APPLICATIONS OF E-COMMERCE:

The applications of E-commerce are used in various business areas such

as retail and wholesale and manufacturing. The most common
E-commerce applications are as follows:​

Retail and wholesale:​

E-commerce has a number of applications in retail and wholesale.

E-retailing or on-line retailing is the selling of goods from
Business-to-Consumer through electronic stores that are designed using
the electronic catalog and shopping cart model. Cybermall is a single
Website that offers different products and services at one Internet
location. It attracts the customer and the seller into one virtual space
through a Web browser.​

Marketing:​

Data collection about customer behavior, preferences, needs and buying

patterns is possible through Web and E-commerce. This helps marketing
activities such as price fixation, negotiation, product feature enhancement
and relationship with the customer.​

Finance:​

Financial companies are using E-commerce to a large extent. Customers

can check the balances of their savings and loan accounts, transfer
money to their other account and pay their bill through on-line banking or
E-banking. Another application of E-commerce is on-line stock trading.
Many Websites provide access to news, charts, information about
company profile and analyst rating on the stocks.​

Manufacturing:​
 E-commerce is also used in the supply chain operations of a company.
Some companies form an electronic exchange by providing together buy
and sell goods, trade market information and run back office information
such as inventory control. This speeds up the flow of raw material and
finished goods among the members of the business community. Various
issues related to the strategic and competitive issues limit the
implementation of the business models. Companies may not trust their
competitors and may fear that they will lose trade secrets if they
participate in mass electronic exchanges.​

Auctions:​

Customer-to-Customer E-commerce is direct selling of goods and services

among customers. It also includes electronic auctions that involve
bidding. Bidding is a special type of auction that allows prospective buyers
to bid for an item. For example, airline companies give the customer an
opportunity to quote the price for a seat on a specific route on the
specified date and time.

Ecommerce Unit - 1
E-Commerce Notes
Unit-1
Lecture-1
Introduction to Commerce
• Commerce is basically an economic activity involving trading or the buying and selling of goods.
For e.g. a customer enters a book shop, examines the books, select a book and pays for it. To fulfill
the customer requirement, the book shop needs to carry out other commercial transactions and
business functions such as managing the supply chain, providing logistic support, handling payments
etc.
As we enter the electronic age, an obvious question is whether these commercial transactions and
business functions can be carried out electronically.
In general, this means that no paperwork is involved, nor is any physical contact necessary. This often
referred to as electronic commerce (e-commerce).
The earliest example of e-commerce is electronic funds transfer. This allows financial institutions to
transfer funds between one another in a secure and efficient manner.
Later, electronic data interchange (EDI) was introduced to facilitate inter-business transactions.
E-Commerce
• “E-Commerce or Electronic Commerce, a subset of E-Business, is the purchasing, selling and
exchanging of goods and services over computer networks (such as Internet) through which
transactions are performed”.
• “E-Commerce can be defined as a modern business methodology that addresses the needs of
organizations, merchants and consumers to cut costs while improving the quality of goods and
services and increasing the speed of service delivery by using Internet”.
• E-Commerce takes place between companies, between companies and their customers, or between
companies and public administration.
FEW EXAMPLES OF E-Commerce are:
• Amazon.com, an online bookstore started in 1995 grew its revenue to more than 600$ million in
1998.
• Microsoft Expedia, an integrated online travel transaction site helps to choose a flight, buy an airline
ticket, book a hotel, rent a car etc. in only a few minutes.
E-Commerce vs Traditional Commerce
• E- Commerce is about the sale and purchase of goods or services by electronic means, particularly
over the internet. In a pure e-commerce system, transactions take place via electronic means. In this
case, you will access a cyber bookstore and download a digital book from a server computer.
• In a physical or traditional commerce system, transactions take place via contact between humans
usually in a physical outlet such as a bookstore.
For e.g. if you want to buy a book, you will go to a physical bookstore and buy the physical book from
a salesman.
• E-Commerce is more suitable for standard goods, intangible goods; whereas traditional commerce is
more suitable for non standard goods, perishable goods, and expensive goods.
• Complex products such as cars are better served by integrating e-commerce and physical commerce.

