E Commerce:

History of E-commerce

Most of us have shopped online for something at some point, which means we've taken part in e-
commerce. So it goes without saying that e-commerce is everywhere. But very few people may know
that e-commerce has a history that goes back to before the internet began.

E-commerce actually goes back to the 1960s when companies used an electronic system called the
Electronic Data Interchange to facilitate the transfer of documents. It wasn't until 1994 that the very first
transaction. took place. This involved the sale of a CD between friends through an online retail website
called NetMarket.3

The industry has gone through so many changes since then, resulting in a great deal of evolution.
Traditional brick-and-mortar retailers were forced to embrace new technology in order to stay afloat as
companies like Alibaba, Amazon, eBay, and Etsy became household names. These companies created a
virtual marketplace for goods and services that consumers can easily access.

New technology continues to make it easier for people to do their online shopping. People can connect
with businesses through smartphones and other devices and by downloading apps to make purchases.
The introduction of free shipping, which reduces costs for consumers, has also helped increase the
popularity of the e-commerce industry.

Advantages and Disadvantages of E-commerce

Advantages

Convenience: E-commerce can occur 24 hours a day, seven days a week. Although eCommerce may
take a lot of work, it is still possible to generate sales as you sleep or earn revenue while you are away
from your store.

Increased Selection: Many stores offer a wider array of products online than they carry in their brick-
and-mortar counterparts. And many stores that solely exist online may offer consumers exclusive
inventory that is unavailable elsewhere.

Potentially Lower Start-up Cost: E-commerce companies may require a warehouse or manufacturing
site, but they usually don't need a physical storefront. The cost to operate digitally is often less expensive
than needing to pay rent, insurance, building maintenance, and property taxes.

International Sales: As long as an e-commerce store can ship to the customer, an e-commerce company
can sell to anyone in the world and isn't limited by physical geography.

Easier to Retarget Customers: As customers browse a digital storefront, it is easier to entice their
attention towards placed advertisements, directed marketing campaigns, or pop-ups specifically aimed at
a purpose.

Disadvantages

There are certain drawbacks that come with e-commerce sites, too. The disadvantages include:
Limited Customer Service: If you shop online for a computer, you cannot simply ask an employee to
demonstrate a particular model's features in person. And although some websites let you chat online
with a staff member, this is not a typical practice.

Lack of Instant Gratification: When you buy an item online, you must wait for it to be shipped to your
home or office. However, e-tailers like Amazon make the waiting game a little bit less painful by
offering same-day delivery as a premium option for select products.

Inability to Touch Products: Online images do not necessarily convey the whole story about an item,
and so e-commerce purchases can be unsatisfying when the products received do not match consumer
expectations. Case in point: an item of clothing may be made from shoddier fabric than its online image
indicates.

Reliance on Technology: If your website crashes, garners an overwhelming amount of traffic, or must
be temporarily taken down for any reason, your business is effectively closed until the e-commerce
storefront is back.

Higher Competition: Although the low barrier to entry regarding low cost is an advantage, this means
other competitors can easily enter the market. E-commerce companies must have mindful marketing
strategies and remain diligent on SEO optimization to ensure they maintain a digital presence.

Types of E-commerce

Depending on the goods, services, and organization of an ecommerce company, the business can opt to
operate several different ways. Here are several of the popular business models.

Business-to-Consumer (B2C)

B2C e-commerce companies sell directly to the product end-user. Instead of distributing goods to an
intermediary, a B2C company performs transactions with the consumer that will ultimately use the good.

This type of business model may be used to sell products (like your local sporting goods store's website)
or services (such as a lawn care mobile app to reserve landscaping services). This is the most common
business model and is likely the concept most people think about when they hear the term e-commerce.

Business-to-Business (B2B)

Similar to B2C, an e-commerce business can directly sell goods to a user. However, instead of being a
consumer, that user may be another company. B2B transactions often entail larger quantities, greater
specifications, and longer lead times. The company placing the order may also have a need to set
recurring goods if the purchase is for recurring manufacturing processes.

