CSC-370

E - Commerce
(BSc CSIT, TU)
Ganesh Khatri
[email protected]
 Module Structure
• Semester : VI
• Nature of the Course
▪ Theory + Lab + Assignments

• Full Marks : 60 + 20 + 20
• Pass Marks : 24 + 8 + 8
• Credit Hours : 3

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 Introduction
• Electronic commerce (e-commerce) remains a
relatively new, emerging and constantly
changing area of business management and
information technology.
• E-commerce is digitally enabled commercial
transactions among organizations and
individuals.
• Digitally enabled transactions include all
transactions mediated by digital technology e.g.
Internet
• Commercial transactions involve the exchange
of value (e.g., money) across organizational or
individual boundaries in return for products and
services
• Exchange of value is important for
understanding the limits of e-commerce.
Without an exchange of value, no commerce
occurs

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 Introduction
• Some of the definitions of e-commerce
often heard and found in publications
and the media are:
– Electronic Commerce (EC) is where
business transactions take place via
telecommunication networks, especially
the Internet
– Electronic commerce describes the
buying and selling of products, services,
and information via computer networks
including the Internet.
– Electronic commerce is about doing
business electronically.
– E-commerce is defined as the conduct of
a financial transaction by electronic
means
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 Difference between E-Commerce and E-Business
• E-Business refers to the digital enablement of transactions and processes within a
firm, involving information systems under the control of the firm as shown in figure.

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 Difference between E-Commerce and E-Business
• E-commerce involves transactions that cross firm boundaries as shown in figure.

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 Difference between E-Commerce and E-Business
• E-Business does not include commercial transactions involving an exchange
of value across organizational boundaries.
• For example, a company’s online inventory control mechanisms are a
component of e-business, but such internal processes do not directly
generate revenue for the firm from outside businesses or consumers, as e-
commerce, by definition, does.
• It is true, however, that a firm’s e-business infrastructure provides support
for online e-commerce exchanges; the same infrastructure and skill sets are
involved in both e-business and e-commerce.
• E-commerce and E-business systems may blur together at the business
firm boundary, at the point where internal business systems link up with
suppliers or customers.

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 Benefits of E-Commerce
• The benefits of e-commerce can be seen to affect three major stakeholders:
organizations, consumers and society
1. Benefits of e-commerce to organizations
▪ International marketplace : Single physical marketplace located in a
geographical area has now become a borderless marketplace including national
and international markets. Businesses now have access to people all around the
world
▪ Operational cost savings : The cost of creating, processing, distributing,
storing and retrieving paper-based information has decreased.
▪ Mass customization : E-commerce has revolutionized the way consumers buy
good and services. Organizations now customize their products according to the
customers’ need and feedbacks online.
▪ Lower telecommunications cost : The Internet is much cheaper than value
added networks (VANs) which were based on telephone lines for the use of
organization. It is also cheaper to send a fax or e-mail via the Internet than
phone calls.
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 Benefits of E-Commerce
1. Benefits of e-commerce to organizations
▪ Digitization of products and processes : Particularly in the case of software
and music/video products(digital products), which can be downloaded or e-mailed
directly to customers via the Internet in digital or electronic format.
▪ No more 24-hour-time constraints : Businesses can be contacted by or
contact customers or suppliers at any time(online order and delivery)

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 Benefits of E-Commerce
2. Benefits of e-commerce to consumers
▪ 24/7 access : Enables customers to shop or conduct other transactions 24 hours
a day, all year round from almost any location. For example, checking balances,
making payments, obtaining travel and other information.
▪ More choices : Customers not only have a whole range of products that they
can choose from and customize, but also an international selection of suppliers
▪ Price comparisons : Customers can ‘shop’ around the world and conduct
comparisons either directly by visiting different sites. (for example
www.pricenepal.com for electronic products).
▪ Improved delivery processes : This can range from the immediate delivery of
digitized or electronic goods such as software or audio-visual files by downloading
via the Internet, to the on-line tracking of the progress of packages being
delivered by mail or courier
▪ An environment of competition : where substantial discounts can be found or
value added, as different retailers for customers. 10
 Benefits of E-Commerce
2. Benefits of e-commerce to society
▪ Enables more flexible working practices : enhances the quality of life for a
whole host of people in society, enabling them to work from home. It also
potentially reduces environmental pollution as fewer people have to travel to work
regularly(eg, Zoom)
▪ 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 so easily available to them.
▪ Facilitates delivery of public services : For example, health services available
over the Internet (on-line consultation with doctors or nurses), paying taxes, bills
over the Internet.