Difference between Traditional Commerce and E-commerce

E-Business
• “E-Business is the conduct of business on the Internet, not only buying and selling but also servicing
customers and collaborating with business partners”.
• E-Business means connecting critical business systems directly to customers, vendors and suppliers-
via the Internet, Extranet and Intranets.
• Therefore it means using electronic information to boost performance and create value by forming
new relationships between and among businesses and customers.
• One of the first to use the term was IBM, in October 1997, when it launched a campaign built
around e-business.
E-Business enables organizations to accomplish the following goals:-
• Reach new markets.
• Create new products or services.
• Build customer loyalty
• Make the best use of existing and emerging technologies.
• Achieve market leadership and competitive advantage.
• Enrich human capital.

Advantages of E-Commerce to Customers

• Reduced Prices:- Costs of products are reduced since the stages along the value chain are
decreased. For instance, intermediaries can be eliminated by the company directly selling to the
customers instead of distributing through a retail store.
• 24-Hour Access:- Online businesses never sleep as opposed to brick and mortar businesses.
E-Commerce allows people to carry out businesses without the barriers of time.
• Global Marketplace:- Consumers can stop anywhere in the world. Currently according to World
Trade Organization (WTO) there are no custom duties put on products bought and traded globally
electronically. This also provides wide selection of products and services to consumers.
• More Choices:- Provides consumers with more choices. For e.g. before making any purchase,
customer can study about all the major brands and features of any item. It also provides consumers
with less expensive products and services by allowing them to shop in many places.

Advantages of E-Commerce to Businesses

• Increased potential market share:- The internet enables businesses to have access to international
markets thereby increasing their market share. Companies can also achieve greater economies of
scale.
• Low cost Advertising:- Advertising on the internet costs less than advertising on print or television
depending on the extent of advertisement. Advertising on the internet itself is less costly since there
is less cost associated with it in terms of printing and limited television spots.
• Low barriers to Entries:- Anyone can start up a company on the internet. Start-up costs are a lot
lower for companies since there is less need for money for capital.
• Strategic Benefits:- The Strategic benefits of making a business e-commerce enabled is that it helps
reduce the delivery time, labour cost and the cost incurred in document preparation, data entry,
error detection etc.
Disadvantages of E-Commerce
• Hidden Costs:- Although buying online is convenient, the cost of this convenience is not always clear
at the front end. For e.g. on-line purchases are often accompanied by high shipping and re-stocking
fees, a lack of warranty coverage and unacceptable delivery times. In fact, too many e-commerce
companies have developed a reputation of overcharging for shipping and handling.
• Lack of Security:- One of the main roadblocks to the wide acceptance of e-commerce by businesses
and consumers alike is the perceived lack of adequate security for on-line transactions.
For e.g. Consumers are growing increasingly worried about providing credit card information over
the Internet.
During the past few years, the press has been filled with reports about hackers breaking into
e-business and stealing credit card information.
• Lack of Privacy:- Customers also worry about the privacy implications of data gathered by
organizations of all types and sizes. Even at the simplest data level, sales information is stored in
databases connected to web servers, thus exposing the information to cyber criminals. Because data
gathering on the web is so easy, databases routinely contain information about customer purchasing
habits, credit information and so on. In many cases, companies sell customer database information
to marketing companies. In turn, the marketing companies engage in massive e-mail campaigns to
attract new customers. It doesn’t take long for the customer’s email box to be filled with unwanted
email (also known as Spam).
• Network Unreliability:- Although the Internet is designed to overcome the single point of failure
problem, there have been several well-publicized incidents of network failures during the past few
years. Network reliability problems may be generated by such factors as:-
Ø Equipment failure in the network connection provider.
Ø Accidental problems caused by nature-such as lightning, floods, earthquakes that affect
communication lines.
Ø Long response time due to increased network traffic or inadequate bandwidth.
• Low Service Levels:- Another common complaint about doing business online is the low level of
customer service that online companies tend to provide. Although technology has automated
business transactions to a large extent, there remains a real need for the human touch. Therefore
e-commerce websites must provide:-
Ø A pleasant and problem free pre-ordering and ordering experience. The website design is an important
interface.
Ø Readily available easily used feedback options.
Ø Quick complaint resolution.
Ø Timely and low-cost shipping delivery to customers.

