E-COMMERCE ESSENTIALSMODULE 1: INTRODUCTION TO E-COMMERCE

E-COMMERCE AND E-BUSINESS: AN

INTRODUCTIONLESSON -1

EVOLUTION OF E-COMMERCE

• MORE IMPORTANT FOR ANSWERING INTERVIEW QUESTIONS THAN PRACTICAL

PURPOSES

• GIVES YOU A NECESSARY UNDERSTANDING OF THE ORIGIN OF E-COMMERCE TO

BUILD UPON IT IN FUTURE LESSONS

EVOLUTION OF E-COMMERCE

E-COMMERCE

• E-COMMERCE COVERS OUTWARD-

FACING PROCESSES THAT TOUCH

CUSTOMERS, SUPPLIERS AND EXTERNAL

PARTNERS, INCLUDING SALES,

MARKETING, ORDER TAKING, DELIVERY,

CUSTOMER SERVICE, PURCHASING OF

RAW MATERIALS AND SUPPLIES FOR

PRODUCTION AND PROCUREMENT OF

INDIRECT OPERATING-EXPENSE ITEMS,

SUCH AS OFFICE SUPPLIES.

E-BUSINESS

E-BUSINESS INCLUDES E-COMMERCE

BUT ALSO COVERS INTERNAL

PROCESSES SUCH AS PRODUCTION,

INVENTORY MANAGEMENT, PRODUCT

DEVELOPMENT, RISK MANAGEMENT,

FINANCE, KNOWLEDGE MANAGEMENT

AND HUMAN RESOURCES

• IT INVOLVES NEW BUSINESS MODELS

AND THE POTENTIAL TO GAIN NEW

REVENUE

• E-BUSINESS STRATEGY IS MORE

COMPLEX, MORE FOCUSED ON

INTERNAL PROCESSES, AND AIMED AT

COST SAVINGS AND IMPROVEMENTS

IN EFFICIENCY, PRODUCTIVITY AND

COST SAVINGS.

• RELATIVELY EASY TO IMPLEMENT

BECAUSE IT INVOLVES ONLY THREE TYPES

OF INTEGRATION: VERTICAL

INTEGRATION OF FRONT-END WEB SITE

APPLICATIONS TO EXISTING

TRANSACTION SYSTEMS; CROSS-BUSINESS

INTEGRATION OF A COMPANY WITH WEB

SITES OF CUSTOMERS, SUPPLIERS OR

INTERMEDIARIES SUCH AS WEB-BASED

MARKETPLACES; AND INTEGRATION OF

TECHNOLOGY WITH MODESTLY

REDESIGNED PROCESSES FOR ORDER

HANDLING, PURCHASING OR CUSTOMER

SERVICE.

• FOUR DIRECTIONS OF INTEGRATION:

VERTICALLY, BETWEEN WEB FRONT- AND

BACK-END SYSTEMS; LATERALLY, BETWEEN A

COMPANY AND ITS CUSTOMERS, BUSINESS

PARTNERS, SUPPLIERS OR INTERMEDIARIES;

HORIZONTALLY, AMONG E-COMMERCE,

ENTERPRISE RESOURCE PLANNING (ERP),

CUSTOMER RELATIONSHIP MANAGEMENT

(CRM), KNOWLEDGE MANAGEMENT AND

SUPPLY-CHAIN MANAGEMENT SYSTEMS; AND

DOWNWARD THROUGH THE ENTERPRISE, FOR

INTEGRATION OF NEW TECHNOLOGIES WITH

RADICALLY REDESIGNED BUSINESS PROCESSES.

INTERESTING FACTS TO IMPRESS THE INTERVIEWER

• 1979- MICHAEL ALDRIDGE IS CREDITED WITH INVENTING ONLINE SHOPPING BY

CONNECTING A MODIFIED DOMESTIC TV TO A REAL-TIME TRANSACTION

PROCESSING COMPUTER VIA A DOMESTIC TELEPHONE LINE

• 1998- PAYPAL COMES INTO EXISTENCE. ONE OF THE FIRST MAJOR E-COMMERCE

COMPANIES THAT EXISTS TODAY.

