Dr. M.G.R Arts and Science College for Women, Villupuram.

UNIT – I
INTRODUCTION

Definition: Electronic Commerce

The term "Electronic commerce" (or e-Commerce) refers to the use of an electronic medium to
carry out commercial transactions. Most of the time, it refers to the sale of products via
Internet, but the term eCommerce also covers purchasing mechanisms via Internet (for B-To-B).
E-commerce, it is generally described as a method of buying and selling products and services
electronically.

ECOMMERCE TECHNOLOGY AND PROSPECTS

Ecommerce Technology:
Ecommerce technology refers to the tools and systems that enable online businesses to operate
and facilitate transactions. It includes website development, shopping carts, payment gateways,
inventory management, and customer relationship management (CRM) software.
Key technologies in ecommerce include mobile commerce (mCommerce), artificial intelligence
(AI) and machine learning (ML), augmented reality (AR) and virtual reality (VR), voice
commerce, and blockchain.
Mobile optimization is crucial as smartphones and tablets are increasingly used for online
shopping. AI and ML enhance personalization, recommendation engines, chatbots, fraud
detection, and supply chain optimization.
AR and VR provide immersive experiences for customers, enabling virtual product visualization
and virtual showrooms. Voice commerce allows customers to search, order, and make
payments using voice commands. Blockchain ensures secure transactions, supply chain
tracking, and counterfeit prevention.
Ecommerce Prospects:
Omni-channel retailing aims to provide a seamless shopping experience across various
channels, including online stores, physical stores, social media, and marketplaces.
Personalization and customer experience are crucial for ecommerce success, achieved by
understanding customer preferences and offering relevant recommendations and targeted
marketing.
Data analytics and insights help businesses understand customer behavior, market trends, and
sales performance.
Security and fraud prevention measures, such as SSL encryption and secure payment gateways,
are essential for customer trust.

SEMESTER – III ELECTRONIC COMMERCE

 Dr. M.G.R Arts and Science College for Women, Villupuram.

International expansion offers growth opportunities through cross-border selling, multi-

currency support, and localization. Continuous advancements in technology and evolving
customer expectations drive the future prospects of ecommerce.

INCENTIVES FOR ENGAGING IN ELECTRONIC COMMERCE

Global Reach: Ecommerce enables businesses to reach a global customer base without the
need for physical store locations. By operating online, businesses can expand their market reach
beyond geographical boundaries and tap into a larger pool of potential customers.
Cost Savings: Ecommerce eliminates many traditional costs associated with brick-and-mortar
stores, such as rent, utilities, and physical inventory management. This can significantly reduce
operating expenses, making it a cost-effective option for businesses, especially startups and
small businesses.
24/7 Availability: Unlike traditional stores with limited operating hours, ecommerce platforms
are accessible 24/7. This allows businesses to cater to customers' needs at any time, providing
convenience and flexibility. It also means potential sales can occur even when the business is
closed.
Increased Sales and Revenue: Ecommerce provides businesses with the potential for higher
sales volumes and revenue growth. With a global customer base, businesses can attract more
customers, increase brand visibility, and leverage digital marketing strategies to drive sales.
Enhanced Customer Insights: Ecommerce platforms generate valuable data about customer
behavior, preferences, and purchasing patterns. By analyzing this data, businesses can gain
insights into customer needs, personalize marketing efforts, and improve overall customer
experience, leading to higher customer satisfaction and loyalty.
Improved Customer Convenience: Ecommerce offers customers the convenience of shopping
from anywhere, anytime, using their preferred devices. This flexibility allows businesses to meet
the expectations of modern consumers who seek convenient shopping experiences.
Targeted Marketing and Personalization: Ecommerce platforms allow businesses to collect and
analyze customer data, enabling targeted marketing campaigns and personalized product
recommendations. By tailoring marketing messages and offerings to individual customers,
businesses can increase conversion rates and customer engagement.
Scalability and Growth Potential: Ecommerce platforms are highly scalable, allowing businesses
to easily expand their operations as demand increases. Businesses can add new products, reach
new markets, and adapt to changing customer needs more efficiently compared to traditional
retail models.

