it, which you’ll recognise from website URLs. This is frequently abbreviated to “the web,” and you may also say “online,” which refers to things that you may do and access on si the web via the internet. History of the Internet r In the 1960s, the Internet was first used as a research project. Numerous ve researchers, scientists, and technologists paved the path. The Advanced Research Projects Agency Network (ARPANET) developed a prototype that sent the first message from a computer at UCLA to one at Stanford University in 1969, putting the idea of a “galactic network” of computers into effect. ni Transmission Control Protocol and Internet Protocol (TCP and IP), which may sound familiar, were invented in the 1970s. In the 1980s, they were employed by ARPANET to expand the network, giving rise to the internet. U But it didn’t take on the shape that we are familiar with today until the 1990s. Tim Berners-Lee first introduced the idea of the Web, a system for gaining access to data via websites, in 1989. Later came the first websites and search engines. The ity World Wide Web’s source code was made available online, where it was shaped by contributions and teamwork. Evolution of the Web m The web has continued to place collaboration and information sharing at the core of its design since its inception. It has been shaped by its users as a versatile tool and information service, while others have used it to serve their own purposes. )A The web changed after it was created. Iterations one and two are frequently referred to as stages of development, while version three is planned. Others, however, consider these alternate applications as having the potential to develop as well as overlap. The development of the web has been influenced by both technology and user interaction. We need the ability to make it happen, such as the protocols necessary to (c construct the internet, for it to advance or evolve. We also require the concept, like Tim Berners-conception Lee’s and implementation of a data access method. Amity Directorate of Distance & Online Education  Fundamentals of Ecommerce 5 The internet is a technology that has showed great potential and has been able to Notes e considerably advance humankind. The Internet and other communication technologies have been extremely successful in enabling nations to “jump frog” and catch up in their development plans. In fact, it serves as an actor in the nation’s system of technological in advancements for other technologies at the moment. But how has the internet influenced people’s lives and our own development and actions? nl The explanation can be found in its own, parallel to ours, expansion over the years after the launch of the World Wide Web (WWW). The World Wide Web today has more than 850 million websites and serves the extraordinary range of requirements of over 3 billion people, up from just 130 websites and over 14 million users in 1993. O [Live internet statistics] The global corporations with prominent names below are so dominant in today’s society’s service, information, and social spheres that it is difficult to imagine a world without them. For instance, the fact that Google currently processes ty over 40,000 search queries per second on average [internet live stats] demonstrates the general public’s growing interest in knowledge and the ease with which it is now accessible worldwide, which was difficult to do 20 years ago. si The crowding of popular websites over time, which sheds insight on the spread of the internet and the rise in user demands, and the interconnection of the internet with other technical ecosystems are two noteworthy elements that can be drawn from r the below figure (Spotlight in Iphone by Apple, a typical electronic device being an ve example). ni U ity m )A (c Figure: The timeline of World Wide Web from 1990 to 2007 Amity Directorate of Distance & Online Education  6 Fundamentals of Ecommerce Rise of the cyberspace - when it all began Notes e in nl O ty Figure: Internet and its growth over the years si The Internet is the ideal illustration of a widely disseminated technology that had spillover effects from R&D in the defence industry. A significant historical event was the establishment of the US Defense Advanced Research Projects Agency (DARPA) r and the development of technology (see Figure above) that was made available to the ve general public. Without regard to a person’s physical location, the Internet serves as a means of information exchange and a platform for cooperation and interaction between users and their computers. One of the best examples of the advantages of ongoing research and development in the field of information technology is the Internet. ni When compared to the expansion of previous technologies, the internet has expanded incredibly quickly. Internet, on the other hand, can appear to be a sophisticated technology at first, but it actually began as a digital archive of many U papers that kept expanding into the web area. ity m )A Figure: Global Internet Users (Source: internetlivestats.com) Figure: Internet User Density (2014) (Source: World bank) The technique emerged about 1993 and has since developed rapidly. Although the (c system follows the general S-Curve after conducting a regression on