Scope of E-Commerce
• E-Commerce is a general concept covering any form of business transaction or information exchange
executed using information and communication technologies ((ICT’s).
• It includes electronic trading of goods, services and electronic material.
*It takes place between companies, between companies and their customers or between companies
and public administrations.
• Electronic Markets:-
An electronic market is the use of information and communication technology to present a range of
offerings available in a market segment so that the purchaser can compare the prices of the
offerings and make a purchase decision
e.g. Airline Booking System
• Electronic Data Interchange:-
Ø It provides a standardized system for coding trade transactions so that they can be communicated from
one computer to another without the need for printed orders and invoices & delays & errors in paper
handling.
Ø It is used by organizations that make a large no. of regular transactions.
e.g. EDI is used in the large supermarket chains for transactions with their suppliers.
• Internet Commerce:-
Ø Information and communications technologies can be used to advertise & make sales of wide range of
goods & services.
Ø This application is both for business to business & business to consumer transactions.
e.g. The purchase of goods that are then delivered by post or the booking of tickets that can be
picked up by the clients

Types of E-Commerce/ E-Commerce Market Models

• There are five types of E-Commerce:-
Ø Business To Business (B2B)
Ø Business To Consumer (B2C)
Ø Consumer To Business (C2B)
Ø Consumer To Consumer (C2C)
Ø Business To Government (B2G)
Business To Business (B2B):- Business to Business or B2B refers to e-commerce activities between
businesses. An E-Commerce company can be dealing with suppliers or distributers or agents. These
transactions are usually carried out through Electronic Data Interchange (EDI). EDI is an automated
format of exchanging information between businesses over private networks.
For e.g. manufacturers and wholesalers are B2B Companies.
By processing payments electronically, companies are able to lower the number of clerical errors and
increase the speed of processing invoices, which result in lowered transaction fees.
In general, B2Bs require higher security needs than B2Cs.
With the help of B2B E-commerce, companies are able to improve the efficiency of several common
business functions, including supplier management, inventory management and payment
management.
Business To Customer (B2C):- Business to Customer or B2C refers to E-Commerce activities that are
focused on consumers rather than on businesses.
 For instance, a book retailer would be a B2C company such as Amazon.com. Other examples could
also be purchasing services from an insurance company, conducting on-line banking and employing
travel services.
Customer To Business (C2B):-
Customer to Business or C2B refers to E-Commerce activities which use reverse pricing models where
the customer determines the prices of the product or services.
In this case, the focus shifts from selling to buying. There is an increased emphasis on customer
empowerment.
In this type of E-Commerce, consumers get a choice of a wide variety of commodities and services,
along with the opportunity to specify the range of prices they can afford or are willing to pay for a
particular item, service or commodity.
Customer To Customer (C2C):-
Customer to Customer or C2C refers to E-commerce activities, which use an auction style model. This
model consists of a person-to-person transaction that completely excludes businesses from the
equation.
Customers are also a part of the business and C2C enables customers to directly deal with each
other.
An example of this is peer auction giant ebay.
Business To Government (B2G):- It is a new trend in E-Commerce. This type of E-Commerce is used
by the government departments to directly reach to the citizens by setting up the websites.
These websites have government policies, rules and regulations related to the respective
departments.
Any citizen may interact with these websites to know the various details. This helps the people to
know the facts without going to the respective departments.
This also saves time of the employees as well as the citizens.
History of E-Commerce
• The history of Ecommerce seems rather short but its journey started over 40 years ago in hushed
science labs
• In the 1960s, very early on in the history of Ecommerce, its purpose was to exchange long distance
electronic data. In these early days of Ecommerce, users consisted of only very large companies, such
as banks and military departments, who used it for command control communication purposes. This
was called EDI, and was used for electronic data interchange.
• Originally, electronic commerce was identified as the facilitation of commercial transactions
electronically, using technology such as Electronic Data Interchange (EDI) and Electronic Funds
Transfer (EFT). These were both introduced in the late 1970s, allowing businesses to send
commercial documents like purchase orders or invoices electronically.
• The growth and acceptance of credit cards, automated teller machines (ATM) and telephone
