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Introduction to E-Commerce
Commerce is simply the process of buying, selling and exchanging products and services between and among organizations and individuals. E-Commerce or Electronics Commerce is a methodology of modern business, which addresses the need of business organizations, vendors and customers to reduce cost and improve the quality of goods and services while increasing the speed of delivery. E-commerce refers to the paperless exchange of business information.
Features of E-Commerce:
E-Commerce provides the following features:
Non-Cash Payment: E-Commerce enables the use of credit cards,
debit cards, smart cards, electronic fund transfer via bank's website,
and other modes of electronics payment.
24x7 Service availability : E-commerce automates the business of
enterprises and the way they provide services to their customers. It
is available anytime, anywhere.
Advertising/Marketing : E-commerce increases the reach of
advertising of products and services of businesses. It helps in better
marketing management of products/services.
Improved Sales : Using e-commerce, orders for the products can be
generated anytime, anywhere without any human intervention. It
gives a big boost to existing sales volumes.
Support : E-commerce provides various ways to provide pre-sales
and post-sales assistance to provide better services to customers.
Inventory Management : E-commerce automates inventory
management. Reports get generated instantly when required.
Product inventory management becomes very efficient and easy to
maintain.
Communication improvement : E-commerce provides ways for
faster, efficient, reliable communication with customers and
partners.
Benefits or Advantages of E-Commerce:
E-Commerce helps in facilitating and redefining the relationships
between or among organizations, and between organizations and
Individuals for value creation. E-Commerce advantages can be broadly
classified in three major categories:
Benefits to Organizations
Benefits to Consumers
Benefits to Society
Advantages or benefit to Organizations:
It helps to reach Global : E-Commerce enabled business now have access to people all around the world. In effect all E-Commerce businesses have become virtual multinational corporations. E-Commerce expands the market place to national and international markets. Cost effective : E-Commerce is proved to be highly cost effective for business concerns as it cuts down the cost of marketing, processing, inventory management, customer care etc. It also reduces the burden of infrastructure required for conducting business. New Customers with Search Engine Visibility : Physical retail is driven by branding and relationships. In addition to these two drivers, online retail is also driven by traffic from search engines. It is not unusual for customers to follow a link in search engine results and land up on an ecommerce website that they have never heard of. This additional source of traffic can be the tipping point for some ecommerce businesses. It Reduces the Paper Costs: E-Commerce decreases the cost of creating, processing, distributing, storing and retrieving information through the use of FDI systems. This greatly cuts on the cost of paper work in terms of the time taken and the man power required. Also the date is more secure from theft and destruction. Reduction in Inventories : A reduction in inventory is desirable to enable reduction in storage, handling, insurance and administrative costs. Internet E- Commerce can helps firms to reduce inventories by electronically linking the suppliers and buyers. The process starts from the customer orders and uses just-in-time manufacturing. Information on inventory levels and
New Found Business Partners : Internet based E-Commerce enables businesses to find new business partners globally on the web, thus not restricting themselves to a specific choice of suppliers. Increased supply chain efficiencies : E-Commerce minimizes supply chain inefficiencies, reduces inventories, and reduces delivery delays. Digitization of Products and Processes : Particularly in the case of software and music/video products, this can be downloaded or e-mailed directly to customers via the Internet in digital or electronic format. The internet helps to expedite access to remote information, thus adding speed to transactions and processes. Information sharing : It takes only few seconds to share information over the internet. a firm can e-mail its customers relating new products and new offers and can solve their product related quires and welcome suggestions.
Benefits of E-Commerce to Consumers:
Gives freedom to make choices : It also gives customers an opportunity to look for cheaper and better quality products. With E-Commerce, consumers can search the specific product or service they require and can even find the direct manufacturer from where they can purchase products at comparatively less price. Shopping online is time saving and convenient. In addition to it, consumers also get to see the reviews of other consumers that will help in making beneficial purchase decision. Increase in variety of goods : As the market will expand the variety of goods available will also expand. Wide variety of goods are available than ever before. It gives more choice and alternatives : E-Commerce provides more choice and alternatives to customers that will increase the choice of vendors or products because they are no longer geographically constrained to reach a vendor or a product. A large number of vendors/manufacturers are marketing and selling their products/services on the internet. Virtual shops (e.g.Homeshop18, snap deal, flipkart) can offer the consumers a large number of products/services at a single site. Convenience of Shopping at Home : allows the consumers to shop went it is convenient for them not strictly during store hours. Also for handicapped or ill consumers, home shopping on the internet provides a lot of opportunity and convenience.