the provided data, the diffusion, which is in its middle stage (and still increasing), does not exhibit any signs of saturation (above Figure Global Internet Users) for causes and developments. Amity Directorate of Distance & Online Education  Fundamentals of Ecommerce 7 The majority of the world’s population makes up the internet’s potential market, Notes e according to NCBI. Only 46.1% of the world’s population currently has access to technology, which could make the technology’s impressive statistics misleading. Additionally, the average obscures the regional disparity (see Figure Internet User in Density), which is covered in more detail in later Sections. The expansion of the internet has produced a number of results and the creation of nl approaches in the study of human development. Internet has been used by a number of states and non-state players to either create new systems, expand the human population, or improve upon methods that already exist. Today, many countries use the ideas of education, e-commerce, e-governance, and ICT4D. Technology has not only O aided human development, but the advancement of technology has also had a strong correlation to each nation’s Human Development Index (HDI) (see below Figure), which suggests that people who are more advanced (based on the HDI’s underlying metrics, ty such as literacy) have quicker access to the internet, which also suggests that there is a digital divide. r si ve ni U Figure: Plot of HDI vs growth of internet users of various nations. ity There have been many changes in how people connect with their surroundings because to the internet. It is one of the pivotal technologies in the information and communications technology (ICT) field that has significantly shaped the societal standards of today. m Social Networking Human to human interactions have changed as a result of the internet. Early adoption of emails and anonymous messaging services in the late 1990s contributed )A to the development of new forms of interpersonal and professional communication. It became one of the most popular methods of information transfer via the internet as a result of less expensive personal computers and an increase in internet users. Social networking sites are a new category of social interaction platform that (c emerged with the launch of Friendster in 2002. (SNS). By definition, these platforms are services that let users build a public or semi-public avatar that can then be used to build a list of users with whom they have connections. As social networking sites (SNS) Amity Directorate of Distance & Online Education  8 Fundamentals of Ecommerce evolved over time, they came to dominate how people spent their online time. Since Notes e then, they have evolved into a platform for social interaction and discussion as well as e-commerce, education, the distribution of media and entertainment, and sociopolitical activities. According to a quotation from Castells, “There is a huge increase in in sociability, fostered and dynamized by constant connectedness and social networking on the web. Many television reports just examine one aspect of the problem; they ignore the rise in online sociability in favour of simply social face-to-face interactions, nl reporting what may not be actual decreases in sociability trends. People can now connect with one another on SNSs with similar interests as they would in real life, but without any restrictions. on time and space. O 1.1.3 Comparison between Traditional and Electronic Commerce Despite the fact that e-commerce and traditional commerce have the same ty goals and objectives, they can be distinguished based on their differing business processes. In e-commerce, the Web and telecommunications technology are crucial. In e-commerce, there may not be a physical store and the customer and seller almost always do not interact. The majority of the time, conventional commercial activities si are used in business processes quite effectively, and these procedures do not require technological enhancement. When customers want to touch, smell, or inspect the things, it is highly challenging to sell through online commerce. r ve Example If customers are unable to closely inspect the goods before making a purchase, they could be reluctant to buy high fashion apparel or food items. ni On the other hand, traditional retail merchants have years of experience in designing a store environment that encourages a customer to make a purchase. Sales professionals might acquire abilities that enable them to recognise customer demands and locate goods and services that satisfy those needs. As a result, using an electronic U medium to practise the skill of personal selling and merchandising is challenging. One copy of a new book or CD is the same as all other copies, making branded products like books or CDs simple to sell online. The ability of a Web site to offer a larger assortment ity of goods and services, as well as the ability to browse, are what set e-commerce apart from traditional commerce. Differences between Traditional Commerce and E-Commerce m Point of E-commerce Traditional Commerce Difference Cost Effective E-commerce is economical. Since For the purpose of marketing the )A there is a direct line of communication company’s