banking in the 1980s were also forms of electronic commerce
• In 1982 Transmission Control Protocol and Internet Protocol known as TCP & IP was developed. This
was the first system to send information in small packets along different routes using packet
switching technology, like today's Internet! As opposed to sending the information streaming down
one route
• Beginning in the 1990s, electronic commerce would include enterprise resource planning systems
(ERP), data mining and data warehousing
• In 1995, with the introduction of online payment methods, two companies that we all know of today
took their first steps into the world of Ecommerce. Today Amazon and ebay are both amongst the
most successful companies on the Internet
 Functions of E-Commerce
• Marketing:- One of the areas it impacts particularly is direct marketing. In the past this was mainly
door-to-door, home parties (like the Tupperware parties) and mail orders using catalogues or leaflets.
This moved to telemarketing and TV selling with the advance in television technology and finally
developed into e-marketing.
• Human Resource Management:- Issues of on-line recruiting, home working and ‘entrepreneurs’
working on a project by project basis replacing permanent employees.
• Business law and ethics:- The different legal and ethical issues that have arisen as a result of a global
‘virtual’ market. Issues such as copyright laws, privacy of customer information etc.
• Management Information System:- Analysis, design and implementation of e-business systems
within an organization ; issues of integration of front-end and back-end systems.
• Product Operations and Management:- The impact of on-line processing has led to reduced cycle
time. It takes seconds to deliver digitized products and services electronically; similarly the time for
processing orders can be reduced by more than 90 percent from days to minutes.
• 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 increasing
knowledge based economy.
• Economy:- The impact of E-commerce on local and global economies; understanding the concepts of
a digital and knowledge based economy and how this fits into economic theory.
​
E-Commerce Applications
• E-Marketing
• E-Advertising
• E-Banking
• E-Learning
• Mobile Commerce
• Online Shopping
• Entertainment
​
• E-Marketing:-
v E-Marketing also known as Internet Marketing, Online Marketing, Web Marketing.
v It is the marketing of products or services over the internet.
v It is consider to be broad in scope because not refers to marketing on the internet but also done in
Email and wireless media.
v E-Marketing ties together the creative and technical aspects of the internet, including design
development, advertising and sales.
v Internet marketing is associated with several business models i.e., B2C, B2B, C2C.
v Internet marketing is inexpensive when examine the ratio of cost to the reach of the target.
​
• E-Advertising:-
v It is also known as online advertising it is a form of promotion that uses internet and World Wide Web
to deliver marketing messages to attracts customers.
Example: Banner ads, Social network advertising, online classified advertising etc.
v The growth of these particular media attracts the attention of advertisers as a more productive source
to bring in consumers.
​
• E-Banking:-
v Means any user with a personal computer and browser can get connected to his banks, website to
perform any of the banking functions. In internet banking system the bank has a centralized data
base i.e., web-enabled.
v Best example for E-Banking is ATM.
v An ATM is an electronic fund transfer terminal capable of handling cash deposits, transfer, Balance
enquiries, cash withdrawals, and pay bills.
• SERVICES THROUGH E-BANKING:
Ø Bill Payment Service
Ø Fund Transfer
Ø Investing through Internet Banking
Ø Shopping
​
• E-Learning:-
v E-Learning comprises all forms of electronically supported learning and teaching.
v E-Learning applications and processes include web-based learning, computer-based learning.
v Content is delivered via. The internet, intranet/extranet, audio, or video tape, satellite TV.
v E-Learning is naturally suited to distance and flexible learning, but can also be used conjunction with
face-to-face teaching.
v E-Learning can also refer to the educational website such as those offering learning scenarios worst and
interactive exercises for children.
v A learning management system (LMS) is software used for delivering, tracking, and managing training
/education.
​
• Mobile Commerce:-
v Mobile Commerce also known as M-Commerce, is the ability to conduct, commerce as a mobile device,
such as mobile phone.
v Banks and other financial institutions use mobile commerce to allow their customers to access account
information and make transactions, such as purchasing, withdrawals etc.,
v Using a mobile browser customers can shop online without having to be at their personal computer.
SERVICES ARE:
1. Mobile ticketing
2. Mobile contract purchase and delivery mainly consumes of the sale of ring tones, wallpapers and
games of mobile phones.
3. Local base services
●​ Local discount offers
●​ Local weather
4. Information services
•​ News
•​ Sports, Scores

