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Introduction to E-Commerce:

What is E-Commerce?

E-commerce (electronic commerce or EC) is buying and selling of products and services by
businesses and consumers through an electronic medium, without using any paper documents.
E-commerce is widely considered the buying and selling of products over the internet, but any
transaction that is completed solely through electronic measures can be considered e-
commerce.
Electronic commerce is subdivided into three categories: business to business in B2B, business
to consumer or B2C and consumer to consumer or C2C.
Core Activities of E-Commerce
 Buying and Selling Products
 Shipping Products
 Producing financial statements
As the functions are carried out without any human intervention they are called as “E” in
E-Commerce. It does not imply that the humans completely vanish from the scene.
People use the term “e-commerce” or “online shopping” to describe the process of searching
for and selecting products in online catalogues and then “checking out” using a credit card and
encrypted payment processing. Internet sales are increasing rapidly as consumers take
advantage of:
● Lower prices offered by vendors operating with less margin than a bricks and mortar store
● Greater convenience of having a product delivered rather than the cost of time and transport
and parking of going to a store
● Sourcing product more cheaply from overseas vendors
● Great variety and inventory offered by online stores
● Comparison engines that compare and recommend product
● Auction sites, where they did for goods
FEATURES OF E-COMMERCE
E-commerce can provide the following benefits over non-electronic commerce:
● Reduced costs by reducing labour, reduced paper work, reduced errors in keying in data,
reduce post costs.
Reduced time Shorter lead times for payment and return on investment in advertising, faster
delivery of product.
● Flexibility with efficiency The ability to handle complex situations, product ranges and
customer profiles without the situation becoming unmanageable.
● Improve relationships with trading partners Improved communication between trading
partners leads to enhanced long-term relationships.
● Lock in Customers The closer you are to your customer and the more you work with them

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to change from normal business practices to best practice e-commerce the harder it is for a
competitor to upset your customer relationship.
● New Markets the Internet has the potential to expand your business into wider geographical
locations.
● Quick, easy and convenient, E-commerce has enabled the consumer to complete
transactions from the comfort of their own home, transactions that would usually happen
within the walls of a store. Transactions now take only minutes, rather than the hours
included in physically getting to the stores.
● Lower prices, many consumers are turning to e-commerce for their needs due to the lower
price for many everyday items. Different factors on the merchant’s side of the equation
allow them to sell products at a lower price compared to a standard store and these cost
savings are often passed to the end consumer.
● Product comparisons, not only are consumers finding it quick and more convenient to shop
online but they are also making more comparisons than ever. Comparing the price, delivery
time and product specifications have never been simpler. Quickly browsing multi websites
that stock products that suite your criteria is as simple as search. Consumers can now
compare multiple products in minutes.

Categories of E-Commerce:

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● B2B or Business to Business

Business transactions taking place between the manufacturers and distributors.
The pricing is dependent upon the quantity of the order.
Example:
An automobile manufacturer purchases tyres, windscreens in bulk quantity from their
respective manufacturers.
● B2C or Business to Consumer
The selling of products of a merchant to the general public takes place through catalogs
utilizing the shopping cart software.
Example:
A Fast Moving Consumer Goods (FMCG) company advertises its products on its own
website and allows customers to browse through them and place the order directly with them.
● C2B or Consumer to Business
A consumer posts his requirements and companies that are capable of meeting the
requirements, bid on the project.
The consumer reviews the bids and selects the company capable of completing the
project.
Example:
Websites provide platform to developers or coders and clients. The client posts his
requirements on this website, the developers or coders browse through requirement details
and place the bid.
● C2C or Consumer to Consumer
The consumer posts his products on a website and another consumer purchases it
through the online auction method.
The payment is done through providers such as PayPal.
Example:
On eBay website, customers can sell their products to other customers.
Companies using internal networks to offer their employees products and services online--not
necessarily online on the Web--are engaging in B2E (Business-to-Employee) e-commerce.

G2G (Government-to-Government), G2E (Government-to-Employee), G2B (Governmentto-

Business), B2G (Business-to-Government), G2C (Government-to-Citizen), C2G (Citizento-
Government) are other forms of e-commerce that involve transactions with the
government--from procurement to filing taxes to business registrations to renewing licenses.
There are other categories of e-commerce out there, but they tend to be superfluous.

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History of Electronic Commerce:

Electronic commerce, or eCommerce, refers to buying and selling products and services on the
Internet.

eCommerce can happen in many forms, like ordering goods, purchasing a service, buying a
subscription to an information source, or even setting up an online bill-paying schedule.

For most of us, it’s hard to imagine modern life without eCommerce. It would not only be
inconvenient but also much more complicated.

Still, as ingrained as eCommerce has become in our lives, it wasn't that long ago when it didn’t
even exist. We can trace the origins of eCommerce back about 40 years, when "teleshopping"
first appeared as the precursor to the modern version.

Of course, eCommerce as we know it today really got its start when retail giant Amazon created
one of the first eCommerce websites back in the early 1990s. Since then, countless companies
have followed its lead.

When Was Online Shopping Invented?

