Unit1 : e-Business

Introduction, E-Commerce – Definition, History of E-commerce, Difference between E -

Commerce and E - Business. Comparison of traditional commerce and e-commerce
Advantages/ Disadvantages of e-commerce,. E-Commerce business models – major B
to B, B to C model, Consumer-to-Consumer (C2C), Consumer-to-Business (C2B) model,
Peer to-Peer (P2P) model – emerging trends. web auctions, virtual communities, portals,
e-business revenue models.

What is e-business?
The use of internet and web technologies in business commonly known as “e-
business” has changed how marketers implement and enhance their business process
and interact with their environments.

Definition of e-Business
Electronic business commonly referred to as “e-business” or internet business is
generally referred as buying and selling of goods or services through internet.

E-Business in a border perspective involves the use information and

communication technologies to facilitate and support processes and activities of
business.

What is e-Commerce?
Electronic commerce, or e-commerce, refers to economic activity that occurs
online. E-commerce includes all types of business activity, such as retail shopping,
banking, investing and rentals. It allows consumers to electronically exchange goods
and services with no barriers of time or distance.

Definition of e-Commerce
Electronic commerce is where business transactions take place via
telecommunications 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.

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Definitions of e-commerce from different perspectives
Communication Perspective: According to this perspective, e-commerce is the delivery
of information, product / services or payments over tele-communication channels,
computer networks or any other electronic mode of communication.

Business Process Perspective: this says that e-commerce is the application of

technology towards the automation of business transactions and work flow.

Service Perspective: E-Commerce is defined as a tool that addresses the desire of firms,
consumers and management to cut service cost while improving the quality of
goods/services and increasing the speed of service delivery.

Online Perspective: E-Commerce provides the capability of buying and selling

products and information on the internet and other online services.

Examples of e-commerce
• Online shopping
• Electronic payments
• Online Auctions
• Internet banking
• Online Ticketing

E-Commerce Transactions
E-Commerce refers to paperless exchange of business information using following
ways.

• Electronic Data Interchange (EDI)

• Electronic Mail (E-Mail)
• Electronic Bulletin Boards
• Electronic Fund Transfer (EFT)
• Other Network-based technologies

Characteristics of E-Commerce technology

1. Improved sales:
E-Commerce is fast, cost efficient, time saving and easy to use. Electronic
business can result in better transactions, wide market coverage by offering the
benefits of speed, convenience, being cost effective, timeliness, high profit

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 margins, instant customer relations, no loss of customers, impact and control all
are a fraction of the past traditional business methods.

2. Improved Responsiveness:
It helps by improving responsiveness to market conditions and customer
preferences. Every business must know how important timing is to marketing
and selling products.

3. Efficient Inventory Management:

Using E-Commerce, inventory management of products becomes automated.
Reports get generated instantly when required. Product inventory management
becomes very efficient and easy to maintain.

4. Effectiveness and Efficiency:

Electronic commerce can increase the efficiency and effectiveness of public
relation programs, broadcast press releases, financial updates and other
corporate communications.

5. Planning and execution of meeting:

The mechanism of electronic operations in business facilitates planning and
execution of meetings. Executive management business facilitates planning and
executions of meetings. Executive management meetings, seminars, workshops
take a great deal of time and effort to manage.

6. Ubiquity:
Internet/Web technology is available everywhere at work, at home, and else
where via mobile devices, anytime. The marketplace is extended beyond
traditional boundaries and shopping can take place anywhere. Customer
convenience is enhanced and shopping costs are reduced.

7. 24x7 services availability and global reach:

It automates business of enterprises and services provided by them to customers
are available anytime, anywhere. Here 24x7 refers to 24 hours of each seven days
of a week.

8. Universal standards:

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 There is one set of technology standards, namely internet standards, the internet
and the technical standards for conducting e-commerce, called universal
standards which are shared by all nations around the work.

9. Interactivity and support:

The technology works through interaction with the users. Consumer are engaged
in a dialog that dynamically adjusts the experience to the individual and makes
the consumer a co-participant in the process of delivering goods to the market.

Difference between E-Business and E-Commerce

Traditional Commerce versus E-Commerce

Traditional commerce E-Commerce
1. Heavy dependency on information 1. Information sharing is made easy via
exchange from person to person. electronic communication channels.
2. Transactions are done in synchronous 2. Transaction can be done in
way. Manual intervention is required asynchronous way. Electronic system
for each communication or transaction. automatically handles when to pass
communication to required person.
3. It is difficult to establish and maintain 3. A uniform strategy can be easily
standard practices in traditional established and maintain in e-
commerce. commerce.

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4. Communication of business depends 4. In e-commerce there is no human
upon individual skills intervention.
5. Unavailability of a uniform platform as 5. E-commerce website provides user a
traditional commerce depends heavily platform where all information is
on personal communications. available at one place.

E-Commerce business models

E-commerce models are as follows.