goods, middlemen between the company and the clients, must be paid. The overall the expense associated with middlemen overhead expense is higher. is avoided.. Running an e-business A typical business must have requires far less overall overhead. An a central office and numerous (c e-business just needs a head office to outposts to serve consumers operate. who are spread out across the country. Amity Directorate of Distance & Online Education  Fundamentals of Ecommerce 9 Time Customers and businesses both save a A transaction takes a long time Notes e great deal of time. Through the internet, to execute. a product may be ordered and the in transaction can be finished in a matter of minutes. Convenience It makes customers and businesses It is not as convenient as online nl more convenient. Due to the website’s shopping. To find and buy a accessibility essentially from anywhere desired goods, customers must at any time over the internet It is not leave their house or place of necessary to move away from their work employment. O place or home to locate and purchase a desired product Accessibility From a regional to a worldwide Growing the market from a ty level, the market’s size can be easily regional to a national level might increased. A company can enter the not be simple. For business worldwide market by hosting a website. enterprises to access the global Attracting customers from international market, there are significant costs si marketplaces is simple and inexpensive. Introduction of It is easy to offer a product on the website The process of introducing new product and gain the immediate feedback of the buyers. The products can be redesigned r a new product and gauging consumer reaction is time- and ve and updated for a successful launch money-consuming. To begin with, based on the feedback. expenses must be paid to conduct pilot surveys to determine the preferences of the clients. ni Profit By boosting sales, reducing expenses, The overhead, inventories, and streamlining administrative inventory costs, and limited sales procedures, it enables the company to in traditional commerce reduce U make higher profits. profit. Physical It prohibits the inspection of products Products may be physically Inspection physically. inspected before buying. ity Time Round the clock service is available. Business is open only for a limited time. Product It is inappropriate for perishable Perishables and “touch and feel” suitability commodities and expensive stuff like products are appropriate jewellery and antiquities. It works best m for buying software, books, music, and tickets. Human Technically competent personnel who It doesn’t experience these )A resources have the desire to stay current in a human resources-related issues. constantly changing world are needed. It struggles to attract and keep talented employees. (c Customer Screen-to-face communication takes There is face-to-face engagement interaction place between the company and the between the company and the customer. customer. Amity Directorate of Distance & Online Education  10 Fundamentals of Ecommerce Process Automated transaction processing Due to the manual processing of Notes e reduces clerical errors in commercial business transactions, there is a transactions. possibility of clerical errors. in Business End-to-end relationships in business are Vertical or linear business relationship what make them unique. relationships are common. Fraud Many cyber frauds occur during Due to the personal relationship nl e-commerce transactions. Most people between the consumer and seller, are hesitant to disclose their credit fraud in traditional commerce is card information. Due to a lack of relatively lower. O physical presence in marketplaces and murky legal difficulties, e-business transactions are vulnerable to fraud. Information Less reliance on interpersonal Heavy reliance on interpersonal ty sharing information sharing. It offers a universal information sharing. There isn’t platform to promote commercial a standardised platform for endeavours all across the world. knowledge transmission because si interpersonal communication is so important. Method of It is possible to communicate Synchronous communication r Communication asynchronously. Electronic systems automatically decide when to carry out is used. Each communication or transaction requires manual ve transactions or convey communications intervention. to the appropriate parties. Strategy A consistent plan is simple to establish It is challenging to create and and keep up. keep up with standards of ni conduct. 1.2 E-Commerce U Electronic commerce is the purchase and sale of goods and services over the Internet. The idea has been expanded to encompass all business processes involved in a sales cycle. The line separating e-business from e-commerce has blurred. Although ity the terms “ecommerce” and “electronic commerce” have been used interchangeably, “electronic business” has not been a phrase that is frequently utilised. The term “ecommerce” refers to businesses and individuals that purchase and resell goods and services online. E-commerce can be done on computers, tablets, m cellphones, and other smart devices, and it operates in a variety of market categories. E-commerce transactions make almost every good or service conceivable accessible, including books, music, airline tickets, and financial services like stock trading and )A online banking. It is seen as a very disruptive technology as a result. 