Ensure Secrecy : the various security measures that are in built are used in ECommerce transactions to prevent any unauthorised access to information on the internet for ensure secrecy they maintain encoding, encryption and passwords. More Competitive Prices and Increased Price comparison capabilities : The large amount of information available on the internet is giving more and more power to the consumers. Consumers can make comparison shopping. There are several online services that allow customers to browse multiple ecommerce merchants and find the best prices. Access to Greater Amounts of Information on Demand : Consumers can have access to large amount of information online on products and services, their features and prices. This further translates into more choice to customers in shopping and greater price comparison opportunities. Time compression : Time is not a factor with Internet communication between firms and their stakeholders. Online stores can be open 24/7; people can communicate as their schedules permit; time zones disappear for managers collaborating with partners on other continents. Quick Delivery of Digitized Products/Services : E-Commerce allows quick delivery in the case of digitized products such as music, software etc. Provide Comparison Shopping: Economic facilitates comparison shopping. There are several online services that allow customers to browse multiple ecommerce merchants and find the best prices. E-payment system : The electronic payment system on the internet is facilitated by payment gateways or intermediary between the business firm and customers and between the business firms for assuring the payments from the customers.
Benefits of E-Commerce to Society:
Enables More Flexible Working Practices : Which enhances the quality of
life for a whole host of people in society, enabling them to work from home. Not only is this more convenient and provides happier and less stressful working environments. It also potentially reduces environmental pollution a fewer people have to travel to work regularly.
Connects People : Enables people in developing countries and rural areas to
enjoy and access products, services, information and other people which otherwise would not be easily available to them.
for opportunities, and thus an ecommerce site, service, payment
gateways; all are always prone to attack. Things such as viruses
could mean losing the site or affecting the customer’s computers
while on purchasing from the website.
Many Goods Cannot Be Purchased Online : Despite its many
conveniences, there are goods that consumer cannot buy online.
Most of these would be in the categories of “perishable” or “odd-
sized”. It could order both of them online, but consider the
inconvenience. The Popsicle would have to be transported in
refrigerated trucks. Unless the seller was willing to make a huge
loss, the cost of shipping that Popsicle would far exceed the cost of
the Popsicle.
Products people won’t buy online : There are various products
which the customers would like to first touch and feel and then buy
it. For example: Furniture users want to touch ant they want to sit
on it, feel the texture of the fabric.
Ecommerce Does Not Allow Experiencing the Product before
Purchase : It cannot touch the fabric of the garment when consumers
wants to buy and it check how the shoe feels on our feet, consumer
cannot “test” the perfume that consumer want to buy. In many cases,
customers want to experience the product before purchase.
Ecommerce does not allow that. If they buy a music system, they
cannot play it online to check if it sounds right? If they are
purchasing a home-theatre system, they would much rather sit in the
“experience centre” that several retails store set up.
Loyal customers: Great amount of effort is put on building a
customer relationship buy the organizations and retaining them is
rather a bigger job. A business cannot survive without a loyal
customer.
Shopping is Social Experience : People love to shop in the mall
because it gives them an opportunity to have fun with friends and
family. It’s something online stores lack of.
Anyone one can set up an Ecommerce Website : Where online
storefront providers bring the ability to set up an ecommerce store
within minutes. The lowered barriers to entry might be a great
attraction to the aspiring ecommerce entrepreneur. But for the buyer,
reliability can be an issue. This could lead customers to restrict their
online purchases to famous ecommerce websites.
Too Many Competitors: If there are thousands of online stores
selling similar products, how company can attract visitors, so they
actually but from it and not from others? As the technology has
boomed the competition is increasing because more and more
people are opening their businesses on internet
Security : When making an online purchase consumer have to
provide at least credit card information and mailing address. In
many cases ecommerce websites are able to harvest other
information about our online behavior and preferences. This could
lead to credit card fraud, or worse, identity theft.
Business models for E-Commerce
Some of the very important E-Commerce models are elaborately
explained as follows:
1. Business - to - Business (B2B)
2. Business - to – Consumer(B2C)
3. Consumer - to - Consumer (C2C)
4. Consumer - to - Business (C2B)
1. Business - to - Business (B2B): Business - to - Business (B2B) is a
transaction that occurs between two companies, as opposed to a transaction involving a consumer. This term may also describe a company that provides
goods or services for another company. Business - to - Business (B2B) is
a transaction that exists between businesses, such as those involving
A manufacturer and wholesaler, or,
A wholesaler and a retailer.
online selling of products, or, e-tailing, in which the manufacturers or retailers sell their products directly to the consumers over the internet. The example of the www.flipkart.com site also involves the B2C model in which the consumer searches for a book on their site and places an order, if required. This implies that a complete business solution might be an integration solution of more than one business model. For example, www.flipkart.com includes the B2B model in which the publishers transact with flipkart and the B2C model in which an individual consumer transact with the business organization.