Companies have been using computer networks to conduct business since as far back as the
1960s, butthatversion of eCommerce would be almost unrecognizable to us nowadays.

In 1968, ARPA (Advanced Research Projects Agency) commissioned the world’s first routers.
Within a year, a network called ARPANET was created to ensure that crucial lines of
communication would be maintained in the event of a nuclear attack.

Three years later, researchers developed a new method for dialing into ARPANET using just a
computer terminal. Terminal Interface Processor (TIP) eventually led to Transmission Control
Protocol and Internet Protocol (TCP/IP), a familiar combination even in modern times.

This technology helped take the Internet from military bases and university labs to business
offices.

Companies used it to share business documents with one other, relying solely on Electronic
Data Interchange (EDI), a digital information transfer technology that could replace mail and fax
for sharing documents. This technology made it possible to transfer information from computer
to computer seamlessly without the need for human involvement.

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It wasn’t until 1979 that the American National Standards Institute (ANSI) finally stepped in and
introduced a standard for sharing business documents. It was called ASC X12 and gave
companies a reliable standard for sharing documents over electronic networks.

1979 also witnessed another first for the Internet Age: the origin of eCommerce.

The Origins of eCommerce

In 1979, English inventor Michael Aldrich introduced and pioneered what would eventually
become known as eCommerce by connecting television and telephone lines.

The story goes that Aldrich thought of the idea while on a walk with his wife, bemoaning the
inconvenience of making regular trips to the market. Wouldn’t it be so much easier if you could
just order what you needed through the TV?

Shortly, thereafter, he invented a system that advertised goods and services on television,
giving viewers the ability to call in to a processing center to place orders. Aldrich called his
system "teleshopping."

eCommerce was born.

Throughout the 80s and into the early 90s, the Internet continued to evolve as new
technologies like SSL made it something more and more people were comfortable using.

In 1982, French innovators launched the Minitel, a service that was a precursor to the World
Wide Web. This service was free for telephone subscribers and used a Videotex terminal and
telephone lines to connect millions of people. The Minitel expanded, and by 1999, more than 9
million terminals connected about 25 million people.

However, the World Wide web soon caught up. Debuting to the public in 1991, its rapid rise
quickly eclipsed the Minitel. In 2012, France Telecom officially discontinued the Minitel service.

The First eCommerce Stores

Technically, the first eCommerce company was Boston Computer Exchange, which launched all
the way back in 1982. It was primarily an online market that served people who wanted to sell
their used computers.

With the arrival of the Internet, another, more familiar kind of store debuted. Book Stacks
Unlimited, which opened its virtual doors in 1992, was an online bookstore that actually
predated a company which would quickly become synonymous with the term by two whole
years: Amazon. Eventually, Book Stacks Unlimited was acquired by Barnes & Noble.

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Further Reading About the Early Days of eCommerce

If you’re interested in learning more about the history of eCommerce, here are some helpful
resources:

 The Michael Aldrich Archive: The Inventor's Story

 The Invention of Online Shopping
 Michael Aldrich: A Connoisseur in the Entrepreneurial World and the Founder of Online
Shopping
 Visionary in Obscurity: Charles Stack
 History of Online Shopping: What People Thought of ECommerce in 1994
 Attention, Shoppers: The Internet Is Open
 ECommerce: An Introduction
 ECommerce Timeline
 The Evolution of ECommerce: From Pilgrims to Online Shoppers
 What Is eCommerce Development?
Now that you better understand the origins of eCommerce, let’s take a closer look at the World
Wide Web.

The World Wide Web Becomes User-Friendly

In 1990, Tim Berners-Lee and Robert Cailliau published a proposal to build a hypertext
browser called "WorldWideWeb."

During that same year, Berners-Lee also designed the first Web server.

On August 6, 1991, Berners-Lee made history yet again when he debuted the first website,
ushering in the World Wide Web as a publicly-available service.

The National Science Foundation relaxed restrictions governing the commercial use of the
Internet a short time later, which paved the way for online shopping.

In 1995, the National Science Foundation started charging user fees for registration of domain
names. In just three years, registered domain names jumped from 120,000 to more than 2
million.

Many concerns around the security of online shopping persisted, but the development of
Secure Socket Layers (SSL) technology made it possible to send data over the Internet safely.

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Browsers identified authenticated SSL certificates on websites, indicating whether websites

were safe and trustworthy. The SSL encryption protocol continues to be a prominent feature of
Web security.

Further Reading About the World Wide Web

To learn more about the introduction of the World Wide Web and its wide-scale adaption,
check out these resources:

 Brief History of the Internet

 A History of NSF and the Internet
 A Brief History of the Internet
 Internet History Timeline: ARPANET to the World Wide Web
 Internet History

Marketplaces, Payment, and Mobile eCommerce

After the formative years of the Internet, advancements began to take hold that increased its
commercial use.

As we’ve covered, Amazon launched in 1995, initially as an online bookstore. During that time,
large brick-and-mortar bookstores could only be expected to carry about 200,000 books –at
most.

However, as an online store, Amazon had no such limitations. It could carry countless titles,
from best sellers to obscure texts.