1.2.1 What is E-Commerce? Electronic commerce is referred to as e-commerce. Its purpose is to transfer information about finances and other aspects of trade via telecommunications and (c information technology. Amity Directorate of Distance & Online Education  Fundamentals of Ecommerce 11 Key Terms in E-Commerce Notes e E-commerce refers to the buying and selling of products and services online. Computers, tablets, cellphones, and other smart devices are used to conduct it. in Today, almost anything can be bought online; as a result, e-commerce is frequently very competitive. nl It can take the place of physical storefronts, while some companies decide to keep both. Business-to-business, business-to-consumer, consumer-to-consumer, and O consumer-to-business are just a few of the market segments in which e-commerce is active. E-commerce, or electronic commerce, is a modern business practise that aims ty to meet the needs of companies, suppliers, and clients by lowering costs, enhancing product quality, and accelerating delivery times. E-commerce describes the following methods for exchanging commercial information without using paper. si Electronic Data Exchange (EDI) Electronic Mail (e-mail) Electronic Bulletin Boards Electronic Fund Transfer (EFT) r ve Other Network-based technologies E-commerce is the idea of using the internet to do business more effectively and quickly. ni E-commerce is the practise of conducting transactions involving the sale and purchase of products and services over the Internet or through a computer-mediated network without the use of paper documentation. U Electronic commerce, sometimes known as e-commerce, covers a broad spectrum of online business ventures involving goods and services. Additionally, it applies to “any type of economic transaction in which the participants communicate electronically as ity opposed to through direct physical contact or exchanges.” Business conducted without the exchange of paper-based documents using computers, telephones, fax machines, barcode readers, credit cards, automated teller machines (ATM), or other electronic devices. It comprises ordering, processing m transactions, authenticating payments, maintaining inventories, and providing customer service. Business to business or B2B (Cisco), business to consumer or B2C (Amazon), and consumer to consumer or C2C (eBay) are the three subcategories of e-commerce. )A The term “e-commerce” refers to conducting business over the Internet using any Internet-dependent applications, including e-mail, instant messaging, shopping carts, Web services, UDDI, FTP, and EDI, among others. A particular kind of business model, or component of a broader business model, that lets a company or a person to conduct business over an electronic network, usually (c the internet. All four of the main market segments—business to business, business to consumer, consumer to consumer, and consumer to business—are served by electronic Amity Directorate of Distance & Online Education  12 Fundamentals of Ecommerce commerce. By offering a less expensive and more effective distribution channel for their Notes e goods or services, e-commerce has helped businesses create a market presence or strengthen an already strong position. in Examples of E-Commerce Online book shopping is done by a person. nl A government worker uses the internet to book a hotel room. Using the seller’s interactive telephone system, a firm places an order for a computer by dialling a toll-free number. O Office supplies are purchased by a company online or through an electronic auction. A retailer places product orders through the extranet of a supplier or an EDI ty network. Using the company’s intranet, a manufacturing plant places an order for electronic components from another unit inside the organisation. si An individual uses an ATM to withdraw money (ATM). accepting credit cards for internet business transactions r Using an intranet to circulate information within a firm ve driving manufacturing and distribution with partners on an extranet across a value chain Selling to customers via a website, a pay-per-download model, etc. ni Business-to-business (B2B), business-to-consumer (B2C), extended corporate computing (also known as “newly emerging value chains”), d-commerce, and mobile commerce are all included in the concept of e-commerce. E-business, or more U especially, its trading component, is what e-commerce is. Despite the fact that there are numerous e-commerce explanations and definitions, the following one makes a distinct distinction. ECommerce has numerous definitions and ways of being understood. These are what they are: ity m )A (c Amity Directorate of Distance & Online Education  Fundamentals of Ecommerce 13 Since its inception in 1995, electronic commerce in the United States has Notes e expanded from a zero-sum game to a $600 billion retail, travel, and media industry and a $6.7 trillion business-to-business juggernaut. This growth has resulted in significant changes to business organisations, markets, and consumer