Business-to-Government (B2G)

Some entities specialize as government contractors providing goods or services to agencies or

administrations. Similar to a B2B relationship, the business produces items of value and remits those
items to an entity.
B2G e-commerce companies must often meet government requests for proposal requirements, solicit
bids for projects, and meet very specific product or service criteria. In addition, there may be joint
government endeavors to solicit a single contract through a government-wide acquisition contract.

Consumer-to-Consumer (C2C)

Established companies are the only entities that can sell things. E-commerce platforms such as digital
marketplaces connect consumers with other consumers who can list their own products and execute their
own sales.

These C2C platforms may be auction-style listings (i.e. eBay auctions) or may warrant further
discussion regarding the item or service being provided (i.e. Craigslist postings). Enabled by technology,
C2C e-commerce platforms empower consumers to both buy and sell without the need for companies.

Consumer-to-Business (C2B)

Modern platforms have allowed consumers to more easily engage with companies and offer their
services, especially related to short-term contracts, gigs, or freelance opportunities. For example,
consider listings on Upwork.

A consumer may solicit bids or interact with companies that need particular jobs done. In this way, the
e-commerce platform connects businesses with freelancers to enable consumers greater power to achieve
pricing, scheduling, and employment demands.

Consumer-to-Government (C2G)

Less of a traditional e-commerce relationship, consumers can interact with administrations, agencies, or
governments through C2G partnerships. These partnerships are often not in the exchange of service but
rather, the transaction of obligation.

For example, uploading your federal tax return to the Internal Revenue Service (IRS) digital website is
an e-commerce transaction regarding an exchange of information. Alternatively, you may pay your
tuition to your university online or remit property tax assessments to your county assessor.

Types of E-commerce Revenue Models

In addition to crafting what type of e-commerce company a business wants to be, the business must
decide how it wants to make money. Due to the unique nature of e-commerce, the business has a few
options on how it wants to process orders, carry inventory, and ship products.

Dropshipping

Often considered one of the easier forms of e-commerce, dropshipping allows a company to create a
digital storefront, generate sales, then rely on a supplier to provide the good. When generating the sale,
the e-commerce company collects payment via credit card, PayPal, cryptocurrency, or other means of
digital currency.

Then, the e-commerce store passes the order to the dropship supplier. This supplier manages inventory,
oversees the warehouse of goods, packages the goods, and delivers the product to the purchaser.
White Labeling

White-label e-commerce companies leverage already successful products sold by another company.
After a customer places an order, the e-commerce company receives the existing product, repackages the
product with its own package and label, and distributes the product to the customer. Although the e-
commerce company has little to no say in the product they receive, the company usually faces little to no
in-house manufacturing constraints.

Wholesaling

A more capital-intensive approach to e-commerce, wholesaling entails maintaining quantities of

inventory, keeping track of customer orders, maintaining customer shipping information, and typically
having ownership of the warehouse space to house products.
Wholesalers may charge bulk pricing to retailers or unit prices for consumers. However, the broad
approach to wholesaling is to connect to buyers of large quantities or many smaller buyers of a similar,
standardized product.

Private Labeling

Private labeling is a more appropriate e-commerce approach for companies that may not have large
upfront capital or do not have their own factory space to manufacture goods. Private label e-commerce
companies send plans to a contracted manufacturer who makes the product.

The manufacturer may also have the ability to ship directly to a customer or ship directly to the company
receiving the order. This method of e-commerce is best suited for companies that may receive on-
demand orders with short turnaround times but are unable to handle the capital expenditure
requirements.

Subscription

E-commerce companies can also leverage repeating orders or loyal customers by implementing
subscription services. For a fixed price, the e-commerce company will assemble a package, introduce
new products, and incentivize locking to a long-term agreement at a lower monthly price.

The consumer only places an order once and receives their subscription order at a fixed cadence.
Common subscription e-commerce products include meal prep services, agriculture boxes, fashion
boxes, or health and grooming products.

Subscription Model: In this model, customers pay a recurring fee at regular intervals (e.g., monthly or
annually) to access a product or service. Examples include streaming services like Netflix, subscription
boxes, and software-as-a-service (SaaS) applications.

Affiliate Marketing: Businesses earn a commission for promoting and selling products or services from
other companies. This model is often used by bloggers, influencers, and content creators who include
affiliate links in their content.