Since its founding, Amazon has expanded to the point that it now offers virtually every type of
product imaginable – including eBooks and movies. Amazon also pioneered the sharing of user
reviews, an idea that was originally considered eCommerce suicide.

Of course, the exact opposite happened. By letting customers share their feedback, Amazon
became one of the most powerful companies in the world seemingly overnight.

Meanwhile, eBay emerged as a successful online auction website, debuting in 1995.

In 2005, Etsy launched as a global marketplace where people could create shops to sell their
unique and often handmade items.

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During that same year, Amazon launched Amazon Prime, a service that offered members free
two-day shipping within the continental United States. This program set a standard in
eCommerce, forcing other merchants to decrease shipping time and charges.

PayPal launched in 1998 as a global eCommerce company that offered payment processing for
online vendors and other commercial users. PayPal customers can hold, send, and receive funds
in many different currencies.

In 2004, the Payment Card Industry Security Standards Council was created to make sure that
businesses comply with security requirements. This organization develops and implements
security standards for account data protection.

As mobile computing began to develop and grow, Amazon launched its first mobile website in
2001, starting the mobile eCommerce race. Because more people were using their mobile
devices to access eCommerce websites, the push to make mobile sales possible was strong.
Consumers today use mobile devices not only for purchases but also for product research, to
find coupons, and to engage via social media.

Further Reading on Marketplaces, Payment, and Mobile eCommerce

 What Is eCommerce? An Inside Look at What Happens Before You Buy

 The First Decade of eCommerce
 Defining eCommerce
 Electronic Commerce and the Consumer
 A Beginner's Guide to eCommerce
 Why Is eCommerce Not a Fad?
 View of Electronic Commerce: The Issues and Challenges to Creating Trust and a Positive
Image in Consumer Sales on the World Wide Web
 eCommerce Sorting Out the Environmental Consequences
 The Evolution of eCommerce

eCommerce Timeline: from the Beginning to Modern Day

Here is a condensed version of the most important milestones throughout eCommerce’s
history:

 1969: CompuServe is founded. It will go on to become what many consider to be the first
true eCommerce company.

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 1979:Fed up with regular trips to the market, Michael Aldrich introduces the world to
electronic shopping
 1982:Boston Computer Exchange becomes one of the first eCommerce platforms
 1992:Charles M. Stack launches Book Stacks Unlimited, one of the first online
marketplaces
 1994: Netscape releases Netscape Navigator, which becomes the most prominent of the
early web browsers
 1994:Jeff Bezos unveils Amazon
 1995:AuctionWeb launches. Its name will eventually be changed to eBay.
 1998:PayPal revolutionizes eCommerce with a secure way for websites to accept
payments
 1999:Jack Ma launches Alibaba.com, a first-of-its-kind B2C, B2B, and C2C eCommerce
company.
 2005:Amazon changes eCommerce forever by introducing flat-fee, two-day shipping
through Prime
 2011: Facebook throws its hat in the eCommerce ring with sponsored stories
 2011:Stripe enters the world of online payments
 2014: Apple follows suit with Apple Pay
 2015:Google responds by introducing Android Pay
 2015:Cyber Monday sales reach a new record high of more than $3 billion
 2016:Alibaba sets a record with $17 billion in sales in just one day
 2017: Instagram enters the eCommerce game with shoppable posts
 2019:ECommerce sales reach$3.5 trillion
As you can see from this timeline, eCommerce is progressing at a rapid rate. The next 10 years
may be even more dynamic than the last 40.

What Does the Future Look Like for ECommerce?

ECommerce and consumer trends will continue to evolve as technology expands and changes.
The Census Bureau estimated that U.S. retail eCommerce sales for the fourth quarter of 2019
were $158.0 billion, an increase of 2.6% from the third quarter.

Expect that trend to continue for years to come.

One example of technology dramatically shaping the future of eCommerce is advancements in

different screen types. Soon, consumers will interact with eCommerce touchpoints via
wearables, kiosks, and improved voice interactions.

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eCommerce personalization will continue to push the field, too. We’re already at the point
where sites can “remember” customers and tailor their eCommerce experiences accordingly.
This doesn’t just improve conversions and customer satisfactions. It also produces game-
changing data that companies can use to craft even better experiences for their website’s
visitors.

Further Reading on the Future of ECommerce

To learn more about the future of eCommerce, take a look at:

 Quarterly eCommerce Sales

 The Future of eCommerce: How eCommerce Will Change in the Years to Come
 Amazon vs. Google

How to Compete and Thrive in the Modern Marketplace

As successful as Amazon is, there’s no reason your company can’t compete and even thrive
alongside this retail giant.

Much smaller, independent merchants can often connect with consumers in ways that a
behemoth like Amazon can't match. These companies can also work to create a memorable
brand experience, which helps gain customer loyalty.

While the Amazon Effect is often seen as a negative for retailers, many have adapted by
adopting which practices they can and offering the aforementioned brand experiences Amazon
can’t.