Competitive Advantage: Engaging in ecommerce can provide a competitive edge in the market.
By leveraging technology and offering a seamless online shopping experience, businesses can
differentiate themselves from competitors and attract tech-savvy customers.

SEMESTER – III ELECTRONIC COMMERCE

 Dr. M.G.R Arts and Science College for Women, Villupuram.

Integration with Emerging Technologies: Ecommerce can integrate with emerging technologies
such as artificial intelligence (AI), virtual reality (VR), and voice commerce, allowing businesses
to stay at the forefront of technological advancements and provide innovative shopping
experiences.
These incentives highlight the potential benefits that businesses can gain by participating in
electronic commerce.

NEEDS OF ECOMMERCE
E-commerce and e-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-business and e-commerce impact on many areas of business and
disciplines of business management studies:
1. Marketing: Issues of online advertising, marketing strategies, consumer‟s behavior and
cultures. One of the areas in which it impacts particularly is direct marketing. In the past this
was mainly door-to-door, home parties and mail order using catalogues or leaflets. This moved
to telemarketing and TV selling with the advances in telephone and television technology and
finally developed into e-marketing spawning „e-CRM‟ data mining and the like by creating new
channels for direct sales and promotion.
2. Computer Sciences: Development of different network and computing technologies and
languages to support e-commerce and e-business, for example linking front and back office
legacy systems with the „web based‟ technology.
3. Finance and Accounting: On-line banking; issues of transaction costs; accounting and
auditing implications where „intangible‟ assets and human capital must be tangibly valued in an
increasingly knowledge based economy.
4. Economics: The impact of e-commerce on local and global economies, understanding the
concept of a digital and knowledge-based economy and how this fits into economic theory.
5. Production and Operations Management: The impact of on-line processing has led to
reduced cycle times. It takes seconds to deliver digitized products and services electronically;
similarly the time for processing orders can be reduced by more than 90 per cent from days to
minutes. Production systems are integrated with finance marketing and other functional
systems as well as with business partners and customers.
6. Production and Operations Management: Moving from mass production to demand driven,
mass customization customer pull rather than the manufacturer push of the past. Web based
Enterprise Resource Planning systems (ERP) can also be used to forward orders directly to
designers and/or production floor within seconds, thus cutting production cycle times by up to
50 per cent, especially when manufacturing plants, engineers and designers are located in
different countries.
7. Management Information Systems: Analysis, design and implementation of E-business
systems within an organization; issues of integration of front-end and back-end systems.

SEMESTER – III ELECTRONIC COMMERCE

 Dr. M.G.R Arts and Science College for Women, Villupuram.

8. Human Resource Management: Issues of on-line recruiting, home working and „intra-
pruners‟ working on a project by project basis replacing permanent employees.
9. Business Law and Ethics: The different legal and ethical issues that have arisen as a result of
a global „virtual‟ market. Issues are copyright laws, privacy of customer information, and
legality of electronic contracts.

ADVANTAGES OF ECOMMERCE
Some key advantages of ecommerce:
Global Market Reach: Ecommerce allows businesses to reach a global customer base without
the need for physical store locations. It eliminates geographical limitations and enables
businesses to expand their market reach beyond local boundaries, potentially leading to
increased sales and revenue.
Convenience and Accessibility: Ecommerce provides a convenient shopping experience for
consumers. They can browse and purchase products or services from anywhere, at any time,
using their preferred devices. This flexibility and accessibility cater to the busy lifestyles and
preferences of modern consumers.
Cost Savings: Ecommerce eliminates many of the costs associated with brick-and-mortar stores,
such as rent, utilities, and physical inventory management. This can significantly reduce
operating expenses, making it a cost-effective option, particularly for small businesses and
startups.
Increased Sales and Revenue: Ecommerce offers businesses the potential for higher sales
volumes and revenue growth. By reaching a larger customer base and leveraging digital
marketing strategies, businesses can attract more customers, increase brand visibility, and drive
sales.
Personalization and Customer Insights: Ecommerce platforms gather valuable data about
customer behavior, preferences, and purchasing patterns. This data can be analyzed to gain
insights into customer needs, enabling businesses to personalize marketing efforts, offer
targeted product recommendations, and enhance the overall customer experience.
Lower Barriers to Entry: Ecommerce reduces the barriers to entry for entrepreneurs and small
businesses. It provides a platform to launch and grow a business without the need for
substantial upfront investments in physical infrastructure. This enables more players to enter
the market and fosters competition and innovation.