FACTORS FUELLING E-COMMERCE

• WHAT ARE SOME OF THE FACTORS ACCORDING TO YOU THAT IS FUELLING E-

COMMERCE IN INDIA?

• TECHNOLOGICAL BOOM

• BUILDING UP TRUST AND RELIANCE: FEEDBACK AND INTERACTION WITH E-

COMMERCE

• ECONOMIC GROWTH

• CONVENIENCE

• MOST IMPORTANT FACTOR: PEOPLE BECOMING FAMILIAR WITH THIS NEW WAY

OF TRANSACTING. (NO MORE FEAR OF THE UNKNOWN)

TRADITIONAL COMMERCE VS. E-COMMERCE

• HOME DELIVERY, SOMETIMES WITHOUT ANY ADDITIONAL CHARGES AND SAME-

DAY DELIVERY OPTIONS

• REACH MORE AUDIENCE; NATION-WIDE OR EVEN GLOBAL.

• DIRECT AND IMMEDIATE FEEDBACK FROM YOUR CUSTOMERS. A TIGHTLY

INTEGRATED SUPPLY CHAIN WITH FEW OR NO MIDDLEMEN. GOOD FOR

BUSINESS.

• CASE OF ONLINE FRAUDS

MEDIA CONVERGENCE

• MEDIA CONVERGENCE IS A TERM THAT CAN REFER TO EITHER: 1) THE MERGING

OF PREVIOUSLY DISTINCT MEDIA TECHNOLOGIES AND MEDIA FORMS RESULTING

FROM DIGITIZATION AND COMPUTER NETWORKING; OR 2) AN ECONOMIC

STRATEGY IN WHICH THE MEDIA PROPERTIES OWNED BY COMMUNICATIONS

COMPANIES EMPLOY DIGITIZATION AND COMPUTER NETWORKING TO WORK

TOGETHER (SEE MEDIA OWNERSHIP).

E-COMMERCE APPLICATIONS

LESSON -2

BUSINESS APPLICATIONS OF E-COMMERCE

• PILLAR STONE FOR MANY OF THE START-UP COMPANIES

• BUSINESS TO BUSINESS (B2B), BUSINESS TO CONSUMER (B2C), CONSUMER TO

BUSINESS (C2B) AND CONSUMER TO CONSUMER (C2C)

• DISCUSS MEANING AND EXAMPLES FOR EACH

ANATOMY OF E-COMMERCE APPLICATIONS

• MULTIMEDIA CONTENT

• MULTIMEDIA STORAGE SERVERS

• ELECTRONIC PAYMENT SYSTEM (EPS)

WHAT ARE SOME OF THE ESSENTIAL COMPONENTS OF AN E-COMMERCE WEBSITE?

ESSENTIAL ELEMENTS OF AN E-COMMERCE WEBSITE

• ONLINE PRODUCT CATALOGUE

• QUIRKY AND DESCRIPTIVE DETAILS

• SHOPPING CART

• BUYING OPTIONS

• AVAILABILITY IN THE ADDRESS AREA

• PAYMENT METHODS

E-COMMERCE CONSUMER APPLICATIONS

• HOME SHOPPING

• BANKING

• EDUCATION AND ENTERTAINMENT

E-COMMERCE ORGANIZATION APPLICATIONS

• ONLINE MARKETING. COMPANIES ARE USING E-COMMERCE TO MARKET THEIR

BRAND ON THE INTERNET.

• INVENTORY MANAGEMENT: NO HASSLES OF CARRYING THE PRODUCTS AND

DOING IT MANUALLY.