Further Reading on Building a Thriving eCommerce Brand

If you’d like to read more about how you can turn your eCommerce brand into one for this
history books, check out these resources:

 12 Steps to Building a Successful ECommerce Site in 12 Months

 Crushing Competition in eCommerce
 BigCommerce Development and Your Business
 How eCommerce Companies Can Compete in an Amazon-Dominated World
 How to Compete with the eCommerce Giants
 How Much the Top eCommerce Companies Make Every Day

Buyer Preferences Driving Rapid Distribution

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Figuring out what shoppers want next is a constant challenge for retailers of all stripes, but
online merchants must also continually find advantages over brick-and-mortar stores.

For example, new advances in product visualizers can enable online retailers to show products
in various situations before purchase.

It's also crucial to keep your website fine-tuned so that it loads quickly, or you risk losing
visitors. And, since many shoppers browse the Internet to read reviews before buying an item,
it's important to monitor social media, answering questions and responding to comments in
order to maintain a good reputation.

The future of eCommerce is bright for companies that understand online buyer preferences and
take steps to meet them.

 The Future of Online Shopping: How eCommerce Trends Are Shaping Retail
 The Future of eCommerceMarketing
 Case Study: How We Increased Revenue by 88%

Learning from the History of eCommerce

If there’s one takeaway from the origins and history of eCommerce, it should be that the
industry is constantly changing. New innovations are always just around the corner, which
means your company must constantly adapt to stay ahead.

Fortunately, countless online businesses have proven this can be done.

You just need to follow two rules.

First, always put your customer first. The very origins of eCommerce are rooted in a desire to
give customers more of what they wanted: convenience, selection, and savings. No matter
what Google does to its algorithm or which devices become the next user-favorite, if you put
your customers first, you’ll be set up for success.

Second, stay flexible. If you let success lead to complacency, you won’t be successful for long.
Always look for new ways to keep your customers happy and they’ll be sure to repay your
efforts.

The future of eCommerce looks to be just as exciting as its past. If you keep these two rules in
mind, you’ll have plenty to be excited about, too.

Update: eCommerce During COVID-19

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Back when I wrote this post, no one could've predicted that a worldwide pandemic would
change almost every facet of our lives - including how we shop online.

If you're curious about the topic, I wrote a post about the effects of COVID-19 on
eCommerce before, during, and after (hopefully) the pandemic.

Advantages and Disadvantages of E-Commerce:

E-Commerce Advantages for Customers

● Convenience Every product is at the tip of your fingers on the internet, literally. Type in
the product you are looking for into your favorite search engine and every option will
appear in a well-organized list in a matter of seconds.
● Time saving With e-commerce there is no driving in circles while looking and digging in
hopes of finding what you need. Stores online offer their full line as well as use warehouses
instead of store fronts—products are easy to locate and can be delivered to your door in just
days.
● Economy Benefit E-commerce allows us to make transaction without any needs on stores,
infrastructure investment, and other common things we find. Companies only need well built
website and customer service.
● Easy to compare Side by side comparisons are readily available and easy to do. When
products are placed online, they come with all the specifics, and they want you to compare
them with others, know they have the best options and come back for more!
● Easy to find reviews Because the competition is high, companies online want you to look
at other consumer reviews. Good and bad reviews are on every site, not only can you see if
the product is liked, you can also see the reasons behind the thumbs up or down.
● Coupons and deals With every online business wanting you, more and more coupons and
deals can’t be avoided, which are totally great for customers. With major sites that act as
department store, you may find items up to 80% off! Take advantage of the competition and
find the best price available.
E-Commerce Advantages for Businesses
● Increasing customer base The customer base is every business’s main concern, online or
off. When online, a business doesn’t have to worry about getting the best property in town,
people from around the world have access to their products and can come back at any time.
● Rise in sales By not managing a storefront, any business will have more sales online with a
higher profit margin. They can redistribute money to make the consumer shopping
experience faster and more efficient. While being available to international markets, more
products will sell.
● Round the clock availability If it’s snowing and the roads are closed, or it’s too hot and
humid to even step outside in the summer, or a holiday that every store in town closes, your

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online business is open for consumers 24/7 every day of the year. The doors never close and
profits will keep rising.
● Expand business reach. A great tool on the internet is…translation! A business online does
not have to make a site for every language. With the right marketing, every consumer
around the globe can find the business site, products and information without leaving home.
● Recurring payments made easy. With a little research, every business can set up recurring
payments. Find the provider that best suits your needs and billing will be done in a
consistent manner; payments will be received in the same way.
● Instant transactions With e-commerce there is no more waiting for the cheque to clear, or a
30-day wait for certain other types of payment. Transactions are cleared immediately or at
most two to three days for the money to clear through the banking system.