behaviour. Businesses in and economies all throughout the world are experiencing similar effects. E-commerce itself has evolved over this very short period of time from its origins as a method for online retail sales into something far wider. E-commerce is now the platform for media nl as well as novel, exclusive services and capabilities that aren’t available anywhere else. Facebook, Twittter, Google search, and a host of other recent online breakthroughs like Pinterest, iTunes, and Tumblr have no analogues in the real world. The biggest O entertainment platform will soon be the Internet instead of television. The new e-commerce is here; welcome! Over the next five years, e-commerce is expected to maintain double-digit growth ty rates and continue to be the fastest-growing sector of the economy. E-commerce of all types will define business and society in the twenty-first century, much as automobiles, aeroplanes, and electronics did for the twentieth century. Both traditional businesses like Walmart, Ford, IBM, Macy’s, and General Electric and internet businesses like si Google, Amazon, Apple, Facebook, Yahoo, Twitter, and YouTube are accelerating the transition to an e-commerce economy and society. In order to be successful managers in the upcoming decade, business and IT students must have a solid foundation in e-commerce. r ve The traditional forms of retail e-commerce and services continue to be important and have shown to be more resilient than traditional retail channels in facing the economic recession, even though companies like Facebook, YouTube, Twitter, Pinterest, and Uber have grown explosively in the last two years and capture our ni attention. This book also focuses on the experience of these companies from 1995 to the present. These businesses stand out because they are successful, long-lasting, effective, innovative, and have strong brand names. U Many of these seasoned retail and service companies, like eBay, Amazon, E*Trade, Priceline, and Expedia, are holdovers from the initial e-commerce era. In order to become profitable, these organisations that have persisted have modified their ity revenue sources, merged their online and offline activities, and evolved their business strategies. Students’ ability to operate their own businesses in the present omni-channel business climate will be aided by their understanding of how these internet businesses were successful. m Ignoring the lessons from the early days of e-commerce would be stupid. Automobiles, electricity, telephones, television, and biotechnology are just a few examples of prior technological revolutions that had an initial burst of entrepreneurship before becoming consolidated. The early phase survivors were establishing successful )A enterprises by 2005 while continuing to grow their revenue quickly. In 2016, the e-commerce industry is seeing a brand-new wave of brisk entrepreneurship that is concentrated on on-demand services, social media, and the mobile platform made possible by smartphones and tablets. (c Our personal lives, markets, industries, small enterprises, and society at large are undergoing remarkable transformations as a result of these technology and Amity Directorate of Distance & Online Education  14 Fundamentals of Ecommerce social behaviours. In every industry, from marketing to management, entrepreneurial Notes e studies, and information systems, e-commerce is creating thousands of new jobs. E-commerce is now a common practise among well-established companies with the market recognition and financial resources needed for the long-term implementation in of e-commerce technology and procedures. If you work for an established company, chances are that the success of the company depends on its ability to conduct business online. nl The way individuals purchase for goods and use services has changed as a result of e-commerce. More and more individuals are using their computers and other electronic devices to place orders for products that can be delivered right to O their homes. As a result, it has altered the retail environment. Due of their enormous popularity, Amazon and Alibaba have forced established retailers to alter the way they conduct business. ty That’s not all, though. Individual merchants have been participating in ecommerce transactions more frequently through their own personal websites, not to be outdone. Additionally, several buyers and sellers congregate on online marketplaces like eBay si and Etsy to transact business. Factors Fueling E-Commerce r Economic causes, marketing and consumer contact factors, and technical factors, ve notably multimedia convergence, are the three main driving forces behind e-commerce. 