The 3 types of mobile commerce

●​ Mobile shopping: Browsing stores via websites or mobile apps.
●​ Mobile payments: Submitting payments via mobile.
●​ Mobile banking: Handling banking transactions from a mobile device.

Mobile commerce" refers to buying and selling goods or services directly through a mobile device
like a smartphone or tablet, while "social commerce" involves making purchases through social
media platforms, utilizing social interactions and influencer marketing to facilitate transactions
between businesses and customers

1.​ S-commerce refers to social commerce. Purchases are made using social media platforms
and the customers are redirected to an e-commerce site but complete the purchase within
the social media platform. M-commerce refers to mobile commerce. Here purchases are
made using a mobile device. M-commerce is a more progressive form of e-commerce as it
allows customers to buy products as long as they have a mobile device and internet access.

2.​ In s-commerce, you set up your store using your business’ social media account. The
different platforms which are most popular at the moment are Facebook, Instagram,
Pinterest and TikTok. Some of these platforms have region restrictions so that is something
to check out. In m-commerce, you are selling through a mobile e-commerce website or a
native app. Though creating a native app may be in your future plans. You could consider
getting your product on Takealot, Makro or Loot. If you use an e-commerce site, ensure that
it is mobile-friendly.

3.​ In s-commerce, you are exposed to everyone who is scrolling through their feed. This means
that you have a large, targeted customer base. As you can see who is interested in your
product, you can ensure you tweak your ads to resonate better with the audience your
product attracts. In m-commerce, it is convenient to search for a product and be able to
make a purchase directly from your phone. By ensuring that you have an easy-to-navigate
mobile store, you can ensure that those who are interested in your product have an easy
purchasing path. With m-commerce if you create your own app, you will need to get
registered on the online app stores so that your customers will be able to download the app
and buy from you.

Essential Benefits of Social Commerce: Why is It Important?

1.​ Reach Out to Your Target Audience Easily

2.​ Grow Your Potential Customer Base
 3.​ Increase Your Visibility
4.​ Boost Your Brand Awareness
5.​ Build A Two-Way Relationship with Your Target Audience
6.​ Fast and Convenient Shopping Experience

Technological building blocks:

Components of an Ecommerce Infrastructure

Below are some infrastructures all ecommerce businesses should have:

1.​ Web Servers

A web server is a hardware or software that stores data and communicates it to users through HTTP
(Hyper Text Transfer Protocol) request. It is in charge of hosting websites, handling visitor requests,
and supplying web page content. Web servers use scripting languages like PHP, ASP, and JavaScript to
generate dynamic web pages. A web server in ecommerce is a computer that stores and serves web
pages to users over the internet. They allow customers to access product information, view prices,
and purchase goods.

Database Servers
A database server is a computer system that stores, manages, and retrieves data from a database. It is
the backbone of an ecommerce system, as it hosts the databases used for online transactions and
stores customer information.