• SUPPLY CHAIN: JUST-IN-TIME SYSTEMS

• LOWER COSTS

• GLOBAL MARKET REACH

BACKBONE OF E-COMMERCE

PAYMENT METHODS

• DIGITAL WALLETS

• SECURE SOCKET LAYER (SSL) PAYMENT GATEWAYS

• SMART CARDS LIKE CREDIT OR DEBIT CARDS

DISCUSS EXAMPLES OF EACH.

BUSINESS MODELS OF E-COMMERCE

LESSON -3

BUSINESS MODELS

• B2B

• B2C

• INTRA B-COMMERCE

• C2C

• B2G

INTRA B-COMMERCE

• TRANSACTIONS WHICH TAKE PLACE WITHIN THE FIRM ARE KNOWN AS INTRA- B

COMMERCE.

• SELLING AND BUYING OF PRODUCTS WITHIN THE ORGANIZATION

• EXAMPLES: TRANSACTION BETWEEN SUBSIDIARIES, DEPARTMENTS, ETC.

• FOR INSTANCE, A PERSON FROM SALES TEAM CAN REACH OUT TO THE PRODUCTION

TEAM FOR A TRANSACTION WHICH IS FOR THE BENEFIT OF THE COMPANY.

• OBJECTIVES OF INTRA- B COMMERCE:

• TO ENSURE THE PROPER PROCUREMENT OF PRODUCT.

• MANAGE THE COMPANY’S RESOURCES EFFICIENTLY.

B2B

• BUSINESS-TO-BUSINESS E-COMMERCE

• REFERS TO THE COMMERCIAL TRANSACTION BETWEEN TWO COMPANIES

• A COMPANY CANNOT PRODUCE ALL OF ITS MATERIALS OF ITS OWN. IT NEEDS

TO BE ASSOCIATED WITH SOMEONE HAVING SPECIALIZATION IN THE RAW

MATERIALS, SOMEONE WITH THE PACKAGING OR SOMEONE WITH THE DELIVERY

OF PRODUCTS.

• ALIBABA: WORLD’S LARGEST B2B PLATFORM

• INDIAMART: INDIA’S LARGEST B2B PLATFORM

B2B EXCHANGES

• THE B2B MARKET IS COMPOSED OF WEBSITES WERE BUYERS AND SELLERS COME

TOGETHER VERTICALLY AND HORIZONTALLY TO COMMUNICATE, BID,

ADVERTISE, TRANSACT, AND PROCURE.

• MOSTLY INDUSTRY SPECIFIC

• EXAMPLES: BRAVOBUILD (CONSTRUCTION), STEELTRADING (STEEL), 1CITYBIZ

(AUCTION)

BENEFITS & BARRIERS TO B2B E-COMMERCE

• WIDE REACH

• EXPLORING UNTAPPED MARKET

• BUSINESS ALL DAY LONG

• QUICKER RESPONSE

• TRANSPARENT STRUCTURE

• MAINTENANCE COSTS

• PROCESS COMPLEXITY

• SECURITY ISSUES

• TECHNICAL GLITCH

• LACK OF VENTURE CAPITAL

B2C E-COMMERCE

• TRANSACTION WHICH TAKES PLACE BETWEEN THE CONSUMERS AND COMPANIES

IS KNOWN AS BUSINESS TO CONSUMER (B2C) E COMMERCE

• E TAILING AND ONLINE SHOPPING IS THE END RESULT OF B2B E COMMERCE

B2C MODELS

• PORTAL MODEL: PORTALS ARE THE CULMINATION OF BOTH INTERNET AND WEB

TO CREATE A PATH FOR GETTING INFORMATION ABOUT THE PRODUCT.

PORTALS ARE BASICALLY THE GETAWAYS PROVIDING POWERFUL SEARCH ENGINE

TOOLS TO DEFINE THE PLATFORM. INTERNET NAVIGATION SITES LIKE YAHOO,

GOOGLE AND MSN ARE SOME OF THE PORTAL SITES WHICH HELP THE

CONSUMER GET INFORMATION LIKE, STOCK MARKETS, FORECASTS, SHOPPING

RATES, ETC.