E-Commerce Disadvantages
E-Commerce Disadvantages for Customers
● Privacy and security Before making instant transactions online, be sure to check the sites
certificates of security. While it may be easy and convenient to shop, no one wants their
personal information to be stolen. While many sites are reputable, always do your research
for those with less than sufficient security.
● Quality While e-commerce makes everything easily accessible, a consumer cannot actually
touch products until they are delivered to the door. It is important to view the return policy
before buying. Always make sure returning goods is an option.
● Hidden costs When making purchases, the consumer is aware of the product cost, shipping,
handling and possible taxes. Be advised: there may be hidden fees that won’t show up on
your purchasing bill but will show up on your form of payment. Extra handling fees may
occur, especially with international purchases.
● Delay in receiving goods Although delivery of products is often quicker than expected, be
prepared for delays. A snow storm in one place may throw off the shipping system across
the board. There is also a chance that your product may be lost or delivered to the wrong
address.
● Need access to internet: Internet access is not free, and if you are using free Wi-Fi, there is
the chance of information theft over an unsecure site. If you have your public library, or
cannot afford the internet or computer at home, it may be best to shop locally.
● Lack of personal interaction: While the rules and regulations of each e-commerce business
is laid out for you to read, there is a lot to read and it may be confusing when it comes to the
legalities. With large or important orders, there is no one you can talk to face to face when
you have questions and concerns.
E-Commerce Disadvantages for Businesses
● Security issues: While businesses make great efforts to keep themselves and the consumer
safe, there are people out there that will break every firewall possible to get the information
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they want. We have all seen recently how the biggest and most renown business can be
hacked online.
● Credit card issues: Many credit card businesses will take the side of the consumer when
there is dispute about billing—they want to keep their clients, too. This can lead to a loss for
e-commerce business when goods have already been delivered and the payment is refunded
back to the consumer.
● Extra expense and expertise for e-commerce infrastructure: To be sure an online
business is running correctly, money will have to be invested. As an owner, you need to
know transactions are being handled properly and products are represented in the most
truthful way. To make sure you get what you need, you will have to hire a professional to tie
up any loose ends.

● Needs for expanded reverse logistics: The infrastructure of an online business must be on

point. This will be another cost to the business because money will need to be invested to
ensure proper handling of all aspects of buying and selling, especially with disgruntled
consumers that want more than a refund.
● Sufficient internet service: Although it seems that everyone is now on the internet all the
time, there are still areas in which network bandwidth can cause issues. Before setting up an
e-commerce business, be sure your area can handle the telecommunication bandwidth you
will need to run effectively.
● Constant upkeep: When a business has started as e-commerce, they must be ready to make
changes to stay compatible. While technology grows, the systems that support your business
must be kept up to date or replaced if needed. There may be additional overhead in order to
keep data bases and applications running.

Roadmap of E-Commerce in India

The fast development of telecommunications technology in the past few decades is
transforming our lives, influencing how we access information, travel, and shop for goods and
services.
Evolution of E-commerce
E-commerce, or electronic commerce, is gaining popularity, allowing transactions through
electronic channels:
 Business to Consumer (B2C): Direct online shopping for private customers.
 Business to Business (B2B): Transactions between companies, enhancing supply chain
efficiencies.
 Consumer to Consumer (C2C): Platforms like eBay facilitate individual transactions.
Asia Pacific's E-commerce Leadership

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The Asia Pacific region, led by China's economic boom, dominates the global e-commerce
industry:
 Expected to surpass the US in e-commerce market size.
India's Rapid Growth
India emerges as a significant player in e-commerce:
 Retail e-commerce sales surged from $2.3 billion in 2012 to an estimated $17.5 billion.
 Expected increase in e-commerce's share of total retail sales from 0.9% to 1.4% by 2018.
Online Shopping Trends in India
Key insights into consumer behavior and popular product categories:
 Significant growth in digital buyers, projected at 41 million by 2016.
 Popular categories include airline tickets, fashion items, electronics, and more.
Future Outlook
Continued growth and technological advancements in e-commerce are set to reshape India's
retail landscape:
 Increasing adoption of digital commerce channels.
 Enhanced accessibility and convenience for consumers nationwide.

TRENDS IN E-COMMERCE IN VARIOUS SECTORS

The internet is changing the way people do business.
Retail
E-commerce has grown at very rapid pace in last few years in India. Growth in internet &
mobile phone penetration has changed the retail environment. Shopping habits of customers,
customer expectations and customer preferences are also changing with change in retail
environment. Large variety of choices, easy comparison, convenience for purchase, and
doorstep delivery are major driving force for customers using e-commerce platform. Above it,
‘Cash-on-delivery’ and convenient return process has increased the customer trust on e-
commerce. But, e-commerce and e-tailing in India has still a long way to go. The way the
business is moving and the increasing thrust on e-commerce is re-proving the country’s
consumption story. E-commerce or e-tailing is the recent paradigm that retailers have had to
also confront and already 75 per cent of retailers have adopted e-commerce in some form and
globally, retailing has already graduated to a multi-channel. Retailers have been able to help
consumers feel more comfortable shopping online.
Banking
Online Banking is becoming an important aspect of worldwide commerce. Online Banking is
also known as e-banking, cyber banking, virtual banking, net banking, and internet banking.
Online banking includes various banking activities conducted from home business, instead of at
a physical bank location. Customer relationship management worked as a tool increased use of
e-commerce makes CRM. Online banking is based on internet or web-based interaction to