1 Economic Factors: One of e-most commerce’s obvious advantages is its increased economic efficiency. Lower global information sharing and advertising costs, quicker and more affordable electronic transactions with suppliers, and more affordable ni customer service alternatives can all help to achieve this. Either internal or external economic integration is possible: a) Internal integration refers to the networking of business activities and U procedures within a company as well as the electronic communication between distinct divisions. Important corporate data should be stored digitally so that it may be retrieved instantly and sent electronically. Internal integration is best demonstrated by a business intranet. ity b) External integration is the electronic communication that takes place in a virtual networking environment using the Internet as the medium between businesses, suppliers, clients or consumers, and contractors. m 2 Market and Customer Interaction Factors: E-commerce is urged to be used by businesses for marketing and product promotion in order to reach global markets. Similar to this, customer service and support are enhanced through the usage of the Internet. Additionally, businesses can use the Internet to give their target customers )A more in-depth product and service information. Example Brazil’s Submarino is the best illustration of the effective application of the Internet (c for improved customer assistance and service. Despite being a local Sao Paulo B2C e-commerce company in Brazil, it is the first largest company to sell books, CDs, Amity Directorate of Distance & Online Education  Fundamentals of Ecommerce 15 video cassettes, DVDs, toys, electronic and computer products in Argentina, Mexico, Notes e Spain, and Portugal. Submarino has improved its customer service by providing other merchants with logistical and technological infrastructure as well as knowledge and skills in areas such as credit analysis, order tracking, and product comparison tools. in 3 Technology Factors: The development of ICT is the primary driver of e-commerce expansion. The digitization of material, compression, and the promotion of open nl systems for the fusion of communication services onto a single platform have all been greatly aided by technology. As a result, separate networks for cable television, broadcast television, telephone services, and Internet access have been built up. Having a single information source implies lower communications costs from the O perspective of organisations. Additionally, the universal access ideals have been made a reality because to technological convergence. Currently, telecommunications firms are negatively ty impacted by the costs associated with constructing telephone landlines in rural areas. Instead than just charging for local and long distance phone calls, the revenue from establishing landlines may be more alluring if it also includes cable TV and internet si fees. The government will benefit from this deployment by reducing the cost of putting in pricey landlines and giving people in rural areas access to information at a reasonable price. 1.2.2 Origin and Growth of E-Commerce r ve Most of us have participated in e-commerce because we’ve all done some sort of online shopping. It follows that e-commerce is prevalent everywhere. However, very few people would be aware that e-commerce has a history that predates the creation of the ni internet. E-commerce has its roots in the Electronic Data Interchange, a method that businesses utilised to make document transfers easier in the 1960s. The very first U transaction did not happen until 1994. This included friends buying and selling a CD online using the retail website NetMarket. Since then, the industry has undergone a tremendous lot of change, leading ity to significant evolution. As businesses like Alibaba, Amazon, eBay, and Etsy grew well-known, traditional brick-and-mortar merchants were compelled to adopt new technologies in order to survive. These businesses established an easily accessible virtual market place for products and services. m People’s ability to shop online is being facilitated by new technology. By downloading applications, customers may engage with businesses via smartphones and other devices and make transactions. The advent of free shipping, which lowers prices for customers, has also contributed to the ecommerce sector’s rise in popularity. )A E-history commerce’s is the tale of how information technology has changed how businesses operate. Some scholars trace the beginnings of e-commerce all the way back to the development of the telephone at the turn of the 20th century. When it comes to e-commerce, which is defined as the networking of business communities and the (c digitalization of corporate information, EDI (Electronic Data Interchange) is sometimes regarded as the birth of the industry. Amity Directorate of Distance & Online Education  16 Fundamentals of Ecommerce Since the 1960s, large organisations have made investments in the development Notes e of EDI. It took until the 1980s for it to become a reasonable concept. For a number of reasons, EDI has never attained the level of popularity of internet-based ecommerce. in Small and medium-sized firms were unable to participate in electronic commerce due to the high cost of EDI. The expansion of EDI was hampered by the slowly developing standards. nl Because of the difficulty in creating EDI applications, only a small user base may benefit from its adaption. O The Advanced Research Projects Agency, a Department of Defense institution, supported research into computer networking in 1969, which led to the creation of the Internet and the Web. Without the development of the World Wide Web in the 1990s, the Internet might have become more like EDI. In a speed that had never been seen ty before, the Web rose