• E-TAILER/ STOREFRONT MODEL: STOREFRONT IS THE ACTUAL PLACE WHERE

THE TRANSACTIONS TAKE PLACE. THE WEBSITE FOR THE COMPANY PROVIDES

THE PRODUCT CATALOGUE AND PAYMENT IS DONE IN A SAFE ENVIRONMENT. IT

PROVIDES ACCESS TO THE CUSTOMERS AT ANY TIME OF THE DAY. NO TIME

RESTRICTION AND SAFE ACCESS TO THE SITE IS THE WORK OF THE STOREFRONT

MODEL.

• CONTENT PROVIDER: ANY NEWS, INFORMATION, VIDEOS NEEDED BY THE

CUSTOMER IS PROVIDED BY THE CONTENT PROVIDERS. THEY ETCH OUT THE

PARTICULAR SITE FOR THE CONTENT AND GENERATE REVENUE THROUGH THE

CLICKS, SUBSCRIPTIONS AND MARKETING. THEY DO NOT OWN THE CONTENT

BUT BRING OUT THE CONTENT ACTUALLY REQUIRED BY THE USE

• SERVICE PROVIDERS: THESE PROVIDERS DO NOT ACTUALLY SELL A PRODUCT;

RATHER THEY PROVIDE ONLINE ASSISTANCE IN THE FURTHER PROCESSING. LIKE

THE SERVICE IN THE INQUIRY OF PARTICULAR ASPECT OR ANY ASSISTANCE IN

UPDATING THE CURRENT VERSION OF PRODUCT. THEY HELP IN CONSULTING,

LAW ESTATE OR STORAGE. THEY USUALLY REFER TO THIRD PARTIES SUCH AS

STORAGE SERVICE PROVIDERS (SSP) OR INTERNET SERVICE PROVIDER (ISP).

• TRANSACTION BROKERS: AS THE NAME SUGGESTS, IT ACTS LIKE THE BROKER

BETWEEN THE BUYER AND THE SELLER. IT ACTS AS THE NEUTRAL PARTY

HELPING SERVE THE PURPOSE OF TRANSACTION. THEY RECEIVE COMMISSION

FOR EACH TRANSACTION THAT TOOK PLACE. SOME OF THE EXAMPLES WOULD

BE ONLINE JOB PORTALS WHICH HELP THE CANDIDATES AND THE COMPANIES

MEET AND FORM AN ALLIANCE.

B2C MODELS: ADVANTAGES & DISADVANTAGES

ADVANTAGES

• TIME FLEXIBILITY

• NO LOCATION CONSTRAINT

• LESS INVESTMENT AND BETTER

RETURNS

• EASE AND COMFORT OF SHOPPING

• NO HASSLES OF MIDDLEMEN

• GLOBAL REACH

DISADVANTAGES

• SECURITY THREATS

• MORE COMPETITION

• LOW CONVERSION RATES

• TECHNICAL GLITCHES AND FAILURES

C2C MODELS

• OLX OR EBAY

• TWO TYPES OF C2C BUSINESS

• CLASSIFIEDS- CLASSIFIEDS REFERS TO THE ADVERTISEMENT STAPLED ONTO THE

PILLARS OR WEBSITES. MANY A TIMES, ONE PERSON HAS NO USE FOR A CERTAIN

PRODUCT AND THE VALUE IS DEGRADING QUICKLY. TO SELL THAT, HE WILL

POST CLASSIFIED ADS IN THE SITE AND THE PERFECT BUYER IS FOUND.

• AUCTIONS: AUCTIONS SIGNIFIES BIDDING UP FOR THE PRODUCT UNTIL IT HAS

OUTREACHED THE MAXIMUM AMOUNT. EBAY IS ONE OF THE SITE WHICH

PROVIDES ONLINE BIDDING ON PRODUCTS.