It is also in charge of effectively managing the data's organization and security. Database servers also
provide expansion, ensuring websites can handle large amounts of data.

2.​ Payment Processing System

A payment processing system is a system used to process financial transactions in an ecommerce system.
It lets merchants receive payments from customers, securely process the payments, and transfer the
funds to the merchant’s bank account.

This system is also part of the ecommerce functionality responsible for confirming clients’ identities and
providing a secure platform for consumers to make their purchases.

This handles payments from different sources, such as debit and credit cards, PayPal, Apple Pay, and
Google Pay.
3.​ Content Delivery Network (CDN)
A content delivery network (CDN) is a network of servers spread out across different locations. It
provides online content to users based on their geographic location.

CDNs are used to improve website performance and deliver a better user experience. In ecommerce,
CDNs are used to provide online content such as product photos, videos, and other information to
customers faster.

4.​ Security and Fraud Prevention

Protecting ecommerce websites from cyber-attacks and fraudulent activities is important. To protect
customers, use fraud protection technologies like SEON, Signifyd, Kount, Cybersource, and more.

For the safety and security of customers and their data, ecommerce security and fraud prevention are
crucial.

5.​ Load Balancing

This is a process for distributing incoming traffic and requests across a group of servers. It helps to
improve the performance of an ecommerce system. This gives no room for failure in the system and
ensures the system can handle the increased demand from online shoppers.

It also helps to prevent any server from becoming overloaded with requests and also helps to improve
customers' shopping experience.

6.​ Backup System

This is a system that stores data, such as customer information, routinely. It helps restore the system to
the last saved state in the event of a system failure.

This ensures that the business can quickly and easily recover from any potential data loss. Backup
systems can also be used to transfer data from one system to another, allowing for greater flexibility.

7.​ Customer Service

Customer service in ecommerce is providing support to customers before, during, and after a purchase.
This helps customers find what they need, provides shipping and delivery info, and also resolves
order issues. This is critical for any ecommerce business.

8.​ Inventory Management

This is the practice of tracking and controlling the inventory of a business’ product. It includes
maintaining stock levels, ordering new products, and tracking sales. It is important to keep accurate
records of inventory to ensure customer satisfaction and product availability.

Inventory management helps protects against loss due to theft or damage and can help identify areas of
opportunity to improve efficiency.

9.​ Shopping Cart

This is more of an ecommerce feature than a component of an infrastructure. It allows customers to add
products to their carts, views their orders, and check out. It is an essential part of any online
shopping experience, as it enables customers to quickly and easily purchase products.
Item selection, item quantity adjustments, payment selection, and order submission are common
features of cart functionality. This can easily be integrated with the help of ecommerce solutions like
Medusa.

10.​Shipping and Fulfillment

In ecommerce, shipping and fulfillment refer to the process of receiving, processing, and shipping orders
to customers. It also includes shipping tracking and order fulfillment.

Shipping and fulfillment are vital for any online business to be successful. This makes sure customers get
their orders quickly and are happy with them.

Some examples of providers that offer this service, ShipBob, ShipStation, Fulfillment by Amazon (FBA),
Deliverr, etc.

Advantages of a Good Ecommerce Infrastructure

Increased Sales: By providing customers with a better shopping experience, a good ecommerce
infrastructure can help to increase sales. Customers will be more likely to complete purchases if they
find the process to be smooth and easy.
Lower Running Costs: A well-designed ecommerce infrastructure can help to reduce running costs. By
improving the buying process, businesses can save time and money processing orders and satisfying
client requirements.
Improved Security: A good ecommerce infrastructure can help to ensure the security of customer data
and transactions. By investing in strong security measures, businesses can protect their customers’
information and help to prevent fraud.
Greater Flexibility: A good ecommerce infrastructure can assist organizations in scaling their operations
as they grow. Businesses should ensure they are well-prepared for future expansion by investing in
infrastructure that can manage greater traffic and revenue.