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 Limitations of E-Commerce
• There was much hype surrounding the Internet and e-commerce over the last
few years of the twentieth century
1. Limitations of e-commerce to organizations
 Lack of sufficient system security, reliability, standards and
communication protocols : There are numerous reports of websites and
databases being hacked into, and security holes in software. For example, Several
banking and other business websites and government websites, have experienced
breaches in security where ‘a technical oversight’ or ‘a fault in its systems’ led to
confidential client information becoming available to all
 Rapidly evolving and changing technology : there is always a feeling of
trying to ‘catch up’ and not be left behind. Customers and developers have to be
updated with the software updates.
 Pressure to innovate and develop business models : to exploit the new
opportunities which sometimes leads to strategies detrimental to the organization
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 Limitations of E-Commerce
1. Limitations of e-commerce to organizations
4. Facing increased competition from both national and international
competitors often leads to price wars and subsequent unsustainable
losses for the organization
5. Problems with compatibility of older and ‘newer’ technology

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 Limitations of E-Commerce
2. Limitations of e-commerce to consumers
 Computing equipment is needed for individuals to participate in the new ‘digital’
economy, which means an initial capital cost to customers
 A basic technical knowledge is required of both computing equipment and
navigation of the Internet and the World Wide Web
 Cost of access to the Internet, whether dial-up or broadband tariffs
 Cost of computing equipment : Not just the initial cost of buying equipment but
making sure that the technology is updated regularly to be compatible with the
changing requirement of the Internet, websites and application
 Lack of security and privacy of personal data
 Physical contact and relationships are replaced by electronic processes.
Customers are unable to touch and feel goods being sold on-line or determine
voices and reactions of human beings
 A lack of trust because they are interacting with faceless computers
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 Limitations of E-Commerce
3. Limitations of e-commerce to society
 Breakdown in human interaction : As people become more used to
interacting electronically there could be an erosion(divide) of personal and social
skills which might eventually be detrimental to the world we live in where people
are more comfortable interacting with a screen than face to face
 Breakdown in human interaction : As people become more used to
interacting electronically there could be an erosion(divide) of personal and social
skills which might eventually be harmful to the world we live in where people are
more comfortable interacting with a screen than face to face.
 Social division : There is a potential danger that there will be an increase in the
social divide between technical haves and have-nots – so people who do not have
technical skills become unable to secure better-paid jobs and could form an
underclass with potentially dangerous implications for social stability
 Reliance on telecommunications infrastructure, power and IT skills :
which in developing countries nullifies the benefits when power, advanced
telecommunications infrastructures and IT skills are unavailable or scarce or
underdeveloped
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 Limitations of E-Commerce
3. Limitations of e-commerce to society
 Wasted resources : As new technology dates quickly how do you dispose of all
the old computers, keyboards, monitors, speakers and other hardware or
software?
 Difficulty in policing the Internet : which means that numerous crimes can
be committed and often go undetected

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 Seven Unique Features of E-Commerce
1. Ubiquity
 In traditional commerce, a marketplace is restricted i.e. we can be in limited
physical area to buy or sell.
 Whereas E-Commerce is ubiquitous meaning that it is available just about
everywhere, at all times.
 It make possible to shop from your desktop, at home, at work or even from your
car, using mobile commerce.
 The result is called a market space - a marketplace extended beyond traditional
boundaries and removed from a temporal and geographic location.
 From a consumer perspective, ubiquity reduces transaction costs – the costs of
participating in a market.
 To transact, it is no longer necessary that you spend time and money traveling to
a market