• Business to Business
• Business to consumer
• Consumer to consumer
• Consumer to business
• Business to government
• Government to business
• Government to citizen

Business-to-Business (B2B)
Business to business is a transaction that occurs between two companies, as
opposed to a transaction involving a consumer. The term may also describe a company
that provides goods or services to another company.

Example for some of the B2B websites

➢ www.getresponse.com
➢ www.incorporate.com
➢ www.foodtrader.com

The impact of B2B markets on the economy

• Search costs:
In B2B, buyers and sellers are gathered together into a single online trading
community and reducing search costs even further.
• Processing cost
B2B allows for the automation of transaction processes and therefore, the quick
implementation of the same compared to telephone and fax.
• Avoid intermediaries
Through B2B e-markets, suppliers are able to interact and transact directly with
buyers, there by eliminating intermediaries and distributors.
• Transparency in pricing

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 The gathering of a large number of buyers and sellers in a single e-market reveals
market price information and transaction processing to participants. Thus
increases the price transparency.

Business-to-Consumer (B2C)
While most companies that sell directly to consumers can be referred to as B2C
companies. The B2C model involves transactions between business organizations and
consumers. This model also includes services like online banking, travel services and
health information.

Example :
➢ www.bagskart.com
➢ www.flipkart.com
➢ Online ticket booking
➢ Airlines portals
➢ www.Shoppersstop.com

Key features
• Heavy advertising required to attract large number of customers
• High investment in terms of hardware and software.
• Consumer shopping procedure.

Advantages for the business

➢ It can reach worldwide market with unlimited volume of customers
➢ It can display information, pictures and prices of products and services
➢ Order processing an easier task than before.

Advantages for the consumers

➢ Consumers can shop at any time of day, from the privacy of there own home.
➢ Consumer is offered many choices for the same products under various brands.
➢ Consumer can shop online without hassles like traffic, congestion of the mails
etc.

Disadvantages for the business

➢ Many websites offering the same product to the customers
➢ Technological problems can cause the website to not operate properly
➢ People are hesitant to enter the credit card details if the website does not have
proper security norms.

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Disadvantages for the consumers
➢ Security issues, especially credit card information which is very sensitive. Fraud,
tip-offs are very common on the web.
➢ Customer service may not be satisfactory for the consumers.

Consumer-to-Consumer (C2C)
C2C is any website where people are brought together to buy, sell or trade. Consumers
interact directly with other consumers. The C2C model involves transaction between
consumers. Here, a consumer sells directly to another consumer. Ex. www.ebay.in,
www.gaddi.com, www.olx.in etc.,

Advantages
➢ Customers can directly contact sellers and eliminate the middle man.
➢ Anyone can now sell and advertise a product in the convenience of ones home.
➢ Feedback on the purchased product helps both the seller and potential
customers.

Disadvantages
➢ Although online allow one to display his or her products, there is often a fee
associated with such exhibitions.
➢ Identity theft has become a rising issue.
➢ Illegal or restricted products and services have been found on auction sites.

Consumer-to-Business (C2B)
C2B e-commerce means transactions taking place between consumer to business
organizations. The end consumers create product and services which are consumed by
business organizations.

Peer-to-Peer (P2P)
P2P is not only an E-Commerce type but also a technology that allows people to
share computer files and computer resources without going through a central web
server.

Benefits of E-Commerce to organizations

➢ International market place: By becoming e-commerce enabled, business now
have access to people all around the world.

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 ➢ Operational cost savings: the cost of creating processing, distributing, storing
and retrieving paper-base information has decreased.

➢ Enables reduced inventories and overheads: the customer orders are collected
and then delivering through JIT (Just In Time) manufacturing. This is
particularly beneficial for companies in the high technology sector where stock of
components held could quickly become obsolete within months.

➢ Lower telecommunication cost: The internet is much cheaper than value added
networks which were based on leasing telephone lines for the sole use of the
organization and its authorized partners.

➢ No more 24-hour-time constraints: Business can be contacted by or contact

customers or suppliers at any time.

Benefits of E-Commerce to consumers

➢ 24/7 access: enables customers to shop or conduct other transactions 24hours
day, all year round from almost any location.

➢ 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: Customer can ‘shop’ around the world and conduct
comparison either directly by visiting different sites.

➢ Improved delivery process: this cam range from the immediate delivery of
digitized or electronic goods such as software or audio – visual files by
downloading via the internet, to the online tracking of the progress of packages
being delivered by mail or courier.

Benefits of E-Commerce to society

➢ Enables more flexible working practices: this enhance the quality of life for a
whole host of people in society, enabling them to work from home.

➢ 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.

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 ➢ Facilitates delivery of public services: health services available over the internet,
filling taxes over the internet though the Indian government website.

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.

➢ Rapidly evolving and changing technology: there is always a feeling or trying

to catch up and not be left behind. Under pressure to innovate and develop
business models to exploit the new opportunities which sometime leads to
strategies detrimental to the organization.

➢ Problems with compatibility of older and newer technology

Limitations of E-Commerce to consumers

➢ Cost of computing equipment: computing equipment is needed for individuals
to particular in the new digital economy, which means an initial capital cost to
customers.