Marketplace Model: Online marketplaces connect buyers and sellers, charging fees or commissions on
transactions. Examples include Amazon, eBay, and Airbnb. Revenue is generated through listing fees,
transaction fees, or subscription fees.
Digital Products and Services: Selling digital products, such as e-books, software, online courses, and
digital downloads, is a common e-commerce revenue model. Customers pay for access to or download
of these digital assets.

Freemium Model: In this model, businesses offer a basic product or service for free and charge for
premium features or upgrades. Popular among mobile apps and SaaS companies, this model helps
acquire users and then monetize them over time.

Rental Model: E-commerce businesses may offer rental services for products such as equipment,
clothing, or housing. Revenue is generated through rental fees.

Freight and Shipping Fees: E-commerce businesses that sell physical goods often charge for shipping
and delivery, which can contribute significantly to their revenue.

The basic building blocks of e-commerce include:

Online Storefront: This is the digital equivalent of a physical store. It's where customers can browse
and view products or services, add items to their cart, and make purchases. The storefront includes
product listings, images, descriptions, prices, and often customer reviews.

Shopping Cart: The shopping cart is a virtual basket where customers can add products they want to
purchase. It keeps track of the items selected, calculates the total cost, and allows customers to proceed
to checkout.

Checkout Process: The checkout process involves a series of steps where customers provide their
shipping and payment information. This typically includes a shopping cart review, shipping address
entry, payment method selection, and order confirmation.

Payment Gateway: This is the technology that allows online stores to accept payments. It securely
processes credit card transactions and other payment methods. Popular payment gateways include
PayPal, Stripe, and Square.

Inventory Management: Inventory management is crucial for e-commerce businesses to ensure they
have enough stock to meet demand. An inventory system keeps track of stock levels, triggers restocking
alerts, and helps manage product availability.

Product Management: Managing product information, including images, descriptions, and pricing, is
essential. Content management systems (CMS) and e-commerce platforms allow businesses to organize
and update product details.

Security: Security is paramount in e-commerce. This includes secure payment processing, encryption of
sensitive data, and protection against fraud. SSL certificates are often used to secure data transmission.

User Accounts: Most e-commerce websites offer customers the option to create accounts. This allows
for easier order tracking, faster checkouts, and personalized recommendations.

Customer Support: Providing customer support through various channels, such as live chat, email, or
phone, is crucial for resolving issues, answering questions, and building trust with customers.
Shipping and Fulfillment: Efficient shipping and order fulfillment processes are essential. This
includes selecting shipping carriers, calculating shipping costs, and tracking orders in real-time.

Return and Refund Policies: Clear and fair return and refund policies are important to handle customer
returns and issues with purchased products. These policies help build trust with customers.

Marketing and Promotion: To attract customers and generate sales, e-commerce businesses use
various marketing strategies, including social media, email marketing, pay-per-click advertising, and
search engine optimization (SEO).

Analytics and Reporting: Monitoring and analyzing data is crucial for understanding customer
behavior, sales trends, and website performance. E-commerce businesses often use analytics tools to
gain insights.

Mobile Optimization: Given the prevalence of mobile devices, it's important for e-commerce sites to be
mobile-friendly and responsive.

Legal and Compliance: E-commerce businesses must comply with various laws and regulations, such
as data protection and consumer rights.

Reviews and Ratings: Customer reviews and ratings can help build trust and influence purchasing
decisions.

Cross-Selling and Upselling: These techniques involve suggesting related or higher-priced products to
customers during the shopping process to increase sales.

Affiliate and Partner Programs: E-commerce businesses may partner with affiliates and other
businesses to expand their reach and increase sales.

E-COMMERCE

Introduction
 • It is a general concept covering any form of business transaction or information
exchange executed using information and communication technologies (ICT‘s)
• It includes electronic trading of goods, services and electronic material.
• It takes place between companies, between companies and their customers,
or between companies and public administrations.
Electronic Commerce Framework:
• E-Commerce application will be built on the existing technology infrastructure -
a myriad of computers Communication networks Communication software forming
information superhighway.