Advantages of Business - to – Consumer(B2C):
1. Advantages for the Business :
It can reach worldwide market with unlimited volume of customers.
It can display information, pictures, and prices of products or services
without spending a fortune on colourful advertisements.
Order processing an easier task than before.
It can operate on decreased, little, or even no overhead.
2. Advantages for the Consumers
Convenience : Consumers can shop at any time of day, from the
privacy of their own home. Internet shopping can be done at time
either day or night.
Many choice : Consumers is offered many choices for the same
products under various brands
Less Hassle : Consumers can shop online without hassles like traffic,
congestion of the malls etc.
Disadvantages of Business - to -Consumer (B2C):
Disadvantages for the Business:
Many websites offering the same product to the customers
Technological problems can cause the website to not operate
properly thereby losing the customer.
People are hesitant to enter the credit card details if the website does
not have proper security norm.
Disadvantages for the consumer :
Security issues, especially credit card information which is very
sensitive. Fraud, rip-offs are very common on the web.
Customer service may not be satisfactory for the consumers.
(3) Consumer - to - Consumer (C2C):
C2C, or customer-to-customer, or consumer-to-consumer, is a business
model that facilitates the transaction of products or services between
customers. An example of C2C would be E-Bay is a global online
shopping and auction website that offers millions of consumers a wide
variety of goods and services. Sellers pay a fee or commission to sell their
items and buyers can shop and make purchases for free. Buyers place bids
just like in a traditional auction and only acquire an item if they are the
highest bidder. Monetary transactions are typically completed through
PayPal, a service for online money transfers.
Advantages of C2C Model :
Customers can directly contact sellers and eliminate the middle
man.
service that the business can use to complete a business process or gain competitive advantage.
One of the best example is Online Advertising sites like Google Ad sense, affiliation platforms like Commission Junction and affiliation programs like Amazon are the best examples of C2B schemes. Individuals can display advertising banners, contextual text ads or any other promotional items on their personal websites. Individuals are directly commissioned to provide an advertising/selling service to companies.
Challenges and barriers in e-commerce environment:
The e-commerce environment faces several challenges and barriers, impacting businesses and consumers alike. Some of these challenges include
- Data and cyber security
- Identity verification
- Captivating the perfect customer
- Customer experience
- Loyalty in customer
- Budgets
- Logistics
- Store Agility
- Customer expectations
- Scalability
1. Data and cyber security: One of the biggest global issues in e commerce is security breaches. The fact there is a lot of personal data and information when involved in ecommerce, and any kind of technical issue can cause serious damage to a business’s daily operations. Thus, security is one of the significant challenges of online shopping. 2. Identity verification : Identifying whether the person who is visiting the shop online is the right person can be one of the ecommerce business challenges. If you don’t have the right information then how can you really proceed? Well, it can be tricky to find the right solution, but one solution is to invest in online identity verification. 3. Captivating the perfect customer: Shoppers have now too many options to choose from. If a shopper has to buy any product, they do some research and finalize it. To make sure that the right customer really wants your product, you need to have the right strategy for it. 4. Customer experience: Ensuring a successful eCommerce website by delivering an exceptional customer experience (CX) or user experience (UX). Shoppers anticipate a level of expertise comparable, if not identical, to what they would encounter in a physical store. The website’s navigation flow, structural organization, and the customization of retail offerings to align with individual shopper preferences are critical components in achieving this objective. 5. Loyalty in customer: Acquiring new customers can cost up to 5 times more than retaining an older existing one. The success rate is also high regarding existing customers compared to new ones. These given facts are proof of how important is customer loyalty. 6. Budgets: As digital marketing becomes the standard for many e-commerce enterprises, an increasing number of companies are directing their investments toward digital and social media advertising. However, as the demand for clicks and virtual advertising space rises, so do the costs. 7. Logistics: Many companies across the world are affected due to supply chain problems. These issues occur during multiple stages which causes expenses and delays. 8. Store Agility : It is important to integrate an agile company model. Remaining aware and keeping a proper understanding of trends is imperative for eCommerce