Improved Customer Engagement: Ecommerce platforms offer various interactive features, such
as customer reviews, ratings, and social sharing options. These features enhance customer
engagement and allow customers to provide feedback, contributing to a sense of community
and building trust in the brand.

SEMESTER – III ELECTRONIC COMMERCE

 Dr. M.G.R Arts and Science College for Women, Villupuram.

Efficient Inventory Management: Ecommerce enables automated inventory management

systems, streamlining the process of tracking and managing inventory levels. Businesses can
optimize their inventory, reduce the risk of stockouts, and efficiently fulfill customer orders.
Targeted Marketing and Remarketing: Ecommerce platforms allow businesses to target specific
customer segments with personalized marketing messages. Through data analysis and
remarketing techniques, businesses can re-engage with customers who have shown interest in
their products, increasing the chances of conversion and repeat purchases.
Integration with Emerging Technologies: Ecommerce can leverage emerging technologies such
as artificial intelligence (AI), virtual reality (VR), and voice commerce. This integration allows
businesses to provide innovative and immersive shopping experiences, staying at the forefront
of technological advancements.
These advantages highlight how ecommerce has revolutionized the way businesses operate and
how consumers engage in shopping.

DISADVANTAGES OF ECOMMERCE
Here are some key disadvantages of ecommerce:
Lack of Personal Interaction: Ecommerce lacks the personal interaction that customers
experience in physical stores. Customers cannot physically touch, feel, or try out products
before purchasing, which may lead to uncertainty or dissatisfaction with the product received.
Security and Privacy Concerns: Ecommerce involves the exchange of sensitive personal and
financial information. There is always a risk of data breaches, hacking, or fraudulent activities,
which can compromise customer information and erode trust in the ecommerce platform.
Dependence on Technology: Ecommerce relies heavily on technology infrastructure, including
stable internet connections, secure servers, and reliable platforms. Technical issues, system
failures, or cyberattacks can disrupt the shopping experience, leading to frustration for both
businesses and customers.
Logistics and Fulfillment Challenges: Efficient order fulfillment and logistics can be complex for
ecommerce businesses. Managing inventory, coordinating shipping, and ensuring timely
delivery can be challenging, particularly for businesses with high order volumes or international
operations.

Limited Sensory Experience: Online shopping cannot replicate the sensory experience of
physically examining products, particularly for industries like fashion or fragrance. Customers
may hesitate to purchase items without being able to see, touch, or try them beforehand.
Need for Trust and Reputation Management: Building trust and maintaining a good reputation
are critical for ecommerce businesses. Negative customer reviews, product quality issues, or

SEMESTER – III ELECTRONIC COMMERCE

 Dr. M.G.R Arts and Science College for Women, Villupuram.

poor customer service can damage a business's reputation, affecting future sales and customer
trust.
Returns and Customer Service Challenges: Ecommerce businesses must handle returns,
exchanges, and customer inquiries efficiently. Dealing with returns can be costly and time-
consuming, and providing responsive and satisfactory customer service is crucial for
maintaining customer satisfaction.
Digital Divide: Not all individuals have equal access to the internet or the necessary digital
literacy skills. The digital divide can exclude certain segments of the population from
participating fully in ecommerce, limiting their access to products and services.
Intense Competition: Ecommerce has a low barrier to entry, leading to intense competition in
many markets. Businesses need to invest in marketing, differentiation, and customer
experience to stand out and attract customers amidst numerous online competitors.
Loss of Local Businesses: The rise of ecommerce has led to the decline of traditional brick-and-
mortar stores, impacting local businesses and communities. This can result in job losses and the
loss of a sense of community and local shopping experiences.