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create a high volatile relationship in the banking sector. Questions are related to online banking
in which given options are Satisfied, Unsatisfied, Neutral, Yes, No. After analysis and
comparison of traditional banking of online banking, it is revealed that it is quite difficult, if not
impossible, to suggest that which online banking is best. Online banking provides the flexibility,
efficiency of work, provide the better security of net banking. The future of web-based e-
banking in developed areas appears bright but consumers and merchants in developing
countries face in number of barriers to successful e-banking, including less reliable
telecommunications infrastructure and power supplies, less access to online payment
mechanisms and relatively high costs for personal computers and Internet access.
Tourism
New technologies are providing different channels for marketing and management that
improve the capabilities of society. And computers are providing faster and more reliable
processing with lower cost continually.
The e-commerce direction is a benefit to all parties over the world in most industries since it is
cost savings. The Internet is not the full solution to success in the Hospitality and Tourism
industry. However, the Internet is the “overall business answer” across industries. The raise in
travellers over the time has also driven IT demand on offering high quality products at low costs
to the customers. The success of the Hospitality and Tourism industry will depend upon the
abilities to identify and answer quickly to current and potential customer needs. IT is playing a
major role in “servicing” customers. This challenges Hospitality and Tourism organizations
because efficiency in both external and internal interactions are required. The setup cost of IT
may be quite expensive in an economic sense, and the tremendous cost savings in the long-
term will depend upon the efficiency of the IT during its crucial implementation stages. In some
way, Hotel could reduce the cost such as the commissions paid to travel agencies as suppliers
will be straightly linked to customers.
Government
E-government refers to the application of e-commerce technologies to government and public
services. In the same way that e-business can be understood as transactions with customers
(citizens), suppliers and internal communications, e-government covers a similar range of
applications: Citizens – facilities for dissemination of information and use of online services at
local and national levels.
Education
Education sector has always been considered to be one of the biggest gainers from the
Internet. India’s education market is growing at a rapid pace. According to India Ratings and
Research Pvt. Ltd. E-learning is one of the fastest growing industries and the large players want
a share of that pie. E-education brings customized content as per learning style, collaborative
learning, self-paced learning, saves on time and definitely is cost-effective. One of the best
advantages of e-learning/ education is reducing dependence on traditional system of learning,

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and allow teachers and students open up to the global knowledge. Online education is quickly
becoming a major phenomenon around the world. The ease, access, convenience and lower
cost it offers appeal to people just about everywhere.

E-Business Models Based on the Relationship of Transaction Parties:

E-commerce business models can generally be categorized into the following categories.

 Business - to - Business (B2B)

 Business - to - Consumer (B2C)
 Consumer - to - Consumer (C2C)
 Consumer - to - Business (C2B)
 Business - to - Government (B2G)
 Government - to - Business (G2B)
 Government - to - Citizen (G2C)

Business - to - Business

A website following the B2B business model sells its products to an intermediate buyer who
then sells the product to the final customer. As an example, a wholesaler places an order from a
company's website and after receiving the consignment, sells the end product to the final
customer who comes to buy the product at one of its retail outlets.

Business - to - Consumer

A website following the B2C business model sells its products directly to a customer. A
customer can view the products shown on the website. The customer can choose a product and
order the same. The website will then send a notification to the business organization via email
and the organization will dispatch the product/goods to the customer.

Consumer - to - Consumer

A website following the C2C business model helps consumers to sell their assets like residential
property, cars, motorcycles, etc., or rent a room by publishing their information on the website.
Website may or may not charge the consumer for its services. Another consumer may opt to
buy the product of the first customer by viewing the post/advertisement on the website.

Consumer - to - Business

In this model, a consumer approaches a website showing multiple business organizations for a
particular service. The consumer places an estimate of amount he/she wants to spend for a
particular service. For example, the comparison of interest rates of personal loan/car loan

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provided by various banks via websites. A business organization which fulfills the consumer's
requirement within the specified budget, approaches the customer and provides its services.

Business - to - Government

B2G model is a variant of B2B model. Such websites are used by governments to trade and
exchange information with various business organizations. Such websites are accredited by the
government and provide a medium to businesses to submit application forms to the
government.

Government - to - Business

Governments use B2G model websites to approach business organizations. Such websites
support auctions, tenders, and application submission functionalities.

Government - to - Citizen

Governments use G2C model websites to approach citizen in general. Such websites support
auctions of vehicles, machinery, or any other material. Such website also provides services like
registration for birth, marriage or death certificates. The main objective of G2C websites is to
reduce the average time for fulfilling citizen’s requests for various government services.

E-Commerce Sales Life Cycle (ESLC) Model:

E-Commerce sales life cycle includes the following stages:

Pre-Sale: Online promotions are done to create excitement about the products that are being
sold through online advertisements.
Transaction: The customers place their order for the products. The process should be user-
friendly and secure.
Delivery: This stage involves delivering the product to the consumer. Care should be taken in
delivery with proper packaging and speedy delivery to make the customer happy.
After Sales: This stage involves following up with the customer to let him know that the
product has been delivered or if he is satisfied. The feedbacks from the customer can be
furthers used in improving services by the company.