• Common business services for facilitating the buying and selling process

• Messaging & information distribution as a means of sending and retrieving information

• Multimedia content & network publishing, for creating a product &

a means to communicate about it

• The information superhighway- the very foundation-for providing the high

way system along which all e-commerce must travel
The two pillars supporting all e-commerce applications & infrastructure

 Public policy to govern issues such as universal access,privacy and information pricing.
 Technical standards to dictate the nature of information publishing ,user interfaces and
transport in the interest of compatability across the entire network

• Any successful e-commerce will require the I-way infrastructure in the same way that
regular commerce needs interstate highway network to carry goods from one point to
another
• I-way will be a mesh of interconnected data highways of many forms
Telephone,wires,cable TV wire
Radio-based wireless-cellular & satellite

• Movies=video + audio

Digital games=music + video + software

• Electronic books=text + data + graphics + music + photographs + video

• In the electronic ‗highway system‘ multimedia content is stores in the form

of electronic documents

• These are often digitized

• On the I-way messaging software fulfills the role, in any no. of forms: e-
mail, EDI, or point-to-point file transfers

• Encryption & authentication methods to ensure security

• Electronic payment schemes developed to handle complex transactions

• These logistics issues are difficult in long-established transportation

Anatomy of E-Commerce applications

E-Commerce applications are:

1. Multimedia Content for E-Commerce Applications

2. Multimedia Storage Servers & E-Commerce Applications

i. Client-Server Architecture in Electronic Commerce

ii. Internal Processes of Multimedia Servers

iii. Video Servers & E-Commerce

 3. Information Delivery/Transport & E-Commerce Applications

4. Consumer Access Devices

Multimedia Content for E-Commerce Applications

• Multimedia content can be considered both fuel and traffic for electronic
commerce applications.

• The technical definition of multimedia is the use of digital data in more than
one format, such as the combination of text, audio, video, images, graphics,
numerical data, holograms, and animations in a computer file/document.

• Multimedia is associated with Hardware components in different networks.

• The Accessing of multimedia content depends on the hardware

capabilities of the customer.

• The client server model, allows client to interact with server through
request-reply sequence governed by a paradigm known as message
passing.

• The server manages application tasks, storage & security & provides
scalability-ability to add more clients and client devices (like Personal digital
assistants to Pc‘s. See infig.
ii. Internal Processes of Multimedia Servers

• The internal processes involved in the storage, retrieval & management of

multimedia data objects are integral to e-commerce applications.

• A multimedia server is a hardware & software combination that converts

raw data into usable information & then dishes out.

• It captures, processes, manages, & delivers text, images, audio & video.

• It must do to handle thousands of simultaneous users.

• Include high-end symmetric multiprocessors, clustered architecture, and

massive parallel systems.

iii. Video Servers & E-Commerce

The electronic commerce applications related to digital video will include

1. Telecommunicating and video conferencing

2. Geographical information systems that require storage & navigation over maps

3. Corporate multimedia servers

4. Postproduction studios

5. Shopping kiosks.
 • Consumer applications will include video-on-demand.

• The figure which is of video–on demand consist video servers, is an link

between the content providers (media) & transport providers (cable
operators)

Information Delivery/Transport & E-Commerce Applications

• Transport providers are principally telecommunications, cable, & wireless industries.

Transport Routers
• Computers with audio & video Mobile
Information Transport Providers computing

• Telecommunication • Telephonic devices

companies
• Consumer electronics
• Cable television companies
• Personal digital assistants (PDAs)
• Computer-based on-line
servers

• Wireless

communications Consumer

Access Devices

Information Consumers
 Multimedia Storage Servers & E-Commerce Applications:

• E-Commerce requires robust servers to store and distribute large

amounts of digital content to consumers.

• These Multimedia storage servers are large information warehouses capable

of handling various content, ranging from books, newspapers, advertisement
catalogs, movies, games, & X-ray images.

• These servers, deriving their name because they serve information upon
request, must handle large-scale distribution, guarantee security, &
complete reliability

iv. Client-Server Architecture in Electronic Commerce

• All e-commerce applications follow the client-server model

• Clients are devices plus software that request information from servers or
interact known as message passing

• Mainframe computing , which meant for ―dump‖