ECOMMERCE FRAMEWORK
Some of the popular ecommerce frameworks:
Magento: Magento is a widely used open-source ecommerce framework that offers a robust
set of features for building scalable and customizable online stores. It provides a flexible
architecture, extensive customization options, and a large ecosystem of extensions and themes.
WooCommerce: WooCommerce is a popular ecommerce framework built as a plugin for
WordPress, a widely used content management system (CMS). It enables businesses to add
ecommerce capabilities to their existing WordPress websites. WooCommerce offers a user-
friendly interface, various extensions, and seamless integration with other WordPress plugins.
Shopify: Shopify is a cloud-based ecommerce platform that provides a complete solution for
building and managing online stores. It offers an intuitive interface, hosting, security, payment
integration, and a range of themes and apps. Shopify is known for its ease of use and is suitable
for businesses of all sizes.
BigCommerce: BigCommerce is a fully hosted ecommerce platform that provides a
comprehensive set of features for building and scaling online stores. It offers robust product
management, marketing tools, mobile optimization, and integrations with popular payment
gateways and third-party applications.
WooCommerce and Shopify are popular ecommerce frameworks that provide a range of
themes and templates for website design, along with features for product management,
inventory control, payment integration, and order management.

SEMESTER – III ELECTRONIC COMMERCE

 Dr. M.G.R Arts and Science College for Women, Villupuram.

OpenCart: OpenCart is an open-source ecommerce framework that is known for its simplicity
and ease of use. It offers a lightweight and modular architecture, multi-store functionality, and
a wide range of extensions and themes.
PrestaShop: PrestaShop is an open-source ecommerce platform that offers a feature-rich
solution for building and managing online stores. It provides a user-friendly interface, extensive
customization options, and a vast marketplace of modules and themes.

Drupal Commerce: Drupal Commerce is an ecommerce framework built on the Drupal content
management system. It offers a flexible and customizable solution for building online stores,
with features for product management, order processing, and payment integration.
These frameworks provide a foundation for developing ecommerce websites and offer various
features, customization options, and integrations to cater to different business needs. The
choice of an ecommerce framework depends on factors such as business requirements,
scalability, budget, technical expertise, and desired level of customization.

IMPACT OF ECOMMERCE ON BUSINESS

Increased Reach and Market Expansion: Ecommerce allows businesses to reach a global
customer base, expanding their market beyond geographical boundaries. It enables businesses

SEMESTER – III ELECTRONIC COMMERCE

 Dr. M.G.R Arts and Science College for Women, Villupuram.

to target and sell to customers in different regions, increasing market reach and potential sales
opportunities.
Cost Efficiency and Reduced Overhead: Ecommerce eliminates many costs associated with
traditional brick-and-mortar stores, such as rent, utilities, and physical inventory management.
Businesses can operate with lower overhead costs, making it more cost-effective, especially for
startups and small businesses.
Enhanced Customer Convenience: Ecommerce provides customers with the convenience of
shopping from anywhere, at any time, using their preferred devices. Customers can browse,
compare, and purchase products with ease, reducing the need for physical travel and saving
time.
Personalization and Targeted Marketing: Ecommerce platforms enable businesses to collect
and analyze customer data, allowing for personalized marketing efforts. Businesses can offer
tailored product recommendations, personalized promotions, and targeted marketing
campaigns based on customer preferences and behavior.
Improved Customer Insights: Ecommerce generates valuable data on customer behavior,
preferences, and purchasing patterns. Businesses can leverage this data to gain insights into
customer needs, refine product offerings, and improve marketing strategies.
Efficient Inventory Management and Order Fulfillment: Ecommerce systems enable businesses
to automate inventory management processes, ensuring accurate tracking and efficient order
fulfillment. This reduces the risk of stockouts, improves inventory turnover, and enhances
customer satisfaction.
Expanded Sales Channels: Ecommerce allows businesses to sell through multiple channels,
including their own website, online marketplaces, and social media platforms. This
diversification of sales channels provides businesses with additional revenue streams and the
opportunity to reach customers on different platforms.
Improved Customer Service and Engagement: Ecommerce platforms offer various customer
service features such as live chat, email support, and self-service options. Businesses can
provide prompt customer support, address inquiries, and resolve issues efficiently, leading to
increased customer satisfaction and loyalty.
Data-Driven Decision Making: Ecommerce platforms generate a wealth of data that businesses
can analyze to make informed decisions. Data analytics provide insights into customer behavior,
market trends, and sales performance, enabling businesses to optimize marketing strategies
and improve operational efficiency.