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Stages:
Stage 1: Start-up & fast growth
Most ecommerce businesses go through an initial period of fast and in some cases unexpected
growth. This is usually to do with the popularity of the product they sell or market demand
rather than the implementation of their ecommerce platforms. Many businesses will choose
platforms such as BigCommerce, Shopify or Magento. It’s important that your business stays
agile and responds quickly to change.

You don’t want to get caught up in complicated systems or handcuffed by too much process.
Brands often enjoy quick impact in this honeymoon period, before growth slows down and
progression is halted by a kind of invisible ceiling. This sees businesses moving into the second
stage of the ecommerce lifecycle, which is a growth plateau.
Stage 2: Plateauing growth or consolidation
Businesses reaching this second stage of the ecommerce lifecycle tend to panic and look for
quick-fix solutions to perceived issues. You need to understand that it’s natural for there to be a
leveling off of growth after the early spike. Once your business has gained traction, brand

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awareness and initial momentum, it’s time to reflect on your progress, analyze your data and
gain key insights to make measured and strategic changes to your ecommerce website and your
marketing.
It’s important for business owners to assign ample time and resources to research, to systemize
and strategize to work out the best ways to move to the next level and start achieving renewed
growth.
Stage 3: Renewed Growth
Many business owners think that the solution to the issue of plateauing growth is a quick fix or
a swift change of direction, which can be an ecommerce platform move or, perhaps, the
recruitment of a new ecommerce manager.
This is not necessarily thinking strategically. A replatforming project might indeed be the
answer perhaps to a more advanced or modern ecommerce platform, like BigCommerce but
you need to make a clear business case (including extensive research and risk assessments)
before deciding to migrate platforms. Check out Space 48’s golden rules of replatforming blog
to learn more.
In this third stage of the ecommerce lifecycle, the attempts to reinvigorate your company’s
momentum and growth should always be strategic. The solution to plateauing growth may only
require realigning your business goals with changing customer trends, keeping up-to-date with
new technology and channel strategies.
Research and analysis is required to optimize processes and improve customer experience. This
will steer your strategy. Research may reveal issues and you might find you need to replatform,
but there need to be sound reasoning behind decisions to implement technology and tools.

Electronic Payment System:

E-commerce sites use electronic payment, where electronic payment refers to paperless
monetary transactions. Electronic payment has revolutionized the business processing by
reducing the paperwork, transaction costs, and labor cost. Being user friendly and less time-
consuming than manual processing, it helps business organization to expand its market
reach/expansion. Listed below are some of the modes of electronic payments −

 Credit Card

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 Debit Card
 Smart Card
 E-Money
 Electronic Fund Transfer (EFT)
 Unified Payments Interface (UPI)

Credit Card

Payment using credit card is one of most common mode of electronic payment. Credit card is
small plastic card with a unique number attached with an account. It has also a magnetic strip
embedded in it which is used to read credit card via card readers. When a customer purchases
a product via credit card, credit card issuer bank pays on behalf of the customer and customer
has a certain time period after which he/she can pay the credit card bill. It is usually credit card
monthly payment cycle. Following are the actors in the credit card system.

 The card holder − Customer

 The merchant − seller of product who can accept credit card payments.
 The card issuer bank − card holder's bank
 The acquirer bank − the merchant's bank
 The card brand − for example , visa or Mastercard.

Credit Card Payment Proces

Step Description

Step 1 Bank issues and activates a credit card to the customer on his/her
request.

Step 2 The customer presents the credit card information to the merchant
site or to the merchant from whom he/she wants to purchase a
product/service.

Step 3 Merchant validates the customer's identity by asking for approval from
the card brand company.

Step 4 Card brand company authenticates the credit card and pays the
transaction by credit. Merchant keeps the sales slip.

Step 5 Merchant submits the sales slip to acquirer banks and gets the service
charges paid to him/her.

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Step 6 Acquirer bank requests the card brand company to clear the credit
amount and gets the payment.

Step 6 Now the card brand company asks to clear the amount from the issuer
bank and the amount gets transferred to the card brand company.

Debit Card

Debit card, like credit card, is a small plastic card with a unique number mapped with the bank
account number. It is required to have a bank account before getting a debit card from the
bank. The major difference between a debit card and a credit card is that in case of payment
through debit card, the amount gets deducted from the card's bank account immediately and
there should be sufficient balance in the bank account for the transaction to get completed;
whereas in case of a credit card transaction, there is no such compulsion.
Debit cards free the customer to carry cash and cheques. Even merchants accept a debit card
readily. Having a restriction on the amount that can be withdrawn in a day using a debit card
helps the customer to keep a check on his/her spending.

Smart Card

Smart card is again similar to a credit card or a debit card in appearance, but it has a small
microprocessor chip embedded in it. It has the capacity to store a customer’s work-related
and/or personal information. Smart cards are also used to store money and the amount gets
deducted after every transaction.
Smart cards can only be accessed using a PIN that every customer is assigned with. Smart cards
are secure, as they store information in encrypted format and are less expensive/provides
faster processing. Mondex and Visa Cash cards are examples of smart cards.