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 Seven Unique Features of E-Commerce
2. Global Reach
 Unlike traditional commerce, e-commerce technology permits commercial transaction to
cross cultural and national boundaries far more conveniently and cost effectively.
 As a result, the potential market size for e-commerce merchants is roughly equal to the
size of the world’s online population

3. Universal Standards
 One strikingly unusual feature of e-commerce technologies is that the technical standards
of the Internet, and therefore the technical standards for conducting e-commerce, are
universal standards – they are shared by all nation around the world.
 In contrast, most traditional commerce technologies differ from one nation to the next.
 For instance, television and radio standards differ around the world.
 The universal technical standards of e-commerce greatly lower market entry cost – the
cost merchants must pay just to bring their goods to market

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 Seven Unique Features of E-Commerce
4. Richness
 With the use of e-commerce technology merchant can present their message in
effective way.
 Information richness refers to the complexity and content of the message

5. Interactivity
 E-Commerce technologies are interactive, meaning they allow two-way
communication between merchant and consumer.
 Television, for instant, cannot ask the viewer any questions, enter into a
conversation with a viewer, or request customer information be entered into a
form.
 In contrast, all of these activities are possible on an e-commerce Web site.
 Interactivity allows an online merchant to engage a consumer in a ways similar to
a face-to-face experience, but on a much more massive, global scale
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 Seven Unique Features of E-Commerce
6. Information Density
 The Internet and the Web vastly increase information density - the total amount
and quality of the information available to all market participants, consumers and
merchants alike.
 E-commerce technologies reduce information collection, storage, processing and
communication costs.
 At the same time, these technologies increase greatly the accuracy and timeliness
of information - making information more useful and important than ever.
 As a result, information becomes more plentiful, cheaper and of higher quality
7. Personalization / Customization
 E-commerce technologies permit personalization: Merchants can target their
marketing message to specific individuals by adjusting the message.
 The technology also permits customization - changing the delivered product or
service based on a user’s preference or prior behavior
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 E-Commerce Framework
• E-Commerce applications are built on the existing technology infrastructure -
a myriad of computers, communication networks, and communication
software forming the Information Superhighway.
• The technology infrastructure of the Internet is both an enabler and a driver
of change.
• An infrastructure is defined as “the foundation of a system.”
• In this case, the technological foundation of the Internet, simply put, enables
the running of the e-commerce enterprises.
• The hardware backbone of computers, routers, servers, fiber optics, cables,
modems, and other network technologies provides half of the technology
equation.
• The other half includes the soft-ware and communications standards that run
on top of the hardware, including the core protocols for the Web
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 E-Commerce Framework
• framework for e-Commerce consists of three parts as shown in below figure

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 E-Commerce Framework
• The first part consists of a variety of electronic commerce applications
including both inter- and intra-organizational and electronic market. Such as
Supply Chain Management, Video-on-Demand, Procurement and purchasing ,
On-line marketing and advertising, Home shopping etc.
• The second part of the building blocks of the infrastructure consists of :
 Common business services, for facilitating the buying and selling process
 Messaging and information distribution, as a means of sending and
retrieving information ( ex-EDI, e-mail, P2P file transfer)
 Multi-media content and network publishing, for creating a product and a
means to communicate about it.
 Information Superhighway infrastructure consisting of telecommunication,
cable operator, ISPs , Wireless technologies and Internet

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 E-Commerce Framework
• The third part consists of the public policy and technical standards necessary
to support the applications and the infrastructure
 Public policies govern issues like universal access, privacy, and information
pricing. The public policy infrastructure affects not only the specific business but
also direct and indirect competitors. It should take into consideration of :
 Cost of accessing information
 Regulation to protect consumers from fraud and protect their right to privacy.
 Policies of global information traffic to detect information pirating and obscene sites
– Technical Standards governs issues like technology for communication and as
well as for Internet

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 E - Commerce Types
• Business - to - Customer(B2C)
▪ online sale of a products or
services from a business to an
end-consumer
▪ Eg. Amazon, Daraz etc

• Business - to - Business(B2B)
▪ sale of goods or services between
businesses electronically
▪ improve the efficiency and
effectiveness of a company's sales
efforts

