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E-COMMERCE UNIT1 NOTES
What is e-commerce?
E-commerce (electronic commerce) is the buying and selling of goods and
services, or the transmitting of funds or data, over an electronic network,
primarily the internet. These e-commerce transactions typically fall within
four types: business-to-business (B2B), business-to-consumer (B2C),
consumer-to-consumer or consumer-to-business.The terms e-
commerce and e-business are often used interchangeably.
How does e-commerce work?
E-commerce is powered by the internet. Customers use their own devices
to access online stores. They can browse products and services those
stores offer and place orders.
As an order is placed, the customer's web browser communicates back
and forth with the server hosting the e-commerce website. Data
pertaining to the order is relayed to a central computer known as
the order manager. The data is then forwarded to databases that manage
inventory levels; a merchant system that manages payment information
using payment processing applications, such as PayPal; and a bank
computer. Finally, it circles back to the order manager. This ensures store
inventory and customer funds are sufficient for the order to be
processed.
After the order is validated, the order manager notifies the store's web
server. It displays a message notifying the customer that their order has
been processed. The order manager then sends order data to the
warehouse or fulfillment department, letting it know the product or
service can be dispatched to the customer. At this point, tangible and
digital products are sent to the customer, or access to a service is
granted.
History of e-commerce
E-commerce began in the 1960s, when businesses started using EDI to
share business documents with other companies. In 1979, the American
National Standards Institute developed ASC X12 as a universal standard
for businesses to share documents through electronic networks.
As the number of individual users sharing electronic documents with each
other grew in the 1980s, the rise of eBay and Amazon in the 1990s
revolutionized the e-commerce industry. Consumers can now buy many
items online, from e-commerce-only vendors -- also called e-tailers -- and
brick-and-mortar stores that have e-commerce capabilities. Almost all
retail companies have integrated online business practices into their
business models and sell online.
The COVID-19 pandemic caused a significant spike in e-commerce
transactions. With shoppers confined to their homes for an extended
period, e-commerce jumped to a record high of 16.4% of total U.S. retail
sales in the second quarter of 2020, according to the U.S. Census Bureau.
It has since leveled off at around 15%. The Census Bureau keeps a record
of quarterly e-commerce data dating back to 1999. In Q3 2023, total U.S.
retail e-commerce sales were estimated to be $284.1 billion.
Worldwide, Insider Intelligence estimated e-commerce sales would
account for 20.8% of 2023 global retail sales and projected it will rise to
nearly 22% of total sales in 2024.
E-COMMERCE FEATURES
Here are a few efficient e-commerce features:
1. User-friendly structure
User-friendly access is one of the most important e-commerce features
that clients look for in an e-commerce website. Customers will switch to
other online retailers if they have trouble using your websites or can’t find
what they’re looking for.
2. Global reach
E-commerce, as I already mentioned, is everything. Being everywhere
makes it incredibly practical for us, the users. You can live in New York City
and shop for products all over the world. Because the goods or service is
available from anywhere, the customer is wide and the business grows as
a result.
3. Information Density
Rich information is made available to the buyer before, during, and after
the purchase of a good or service thanks to e-commerce. These data are
better in quality and less expensive to give and receive.Data density
means overall amount and fine of facts to be had over the internet to all
market buyers and sellers. net massively increases data density. Record
density gives higher exceptional statistics to patrons and merchants. E-
trade technologies increase accuracy and timeliness of records. For
instance, the flipkart.com store has a variety of products with expenses.
4. Customer Reviews
Create a section on the online store’s website where customers can read
product reviews.
Reviews are essential for any online business because clients would not
have the opportunity to actually check a product; instead, they would
likely rely on reviews left by other customers.
Platforms that allow customers to leave reviews on products to help
others make informed decisions.
5. Secure Payment
Make sure to make the checkout stage as simple as possible for the clients
by including a variety of online payment options in the shopping cart in
order to increase your chances of closing the transaction during the
primary checkout process. Platforms should have secure payment
gateways for customers to make payments securely.
Advantages of E-commerce
There are many advantages to e-commerce, including:
- Increases Sales and Revenue
E-commerce always helps to increase sales and revenue as it
widens the market by reaching out to new customers. It also allows
businesses to offer discounts and incentives that are not possible in
a physical store. There are also many opportunities for cross-selling
and up-selling.
E-commerce also helps reduce business costs as it eliminates the
need for a physical store and sales staff. It also reduces inventory
costs and transportation costs. There are also many opportunities
for cost-saving through online auctions and supply chains.
- Eliminates Geographic Barriers
E-commerce also eliminates geographic barriers, as customers can
buy goods and services from anywhere in the world. This allows
businesses to sell to new markets and expand their customer base.
It may also help to reduce the cost of doing business.
- Improves Customer services
This is because e-commerce allows businesses to offer 24/
customer service, which is not possible in a physical store. It also
allows customers to compare prices and products from different
retailers easily. Sometimes there are also additional services, such
as customer reviews and ratings, that are not available in a physical
store.
Efficiency is increased as orders can be placed and processed
quickly and easily through an e-commerce website. This eliminates
the need for paperwork and reduces the chances of human error. It
also allows businesses to track inventory levels and sales trends in
real-time.
Disadvantages of E-commerce
However, there are also some disadvantages to e-commerce,
including:
- Lack of Social Interaction
One disadvantage is that there is a lack of social interaction, as
people cannot see or touch the product before they buy it. This may
lead to dissatisfaction with the purchase if the product is not what
was expected.
