Submitted by: Asmita Maharjan (1921021015)

E-commerce
Proposal
As a symbol of globalization, e-commerce represents the cutting edge of success in today’s
digital era. The number of Internet users around the world has been steadily growing and this
growth provides the impetus and the opportunities for global and regional electronic commerce.
However, with Internet, different characteristics of the local environment, both infrastructural
and socioeconomic, have created a significant level of variation in the acceptance and growth of
electronic commerce in different regions of the world. The purpose of this study is to briefly
discuss the above statements.
Theory
E-commerce means electronic commerce and pertains to business or trading in goods and
services through the electronic channel, i.e. the Internet, TV and phone. On Internet, it pertains to
a website, which sells various products or services directly from the website using a shopping
cart or shopping basket system and allows credit card or electronic payments. It involves
conducting business with the help of the electronic media, making use of the information
technology such as Electronic Data Interchange (EDI). In simple words, we can say that
Electronic commerce involves buying and selling of goods and services over the internet or
World Wide Web. Online customers can purchase anything right from a car or a cake sitting
comfortably in their room and gift it to someone sitting miles apart simply by a click of mouse.
Electronic commerce (or e-commerce) encompasses all business conducted by means of
computer networks and electronic devices. Advances in electronic communications and
computer technologies in past few recent years have made computer networks and
communication an integral part of the economic infrastructure. Daily more and more companies
are facilitating transactions or services over web. There has been tremendous competition to
target each and every mobile and computer owner who is connected to the Web through internet.
Although business-to-business transactions play an important role in e-commerce market, a share
of e-commerce revenues in developed countries is generated from business to consumer related
transactions. E-commerce provides many benefits to the consumers in form of availability of
goods at lower cost, wider choice/variety and saves time. People can buy goods and services
with just a click of mouse button without moving out of their house or office. Business to
business transactions will represent the largest revenue generation but online retailing over
internet will also enjoy a drastic growth. Online businesses like financial services, travel,
entertainment, and groceries are all likely to grow in coming years.
E-commerce business are not solely the Internet, websites or dot com companies. It is about a
new business concept that incorporates all previous business management and economic
concepts. As such e-commerce business impacts on many areas of business and segments of
business management studies. For example: Marketing, Computer Sciences, Finance &
Accounting, Economics, Production & Operations Management, Management Information
System, Human Resource Management and Business Law & Ethics.
Benefits of E-commerce

 It enhances the quality of life for a whole host of people in society, enabling them to
work from home. Not only is this more convenient and provides happier and less stressful
working environments, it also potentially reduces environmental pollution as fewer
people have to travel to work regularly.
 It enables people in developing countries and rural areas to enjoy and access products,
services, information and other people which otherwise would not be so easily available
to them.
 It facilitates delivery of public services- For example, health services available over the
Internet (on-line consultation with doctors or nurses), and filing taxes over the Internet
through the Inland Revenue website. There is a growing awareness among the business
community about the opportunities offered by e-commerce.
Having said its benefits, following are some of the infrastructural barriers responsible for slow
growth of ecommerce for developing countries.
1. Taxation– Difference in state tax policies, VAT, octroi etc. creates commercial hurdles in
ecommerce business of thin margins. For example- imposing of service tax on
ecommerce transactions may result in making online shopping more expensive.
2. Vendor Management– Even if one’s system may be most advanced, one is needed to deal
within sufficient system of inventory management for product procurement. For updating
the pricing on one’s website there is no mechanism in place to check for daily pricing.
3. Payment Collection and Logistics-Though these both services are in correction mode and
due to this e-commerce industry has witnessed tremendous growth in recent years. Still a
lot of work is required on these two factors. Even payment collection and logistics for
ecommerce industry presents new business opportunities for new age entrepreneurs. If
the product is delivered safe and secure to right person in right time frame, it gives a
seamless experience to user. An honest approach to logistics and payment collection can
multiply growth in coming times.
4. Business of Thin Margins- Ecommerce is a business of thin margins. Following an
aggressive business model cannot be recommended. Even the insurance on high value
shipped articles is needed sometimes, resulting in increasing the cost. Low value items
have significant transportation cost again resulting in increasing the cost.
5. Cyber act and legal system- Though IT has offered many advantages, number of
challenges has been posed to legal system. The information transferred electronically
makes into a contract that raises many issues that cannot be answered by existing
provisions of contract.
6. Electronic transactions does not have any national or international boundaries. So, in case
of any dispute it cannot be resolved with common law principles of that land. As different
nations have different laws for cyber space. The jurisdiction issues cannot include one
nation and hence needs global resolution.
 7. Risk as perceived by online shoppers –Some studies reveal that 23 % of online shoppers
quit even before registration at particular website because of online frauds. This could be
a reason, why credit card penetration in our country is very less (currently only 2% of our
population holds a credit card). Increase in cybercrimes is a great matter of concern
among online shoppers.
8. Price Undercutting Among Ecommerce Players - Due to intense sales competition,
everybody is in cutthroat price war. Even some reports stated that companies are selling
below cost to acquire customers. Recently some companies have shut down shops due to
cut throat price war.
9. Problems with compatibility with older and newer technology: There are problems where
older business systems cannot communicate with web based and Internet infrastructures,
leading to some organizations running almost two independent systems where data
cannot be shared. This often leads to having to invest in new systems or an infrastructure,
which bridges the different systems. In both cases this is both financially costly as well as
disruptive to the efficient running of organizations.
Conclusion
The future of ecommerce industry is quite promising and growing internet users have fueled to
its growth especially among middle class. Today, E-commerce space percentage is getting higher
as more and more online retailers enter the market. Although this level of entry in the
ecommerce market is good from a long-term perspective, the challenge is that most
entrepreneurs don’t have the resources or capital to wait for years before they can get profits.
Major portal sites have also shifted towards ecommerce instead of depending on advertising
revenue. The web communities built around these portal sites with content have been effectively
targeted to sell everything from event and movie tickets the grocery and computers. Banks too
have been very successful in adopting EC and EDI technologies to provide customers with real
time account status, transfer of funds between current and checking accounts, stop payment
facilities. Bank also have put their electronic banking over the internet facilities in place for the
upcoming e-commerce market speed post also plain to clone the federal express story with online
package status at any moment in time.
References
 Ubois, Jeff (1995), “Wheels of Commerce- an Interview with commerce”, pp 62-69
 Megna, Michelle (2008); “E-Commerce Trends for 2008 and 2009”.
 Rastogi, Rajiv; “Country’s report on E Commerce Initiatives”.
Discussion Questions
 What is the effect of e-commerce on audit risks?
 Will the competition of banks with fintechs contribute to the reduction of electronic
online banking fees?