E-Money

E-Money transactions refer to situation where payment is done over the network and the
amount gets transferred from one financial body to another financial body without any
involvement of a middleman. E-money transactions are faster, convenient, and saves a lot of
time.
Online payments done via credit cards, debit cards, or smart cards are examples of emoney
transactions. Another popular example is e-cash. In case of e-cash, both customer and
merchant have to sign up with the bank or company issuing e-cash.

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Electronic Fund Transfer

It is a very popular electronic payment method to transfer money from one bank account to
another bank account. Accounts can be in the same bank or different banks. Fund transfer can
be done using ATM (Automated Teller Machine) or using a computer.
Nowadays, internet-based EFT is getting popular. In this case, a customer uses the website
provided by the bank, logs in to the bank's website and registers another bank account. He/she
then places a request to transfer certain amount to that account. Customer's bank transfers the
amount to other account if it is in the same bank, otherwise the transfer request is forwarded
to an ACH (Automated Clearing House) to transfer the amount to other account and the
amount is deducted from the customer's account. Once the amount is transferred to other
account, the customer is notified of the fund transfer by the bank.
Unified Payments Interface (UPI)

Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single
mobile application (of any participating bank), merging several banking features, seamless fund
routing & merchant payments into one hood. It also caters to the “Peer to Peer” collect request
which can be scheduled and paid as per requirement and convenience.
With the above context in mind, NPCI conducted a pilot launch with 21 member banks. The
pilot launch was on 11th April 2016 by Dr. Raghuram G Rajan, Governor, RBI at Mumbai. Banks
have started to upload their UPI enabled Apps on Google Play store from 25th August, 2016
onwards.
Risks and Electronic Payment Systems:
Fraud:
Fraud can be defined as the undesired activities taking place in an operational system [15]. E-
payments companies and their customers suffer billions of dollars in fraud losses annually as it
affects the entire epayments industry. According to data from “ACI Worldwide” the number of
fraud attempts based on total population in 2015 increased to 1.49% compared to 1.39% in
2014, i.e. one out of every 67 transactions was a fraudulent attempt in 2015 compared to one
out of every 72 transactions in 2014. Which represents a 7.1% increase during the year. All this
numbers show how it is very important to work against fraud attacks and how it is important to
have solutions for those attacks.
Tax Evasion:
Businesses are required by law to provide the government with records of their financial
transactions so that their tax compliance can be checked. E-payment, however, can thwart tax

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collection efforts. Until a company discloses the numerous e-payments it has made or received
during the tax period, the government will not know the truth that may lead to tax evasion.
Payment Conflicts:
Payment problems also occur because payments are not made manually, but through an
automated system that can cause errors. This is particularly important when payment is made
on a daily basis to several recipients. For example, if you do not review your pay slip at the end
of will pay period, you could end up in a dispute due to such technical issues or anomalies.
Impulse Buying:
E-payment systems promote pulse transactions, particularly online, and consumers are likely to
make a decision to buy an item they find on sale online, as it will cost only a click to buy it via a
credit card. The buying of impulses leads to disorganized budgets and is one of the drawbacks
of e-payment systems.
Dishonest providers and Merchants:
Those who exploit and sell consumers 'personal data in order to be used by advertisers in ads
often use this data for fraud purposes.
Electronic Data Interchange (EDI):
Electronic Data Interchange (EDI) is the electronic interchange of business information using a
standardized format; a process which allows one company to send information to another
company electronically rather than with paper. Business entities conducting business
electronically are called trading partners.

Many business documents can be exchanged using EDI, but the two most common are
purchase orders and invoices. At a minimum, EDI replaces the mail preparation and handling
associated with traditional business communication. However, the real power of EDI is that it
standardizes the information communicated in business documents, which makes possible a
"paperless" exchange.

The traditional invoice illustrates what this can mean. Most companies create invoices using a
computer system, print a paper copy of the invoice and mail it to the customer. Upon receipt,
the customer frequently marks up the invoice and enters it into its own computer system. The
entire process is nothing more than the transfer of information from the seller's computer to
the customer's computer. EDI makes it possible to minimize or even eliminate the manual steps
involved in this transfer.

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The process improvements that EDI offers are significant and can be dramatic. For example,
consider the difference between the traditional paper purchase order and its electronic
counterpart:

A Traditional Document Exchange of An EDI Document Exchange of a Purchase

Purchase Order Order
This process normally takes between three This process normally occurs overnight and
and five days. can take less than an hour.

Buyer makes a buying decision, creates the Buyer makes a buying decision, creates the
purchase order and prints it. purchase order but does not print it.

Buyer mails the purchase order to the EDI software creates an electronic version of
supplier. the purchase order and transmits it
automatically to the supplier.
Supplier receives the purchase order and Supplier's order entry system receives the
enters it into the order entry system. purchase order and updates the system
immediately on receipt.
Buyer calls supplier to determine if purchase Supplier's order entry system creates an
order has been received, or supplier mails acknowledgment and transmits it back to
buyer an acknowledgment of the order. confirm receipt.

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