IMPORTANCE OF C2C MODELS

• REDUCTION IN COST OF SELLING

• ALIGNMENT OF NEED AND SALE

• NO TIME CONSTRAINT

• WIDE REACH

• ONE-TO-ONE SALE

INTERNET ENVIRONMENT FOR E-COMMERCE

LESSON -4

INTERNET ECONOMY: CONCEPTUAL FRAMEWORK

• BEFORE INTERNET BECAME POPULAR, ELECTRONIC DATA INTERCHANGE (EDI)

WAS EMPLOYED TO EXCHANGE RECEIPTS, INVOICES, INFORMATION BY

BUSINESSES

• IT WAS NOT FLEXIBLE AND IN DUE COURSE OF TIME, IT WAS HARD TO MAINTAIN

TRANSACTIONS. SO AFTER THE ARRIVAL OF INTERNET, IT WAS DISCARDED.

INTERNET ECONOMY CONCEPTUAL FRAMEWORK

• LAYER 1: THE INTERNET INFRASTRUCTURE LAYER

• LAYER 2: THE INTERNET APPLICATIONS LAYER

• LAYER 3: THE INTERNET INTERMEDIARY LAYER

• LAYER 4: THE INTERNET COMMERCE LAYER

LAYER -1: THE INTERNET INFRASTRUCTURE LAYER

• WHAT IS IT?

• COMPANIES THAT PROVIDE THE INFRASTRUCTURE FOR NETWORK AND ITS

SERVICES

• TYPES OF COMPANIES

• NETWORK HARDWARE PROVIDER, ISP, SOFTWARE COMPANIES, SERVER

MANUFACTURERS

• EXAMPLES: MCI, CISCO, TCS

LAYER 2: THE INTERNET APPLICATIONS LAYER

• WHAT IS IT ABOUT?

• COMPANIES THAT PROVIDE SOFTWARE FOR ENABLING TRANSACTIONS AND

SERVICES

• TYPES OF COMPANIES: CONSULTANCY SOFTWARE DEVELOPERS, MULTIMEDIA

DEVELOPMENT PROVIDERS

• EXAMPLES: NETSCAPE, ADOBE, MICROSOFT

LAYER 3: THE INTERNET INTERMEDIARY LAYER

• WHAT IS IT?

• COMPANIES THAT ACT LIKE THE PLATFORM FOR TRANSACTIONS

• TYPES OF COMPANIES

• ONLINE PORTALS, CONTENT PROVIDERS, INTERNET AND BROKERS

• EXAMPLES: YAHOO, E-BAY

LAYER 4: THE INTERNET COMMERCE LAYER

• WHAT IS IT ABOUT?

• COMPANIES THAT DIRECTLY INTERACT WITH THE CUSTOMERS TO SELL THEIR

PRODUCTS

• TYPE OF COMPANIES: SUBSCRIPTION BASED COMPANIES, E-TAILERS, ONLINE

TICKET SELLERS.

• EXAMPLES: FLIPKART, AMAZON

PROVIDERS AND VENDORS OF E-BUSINESS SOFTWARE

• ARIBA: PROVIDES BUSINESS TO BUSINESS ELECTRONIC COMMERCE SOLUTIONS

FOR ENTERPRISES.

• IBM COMMERCE SOFTWARE: SOFTWARE FOR SMALL AND MEDIUM COMPANIES.

• SHOPIFY: THE MOST POPULAR ONE. IT HELPS YOU MAKE A GREAT LOOKING E-

COMMERCE WEBSITE BY SELECTING ANY OF THE TEMPLATE DESIGNS. IT ALSO

HELPS PROVIDE MARKETING TOOLS FOR SEO AND STRATEGIES TO THRIVE

TOWARDS SUCCESS.