Competitive Advantage and Agility: Ecommerce allows businesses to compete on a global

scale, regardless of their size. It provides opportunities for startups and small businesses to
establish a strong online presence and compete with larger players. Ecommerce also enables
businesses to adapt quickly to market changes, launch new products, and respond to customer
demands more effectively.

SEMESTER – III ELECTRONIC COMMERCE

 Dr. M.G.R Arts and Science College for Women, Villupuram.

Overall, ecommerce has transformed the way businesses operate, enabling them to reach a
broader customer base, reduce costs, and enhance customer experiences. Embracing
ecommerce can provide businesses with a competitive edge, increased efficiency, and growth
opportunities in today's digital age.

ECOMMERCE MODELS
Ecommerce models refer to different types of business models that are commonly used in
electronic commerce. Here are some key ecommerce models:
Business-to-Consumer (B2C): In the B2C model, businesses sell products or services directly to
individual consumers. This is the most common ecommerce model, where customers browse
and purchase products from online stores operated by businesses. Examples include online
retailers like Amazon, clothing stores, and food delivery services.
Business-to-Business (B2B): In the B2B model, businesses sell products or services to other
businesses. This model involves transactions between companies, such as wholesalers selling
products to retailers or software providers selling enterprise solutions to businesses. B2B
ecommerce platforms facilitate efficient ordering, procurement, and supply chain management.
Consumer-to-Consumer (C2C): In the C2C model, individual consumers engage in buying and
selling products or services with other individual consumers through an online platform. These
platforms act as intermediaries, connecting buyers and sellers. Examples include online
classifieds, auction websites like eBay, and peer-to-peer marketplaces like Airbnb.
Consumer-to-Business (C2B): In the C2B model, individual consumers offer products, services,
or expertise to businesses. This can include freelancers, influencers, or content creators who
provide services or sell their creations directly to businesses. Examples include freelance
platforms like Upwork and platforms for sponsored content or influencer marketing.
Business-to-Government (B2G): In the B2G model, businesses sell products or services to
government agencies or entities. This can involve government procurement, contract bidding,
or providing specialized services to government organizations. Examples include companies that
supply equipment or services to government agencies or those involved in government
contracts.

Government-to-Business (G2B): In the G2B model, government entities or agencies provide

products, services, or information to businesses. This can include government portals for
business registration, tax filing, or procurement information. Examples include government
websites that provide resources or services for businesses to interact with government
processes.
Peer-to-Peer (P2P): In the P2P model, individuals can directly exchange products, services, or
assets with each other without the involvement of intermediaries. These transactions occur

SEMESTER – III ELECTRONIC COMMERCE

 Dr. M.G.R Arts and Science College for Women, Villupuram.

between peers on a platform, facilitated by the platform's infrastructure. Examples include ride-
sharing services like Uber and home-sharing platforms like Airbnb.
Subscription-based Model: In the subscription-based model, customers pay a recurring fee at
regular intervals to access products or services. This model is commonly used for software-as-a-
service (SaaS) businesses, streaming services, subscription boxes, and membership-based
platforms.
It's important to note that some businesses may adopt a hybrid model or combine different
ecommerce models to cater to their specific needs and target different customer segments. The
choice of ecommerce model depends on the nature of the business, target market,
product/service offerings, and customer preferences.

END OF UNIT – I

SEMESTER – III ELECTRONIC COMMERCE