Another disadvantage is that there are security risks, as sensitive
financial information can be stolen by hackers. This can result in
loss of money and identity theft. There may also be risks involved
with buying and selling products online, as there is no guarantee of
product quality or authenticity.
- Difficulties with Returns
Another disadvantage is that it can be difficult to return products
that have been bought online. This is because businesses often
require the product to be returned in its original packaging, which
may not be possible if the product has been used. There may also
be shipping costs involved in returning the product.
There may be a lack of trust among consumers when it comes to
buying goods and services online. This is because they may be
afraid of being scammed or not receiving the product that they
ordered.
Direct-to-consumer (D2C). This is where a business that manufactures or produces goods and services sells directly to consumers online without any middlemen or distributors involved, in contrast to B2C e-commerce. Consumer-to-consumer (C2C). This is a type of e-commerce in which consumers trade products, services and information with each other online. These transactions are generally conducted through a third party that provides an online platform in which the transactions are carried out. Online auctions and classified advertisements are two examples of C2C platforms. EBay and Craigslist are two well-known examples of these platforms. Because eBay is a business, this form of e-commerce could also be called consumer-to-business-to-consumer. Platforms like Facebook marketplace and Depop -- a fashion reselling platform -- also enable C2C transactions. Consumer-to-business (C2B). This is a type of e-commerce in which consumers make their products and services available online for companies to bid on and purchase. This is the opposite of the traditional commerce model of B2C. A popular example of a C2B platform is a market that sells royalty-free photographs, images, media and design elements, such as iStock. Another example would be a job board. Business-to-administration (B2A). This refers to transactions conducted online between companies and public administration or government bodies. Many branches of government are dependent on various types of e-services or products. These products and services often pertain to legal documents, registers, Social Security, fiscal data and employment. Businesses can supply these electronically. B2A services have grown considerably in recent years as investments have been made in e-government capabilities. Consumer-to-administration (C2A). This refers to transactions conducted online between consumers and public administration or government bodies. The government rarely buys products or services from individuals.
Difference between E-commerce and M- commerce **S.No. E-commerce M-commerce
Electronic Commerce in short it is called as e- commerce. Mobile Commerce in short it is called as m-commerce.
In general, e-commerce activities are performed with the help of desktop computers and laptops. M-commerce activities are performed with the help of mobile devices like smartphones, tablets, PDA’s (Personal Digital Assistant) etc.
E-commerce is an older concept. M-commerce is an newer concept.
It is broad term which refers doing shopping and making payments online with help of electronic devices like Laptop and computers. It is subcategory of ecommerce which does the same this via mobile devices.
In e-commerce the use of internet is mandatory But in case of m-commerce some activities can be performed without internet also.
E-commerce devices are not easy to carry and portability point of view it is not so good. M-commerce devices are easy to carry and portability point of view it is good.
E-commerce developed in 1970’s. M-commerce developed in 1990’s.**
What is social commerce?
Social commerce is the process of selling products and services directly
through social media.
With social commerce , the entire shopping experience from product
discovery and research to checkout, takes place right on social media.
Currently, social apps with built-in native social commerce features
are Instagram, Facebook, Pinterest and TikTok
With social commerce, you might see a pair of sweet strawberry-print
clogs on your Instagram feed, hit “shop now”, add it to your shopping cart
and complete the purchase right there in the app.
Or, you could spot a well-priced crewneck as you’re scrolling through
TikTok, and click “Buy.” Once your purchase is complete, you can
continue to enjoy your usual TikTok experience by watching duet videos
with your favorite artist, without missing a beat.
These are shopping opportunities (shopportunities!) right on the digital
platforms that your audience uses most. And you should be taking
advantage of them.
What are the best platforms for social commerce?
There are currently five social platforms that offer social commerce capabilities. But as the interest (and revenue) grows, it’s likely we’ll see more of these social media brands integrating “shop now” options. Here are the current social commerce platforms available. 1.Facebook You use your Facebook Business Page to share news, connect with fans, and show off your cute new logo. Why not use it to sell a few things and boost sales while you’re there? Set up a Facebook Shop and you can do just that. Facebook Shops are customizable. Choose which collections or goods to feature, and customize the fonts, images, and colors to suit your brand. Import an existing catalog of products from your website, or create one from scratch. 2.Instagram 60% of people discover new products on Instagram. Your products should be among them. Instagram Shops allows users to buy products featured in your photos and videos from anywhere in the app. 3.Pinterest Pinterest was one of the first social media platforms to offer shopping capabilities for users way back in 2015. But there’s some news you should pin right now: Pinterest does not strictly offer social commerce. Yes, for business accounts, Pinterest does offer the option to create “Product Pins” (formerly Buyable Pins), which are displayed in your brand’s Pinterest Shop. If a customer lives in the US and sees a Buy button below a Pin, they can complete their purchase through a checkout experience without ever having to leave Pinterest.
What are Ecommerce Infrastructures?
Ecommerce infrastructures are hardware and software components required to operate and maintain an online store. They are the foundation upon which ecommerce businesses are built, empowering businesses to sell their products and services over the internet. They include the hardware, software, and services needed to manage online transactions and process orders.
Components of an Ecommerce Infrastructure
Below are some infrastructures all ecommerce businesses should have: 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. 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.
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. 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. 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. 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. 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. 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.