to become a well-liked mainstream media (considered as the fourth mainstream medium in addition to print, radio, and TV). In 1995 and 1996, the number of Web users and the amount of material virtually doubled every few months. The stock bubble in the 1990s was powered by the internet and telecommunications si technologies, which eventually drove the NASDAQ above 5,000 in 2000 before it plummeted to 1,200 in 2002. r Online services and XML In addition to the accessibility of technical infrastructures, the ease of HTML writing and low access costs of the Web are major factors in its ve appeal. These factors are barriers to EDI development. The technical challenges of EDI have been handled by the Internet and the Web, but the issue of the delayed development of e-commerce standards has not been resolved. ni In a range of business communities, XML, which is a meta markup language, offers a development tool for specifying the format of data transfer. An adaptable and powerful architecture for the implementation is provided by Web Services. Without a question, U XML and Web Services will influence how e-commerce develops in the years to come. Electronic funds transfer, or EFT, which allowed money to be transported electronically from one organisation to another, is credited with launching the first e-commerce applications in the early 1970s, especially among financial organisations. ity However, only major firms, financial institutions, and a few other bold businesses used these applications. Then came electronic data interchange (EDI), a technology that made it possible to send common documents electronically. Later, EDI moved beyond financial transactions to encompass other kinds of activities (see Online Tutorial T2 for m more on EDI). The next wave of innovative EC applications included everything from online stock trading to reservation systems for travel. The U.S. government launched the Internet in 1969 as an experiment, and the )A majority of its early users were scientists and university scholars. Some people began posting personal classifieds online. The World Wide Web’s (also known as “The Web”) launch in the early 1990s marked a significant turning point in the evolution of EC. This made it possible for businesses to create a text- and image-rich online presence. The phrase “electronic commerce” was first used in the early 1990s, when the Internet (c started to be used for business purposes and users started flocking to participate in the World Wide Web. Applications for EC grew quickly. Additionally, a significant number of so-called dot-coms, or Internet start-ups, emerged. Amity Directorate of Distance & Online Education  Fundamentals of Ecommerce 17 The majority of businesses in developing nations are online. Tens of thousands Notes e of pages and links can be found on several of these websites. B2C to B2B was the focus of EC in 1999, and B2B to B2E, c-commerce, e-government, e-learning, and m-commerce in 2001. Social networks, mobile commerce, and wireless apps all saw a in significant increase in attention in 2005. EC added social commerce channels in 2009. The rising commercial activity on Facebook and Twitter serves just one illustration. Technology and Internet usage being what they are, EC will definitely continue to nl develop, add new business models, and alter. Success stories for EC are multiplying. See Plunkett et al. for a thorough ready-reference guide to EC that includes data, trends, and in-depth professional profiles of hundreds of enterprises. O The following must be considered when studying EC’s history. The Interdisciplinary Nature of EC ty You can undoubtedly see that EC is related to a number of different fields from just the brief review of the EC framework and classification. Accounting, business law, computer science, consumer behaviour, economics, engineering, finance, si human resource management, management information systems, marketing, public administration, and robotics are some of the key academic EC fields. The Google Revolution r Early on, businesses like Amazon.com, eBay, AOL, and Yahoo! had an impact on ve EC. However, since 2001, Google has most likely had the biggest influence on EC of any corporation. Google did a much better job than its rivals at connecting web queries to relevant adverts. Google is now much more than just a search engine; it uses numerous cutting-edge EC models, participates in numerous EC joint ventures, and has ni an impact on both organisational operations and personal life. Cyber Monday, Singles’ Day U The amount of purchasing done during Single Day (11/11) in China and Cyber Monday in the United States is an intriguing indicator of the growth of online shopping. In the automotive sector, for Single Day’s size in China. ity Social Commerce By making e-commerce more social, the explosion of social media and networks as well as Web 2.0 tools (such as wikis, blogs) has led to new methods of doing it. m F-Commerce Some people think that Facebook is changing e-commerce, particularly for small enterprises, given the site’s popularity and the quickly expanding commercial activity )A undertaken on or enabled by it. In order to describe the growing significance of Facebook in the field of e-commerce as of 2009, they created the word “f-commerce.” EC Failures (c Many EC businesses, notably those involved in e-commerce and business-to- business exchanges, started to fail starting in 1999. The well-known B2C flops include Amity Directorate of Distance & Online Education  18 Fundamentals of Ecommerce Boo, eToys, MarchFirst, Drkoop, and MarchFirst. The B2B failures Webvan, Chemdex, Notes e Ventro, and Verticalnet are well-known. (Incidentally, David Kirch’s Business Plan Archive details the history of these trailblazing businesses ( businessplanarchive. org ). According to a Strategic Direction poll from 2005, only 50% of dot-coms had in any marketing experience, and 62% lacked financial abilities. Similar to this, a lot of businesses lacked sufficient order fulfilment and inventory to meet the fluctuating and growing demand for their goods. nl EC Successes EC enterprises including eBay, Pandora, Zillow, Google+, Facebook, Yahoo!, O Amazon.com, Pay Pal, Pinterest, VeriSign, LinkedIn, and E*TRADE have grown tremendously during the past few years. Companies with a physical presence, like Cisco, Target, General Electric, IBM, Intel, and Schwab, have also been very successful. Startups like Alloy are one example of more success stories. ty E-commerce timeline 1969: Using a dial-up connection, Dr. John R. Goltz and Jeffrey Wilkins start si CompuServe, the first substantial eCommerce business. eCommerce was initially launched at this period. r Michael Aldrich created electronic shopping in 1979. (he is also considered as founder or inventor of eCommerce). This was accomplished by using a telephone ve connection to connect a transaction-processing computer with a customised TV. For the transfer of secure data, this was done. 1982: Boston Computer Exchange introduced the first eCommerce platforms as a result of the ongoing advancements in technology, particularly in the field of ni electronics. 1992: Charles M. Stack’s online bookstore Book Stacks Unlimited was first U introduced in the 1990s, which propelled online commerce to a new level. It was one of the earliest online stores ever built. 1994: Marc Andreessen and Jim Clark’s Netscape Navigator, a web browser tool, was released. It operated on the Windows operating system. ity 1995: The founding of eBay and Amazon was a watershed moment in the history of online commerce. Jeff Bezos founded Amazon, whereas Pierre Omidyar founded eBay. m In 1998, PayPal introduced the first eCommerce payment system as a means of sending money. 1999: Alibaba launched its online marketplace that year with a capital investment )A of about $25 million. It eventually developed into a major eCommerce player. In order to assist shops in utilising the pay-per-click (PPC) context, Google introduced the first online advertising tool named Google AdWords in the year 2000. (c The four years saw the development of eCommerce in the following ways: ◌◌ 2005: Amazon developed the Amazon Prime programme to offer customers Amity Directorate of Distance & Online Education  Fundamentals of Ecommerce 19 free two-day shipping for an annual fee. In order to help small and medium- Notes e sized shops sell products online, Etsy was established in 2005. ◌◌ Jim McKelvey and Jack Dorsey started in 2009. in ◌◌ 2005 sees the birth of Square, Inc. as an app-based business. ◌◌ 2005 saw the launch of BigCommerce, an online shop platform, by Eddie Machaalani and Mitchell Harper. nl The years experienced massive development in the sphere of eCommerce, such as: ◌◌ 2011: Google releases a payment app for its online wallet O ◌◌ 2011: One of Facebook’s initial initiatives to introduce sponsored stories for advertisers ◌◌ 2014:Apple introduced the online payment programme Apply Pay. ty ◌◌ 2014: 2014 saw the establishment of the online shopping website Jet.com. ◌◌ 2017:Shoppable tags are now available on Instagram, allowing users to make direct sales from the social media network. si 1.2.3 Advantages and Issues in E-Commerce Advantages and Disadvantages of E-Commerce: r ve E-Commerce advantages can be broadly classified in three major categories – ◌◌ Advantages to Organizations ◌◌ Advantages to Consumers ni ◌◌ Advantages to Society Advantages to Organizations U Organizations can use e-commerce to grow their business to domestic and worldwide markets with a minimal capital outlay. A company can simply find additional clients, the best suppliers, and qualified business partners all around the world. ity By digitising the information, e-commerce enables businesses to lower the cost of producing, distributing, retrieving, and managing paper-based information. E-commerce helps the company’s brand image. m E-commerce enables businesses to offer superior client services. E-commerce facilitates the streamlining, acceleration, and efficiency of business processes. )A Paperwork is reduced through e-commerce. Organizational productivity is raised through e-commerce. It supports supply management of the “pull” variety. With “pull” supply management, a business procedure begins when a client request is received and just-in-time manufacturing (c is used. Amity Directorate of Distance & Online Education  20 Fundamentals of Ecommerce Advantages to Customers Notes e It offers assistance around-the-clock. Customers can make inquiries about a good or service a