Amity School of Business

Amity School of Business

BBA, Semester IV
E-Commerce
Ms Bhawana Gupta

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MODULE-I

Understanding E-commerce

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E-Commerce
• Electronic commerce is an emerging model of new selling and
merchandising tools in which buyers are able to participate in all phases
of a purchase decision, while stepping through those processes
electronically rather than in a physical store or by phone (with a physical
catalog). The processes in electronic commerce include enabling a
customer to access product information, select items to purchase,
purchase items securely, and have the purchase settled financially.

• It is an emerging concept that describes the process of buying

and selling or exchanging of products, services; and information via
computer networks including the Internet.

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E-Business
• E-Business implies the use of web-based technology to buy and
sell goods and services, create value and strengthen relationship with
customers, suppliers, business partners, shareholders and employees. E-
business refers to a broader definition of e-commerce; it not only
includes buying and selling but also servicing customers and
collaborating with business partners through electronic media.

• E-Business goes beyond e-commerce by integrating e-commerce

tightly with business operations to improve performance, create value
and enable new relationships between business firms and customers.

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Difference between E-commerce and

1. The term e-commerce usually refers to monetary transactions that mainly
E-Business
include the buying or selling or products or services. However, other business
functions like marketing, customer education, customer support, getting raw
materials etc come under the term of e-business as they all are business
functions.
• If you are successfully selling something, that is considered as an e-commerce
activity. However, brining customers to your website by efficiently marketing
your product and maintaining the standard of your website is an e-business
activity. Moreover, educating your customers about the website and about the
products or services is also an e-business activity. To order to have a
successful e-business, you need to get the appreciation of the customers and
you need to use tools and techniques that can help you in bringing healthy
amount of customers towards your website. Moreover, your website needs to
have a better search engine rating which is an e-business activity

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Difference between E-commerce and
E-Business
2. E-Commerce is often described as outward process as it involves
processes like reaching the customers, any external partner, external
suppliers etc. On the other hand, e-business covers various internal
processes like content management, risk management, inventory
management, production management, finance management and other
internal business processes.

3. If you are willing to start your e-business, you must think about all
business processes while outsourcing the e-commerce services using
various web development companies. E-commerce can be considered as
an online way of transaction while e-business can be described as the
management of various business functions that enable successful
transactions and growth of the business. 6
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Example of E-commerce and E-

Business
When Dell sell , laptops, monitors, printers, accessories etc online then it
is not engaged in e-commerce but e-business. Let me tell you how.
When
a visitor comes on the website, the first thing he see is website design
and navigation as well as those things which are going to help him find
what he is looking for and if he directly lands on the page he was looking
for, he looks for the information related to it. The information provided
should be appealing and clear maximum doubts of the visitor so as to
convert him in a client. Till now no money has been exchanged nor been
talked about. So, was this e-commerce? No, it is e-business which guides
the visitor.
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Myths about E-commerce

• Setting up a E-commerce Web site is easy
• E-commerce means the end of mass marketing
• Everyone is doing it.
• E-Commerce means a new economy.
• Build it and they will come.

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E-commerce Advantages
• Being able to conduct business 24 x 7 x 365 : E-commerce systems can
operate all day every day. Your physical storefront does not need to be
open in order for customers and suppliers to be doing business with you
electronically.

• Launching of New Products and Sales Promotion: It is easier to launch a

new product through the Internet. Complete information about the product
can be provided over the Internet. Emails about the launch of the new
product can be sent to the dealers and customers.

• Lower cost of staff : There is paperless exchange of information. This

saves a lot of time, money and energy in receiving orders and executing the
dame under the traditional mode of ecommerce. Thus, less clerical work is
involved. As a result, there is reduction in labour cost of the business.

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E-commerce Advantages
• Speedy Payments: Payments between business firms and customers
and also between business firms can be made online without any loss of
time. E-commerce eliminates the need of issue of cheque by the
customer, deposit of cheque by the seller with the banking, and sending
the cheque for clearing by the bank. The facility of electronic transfer
of funds has given a great boost to trade and ecommerce.

• Flexibility: E-commerce provides flexibility to marketers.

Information sent to customers about products through mailed catalogues
cannot be changed until the next mail is sent but online catalogues can
be changed any moment the seller wants.

• Wider Reach: E-commerce has increased the reach of business firm.

They can make sales to customers spread over all parts of the world.

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E-commerce Advantages
• Direct contact with customers: E-commerce helps the business firm
to establish direct contact with the customers through the internet. It
allows the firm to focus on specific types of customers. Cost of
intermediaries or middlemen are saved.