2
 E - Commerce Types
• Business-to-Government(B2G)
▪ Businesses selling to local, state
and federal agencies
▪ Eg. igov.com

• Customer-to-Customer(C2C)
▪ Customers sell directly to other
customers electronically
▪ Eg. ebay.com, hamrobazar

• Customer-to-Business(C2B)
▪ customers offer products or
services to businesses
▪ Eg. priceline.com
3
 Mobile Commerce ( M – Commerce )
• is the buying and selling of goods and
services through wireless handheld
devices such as smartphones and
tablets

• As a form of e-commerce, m-commerce

enables users to access online shopping
platforms without needing to use a
desktop computer

• Eg. in-app purchasing, mobile banking,

virtual marketplace apps like the
Amazon mobile app or a digital wallet
such as Apple Pay, Android Pay and
Samsung Pay

• M - Commerce usage worldwide : 59%

[ simicart.com/blog/m-commerce-statistics ] 4
 Ubiquitous Commerce (U - Commerce)
• The ultimate form of e-commerce and m-commerce in an ‘anytime, anywhere’
fashion.
• It involves the use of ubiquitous networks to support personalized and
uninterrupted communications and transactions at a level of value that far
exceeds traditional commerce
• The use of ubiquitous networks is to support personalized and uninterrupted
communications and transactions between a firm and its various stakeholders
to provide a level of value over, above, and beyond traditional commerce.
• It is the combination of electronic, wireless/mobile, television, voice
commerce

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 Pure vs Partial E-Commerce
• Depending up on the
digitization of
products(services) sold,
process, and delivery agent,
there are two types of E-
Commerce
▪ Pure E-Commerce : If all
of the above
(product/service, process,
delivery agent) dimensions
are digital, then e-
commerce is called pure e-
commerce
▪ Partial E-Commerce :
Partial otherwise
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 Challenges in E-commerce
• An absence of online identity verification
• Competitor Analysis
• Stuck in at the old way of approach to selling
• Shopping cart abandonment
• Maintaining customer loyalty
• The headache of product return and refund
• The struggle of competing on price and shipping
• Competing against retailers and manufacturers
• A problem of data security
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 Status of E-Commerce in Nepal
• In past recent years due to education and reach to Internet among the many
people in Nepal has brightened the future of E-commerce.
• The interest of students in the field of IT and the growth of IT companies has
helped a lot in the awareness and interest in youths for Internet and IT.
• This has directly created more opportunities to uplift E-Commerce in Nepal.
• It is noted that 63% of total population uses internet service in Nepal.
• This status proves that there is a good scope of E-Commerce in Nepal
• With the introduction of new technologies, digital stores and interactive apps,
there is a big boost in sector of e-commerce.
• Many online portals and shopping portals are being launched.
• They are doing good business along with providing the best services. 8
 Status of E-Commerce in Nepal
• They provide festival offers and various discounts to customers.
• A large number of people in Nepal stills think twice before purchasing online.
Despite of the technological advancement, security is still a concern in
people’s mind.
• Various frauds and scams are hampering the growth of e-commerce in Nepal.
• Some of the successful companies playing a vital role in the growth of this
industry are mentioned below
▪ Kaymu (www.daraz.com.np)
▪ Sastodeal (www.sastodeal.com)
▪ Foodmandu (www.foodmandu.com)
▪ Muncha (www.shop.muncha.com)
▪ Metrotarkari (www.metrotarkari.com)
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 Overview of Electronic Transaction Act of Nepal
• ETA (Electronic Transaction Act) deals with issues related to cybercrime and
also help in making and implementing laws over cybercrime
• It has made different requirements so that if anyone found having cybercrime,
he/she will be punished according to the scene of the crime.

• He /she can be jailed for minimum from 6 months to a maximum of 3 years and has
to pay the penalty according to the offense.

• However, the cybercrime has been overgrowing in Nepal because of an inadequate

tracking system and the advancement needs still to build like in other developed
countries.

• The lack of proper updates of ETA, the hackers again hack the governmental
confidentiality.

• ETA yet hasn’t adequately addressed Online payment, due to which we still don’t
have a fast and reliable online payment system too. [ref : ictframe.com ]
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