• Better Customer Service: E-commerce allows quick response to the

queries of customers about price, product features, quality, etc. It also
increases customer satisfaction through quick delivery of goods. The
customer need not visit the store of the business firm for making
purchase.

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Constraints in E-Commerce
• The Cost Factor
• Security
• System and Data Integrity
• System Scalability
• Fulfillment and Customer Relations Problems
• Lack of E-Commerce Professionals
• Corporate Vulnerability

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Issues in E-Commerce
• E-Commerce systems are based on Internet Technologies, which provide
open and easy communications on a global basis. However, since Internet
is unregulated, unmanaged and uncontrolled, it introduces a wide range of
risks and threats to the systems operating on it. The following are the
security issues related to e-commerce are:
– Integrity:
• Ability to ensure that information being displayed on a web site or
transmitted/received over the internet has not been altered in any
way by an unauthorized party.
• Customer perspective – has information transmitted or received been
altered?
• Merchant’s perspective – has data on the site been altered without
authorization? Is the data being received from customer valid?

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Issues in E-Commerce
- Non-repudiation:
• The ability to ensure that e-com participant do not deny their
online actions
• Customer – can a party in an action with me later deny taking
that action?
• Merchant – can a customer deny ordered products?
- Authenticity:
• The ability to identify the identity of a person or entity with
whom one is dealing.
• Customer – who am I dealing with? How do I be assured that
the person or entity is who they claim to be?
• Merchant – what is the real identity of the customer? 14
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Issues in E-Commerce
- Confidentiality:
• The ability to ensure that message and data are available to
only those who are authorized to view it.
• Customer – can someone other that the intended recipient read
my message?
• Merchant – are message or confidential data accessible to
anyone other than those authorized to view it?
- Privacy:
• The ability to control the use of information about oneself.
• Customer – can I see that only information relevant to context
is provided?
• Merchant – is the personal information of customers used in
some unwilling & unauthorized manner? 15
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Value Chain in E-commerce

• VALUE CHAIN : a way of organizing the activities of a business so
that each activity adds value (value added activity) or productivity to the
total operations of the business.
• It is a strategic tool for identifying how the critical components of a
business tie together to deliver value for the business across the value-
chain process.
• Business receive raw materials as input, add value to them through
various processes, and sell the finished product as output to customers.
This means that organizations are open systems. They do not consist of
isolated sets of function. They are a chain of value-creating activities
that assure competitive advantages by the way they deliver value to the
customers. A communication process that extends from a firm backward
to suppliers and forward to customers ties all sorts of activities together
– therefore, the value chain 16
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Value Chain in E-commerce

• Value chain activities are divided into two activities:
1. Primary Activities
2. Support Activities

Primary Activities of a business are:

1. Inbound Logistics
2. Operations
3. Outbound Logistics
4. Service.
5. Marketing and Sales
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Value Chain in E-commerce

Support Activities of a business are :

1. Corporate Infrastructure
2. Human Resources
3. Technology development

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E-Commerce Strategies
• Value proposition
– Why should the customer buy from you?
– What is unique about you that other don’t have?
• Market opportunity
– Refers to the company’s intended market space and the overall
potential financial opportunities available to the firm in that
market space.
• Competitive environment
– Refers to the other companies operating in the same market space
selling similar products.
• Competitive advantage
– Achieved by firm when it can offer a superior product/service at a
lower price that its competitors. 19
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E-Commerce Strategies
• Market strategy
– It’s a plan, the organization put together that details exactly how it
intend to enter a new market and attract new customers.
• Organization development plan
– Describes how the company will organize the work that needs to
be accomplished.
• Management Team
– Right people, at right place with right decision making capabilities.
Should be responsible for making the business model work.
• Revenue Model
– How the firm will generate the revenue, produce profits and
superior return on invested capital. 20
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E-Commerce Business Models

• Websites are not free; every one costs money to develop and
maintain. The cost and potential revenue constitute a Business model.

• It is a way of doing business to sustain a business-generate revenue.

Free e-mail service has a business model, Free home pages fir into a
business model.

• The business model spells out how a company makes money by

showing where it is in the value chain.

• There are different models in e-commerce . Each model has it own

unique features and offering.

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E-Commerce Business Models

• STOREFRONT MODEL
• CLICK-AND-MORTAR
• BROKER MODEL
• SUBSCRIPTION-BASED ACCESS MODEL
• PREPAID ACCESS MODEL
• BUILT TO ORDER MERCHANT MODEL
• VIRTUAL MALL MODEL

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