➢ Lack of security and privacy of personal data

➢ Physical contact and relationships are replaced by electronic processes.

Web Auctions (Online Auctions)

A web auction / online auction is an auction which is held over the internet.
Online auctions remove the physical limitations of traditional auctions such as
geography, presence, time, space, and target much wider audience.

Online auctions are widely accepted business model for the following reasons:
• No fixed time constraint
• Flexible time limits
• No geographical limitations
• Offers highly intensive social interactions

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 • Includes a large number of sellers and bidders, which encourages a high-
volume online business

Types of online auctions

✓ English auctions
In live terms, English auctions are where bids are announced by either an auctioneer or
by the bidders and winners pay what they bid to receive the object.

✓ Dutch auctions

Dutch auctions are the reverse of English auctions whereby the price begins high and is
methodically lowered until a buyer accepts the price.

✓ First-price sealed-bid

First-price sealed-bid auctions are when a single bid is made by all bidding parties and
the single highest bidder wins, and pays what they bid. The main difference between
this and English auctions is that bids are not openly viewable.

✓ Vickrey auction

A Vickrey auction, sometimes known as a second-price sealed-bid auction, uses very much
the same principle as a first-price sealed bid. The highest bidder and winner will only
pay what the second highest bidder had bid.

✓ Reverse auction

Reverse auctions are where the roles of buyer and seller are reversed. Multiple sellers
compete to obtain the buyer's business and prices typically decrease over time as new
offers are made.

✓ Shill Bidding

Placing fake bids that benefits the seller of item is known as shill bidding. This is a
method often used in online auctions. This is seen as unlawful act as it unethically raises
the final price of the auction, so that the winning bidder pays more than they should
have.

Virtual communities
A virtual community is a community of people sharing common interests, ideas
and feelings over the internet or other collaborative networks.

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Types of virtual communities

✓ Internet message boards

An online message board is a forum where people can discuss thoughts or ideas on
various topics. Online message centers allow users to choose which thread, or board of
discussion, users would like to read or contribute to. A user will start a discussion by
making a post on a thread.

✓ Online chat rooms

Shortly after the rise of interest in message boards and forums, people started to want a
way of communicating with their "communities" in real time. The downside to message
boards was that people would have to wait until another user replied to their posting,
which, with people all around the world in different time frames, could take awhile.
The development of online chat rooms allowed people to talk to whoever was online at
the same time they were. This way, messages were sent and online users could
immediately respond back.

Chat rooms are now provided by Internet Relay Chat (IRC) and other individual
websites such as Yahoo, MSN, and AOL.

✓ Virtual worlds

Virtual worlds are the most interactive of all virtual community forms. In this type of
virtual community, people are connected by living as an avatar in a computer-based
world. Users create their own avatar character's life and interactions with other
characters in the 3-D virtual world. It is similar to a computer game, however there is
no objective for the players.

✓ Social network services

Social networking services are the most prominent type of virtual community. They are
either a website or software platform that focuses on creating and maintaining
relationships. Facebook, Twitter, and Myspace are all virtual communities. With these
sites, one often creates a profile or account, and adds friends or follow friends. This
allows people to connect and look for support using the social networking service as a
gathering place.

Web Portal
A web portal refers to a website or service offers a broad array of resources and
services such as e-mail, forums, search engines, links to other sites, and online shopping

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malls. The first web portals were online services, such as AOL, the provided access to
the web, but the now most of the traditional search engines have transformed
themselves into web portals to attract and keep a larger audience.

Examples: AOL, Excite, Natives, iGoogle, MSN, India timers, Rediff and Yahoo!.

Types of web portal

✓ Vertical portals
There are web portals which focus only on one specific industry, domain or vertical.
Vertical portals provide tools, information, articles, research and statistics on the
specific industry or vertical.

✓ Horizontal portals
There are web portals which focus on a wide array of interests and topics. They
focus on general audience and try to present something for everybody. Horizontal
portals try act as an entry point of a web surfer into the internet, providing content
on the topic of interest and guiding towards the right direction to fetch more related
resources and information.

✓ Enterprise portals
These are portals developed and maintained for use by members of the intranet or
the enterprise network. In today’s demanding business enterprise the key to
productivity of the employees depends on access to timely information and
resources.

✓ Knowledge portals
Knowledge portals increase the effectiveness of knowledge workers by providing
easy access to information that is necessary or helpful to them in one or more
specific roles.

✓ Corporate portals
An corporate portal provides personalized access to an appropriate range of
information about a particular company.

✓ Market space portals

Market space portals exist to support the business to business and business to
custo0mer of e-commerce, software support for e-commerce transactions and ability

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 to find and access rich information about the products on sale also, ability to
participate in discussion groups with other vendors and buyers.

✓ Search portals
Search portals aggregate results from several search engines into one page.

E-Business Revenue Models

A company’s revenue model describes how the company will earn revenue,
generate profits, and produce a better return on invested capital. The function of
business organizations is both to generate profits and to produce returns on invested
capital that exceed alternative investments.

Types of Revenue Models

1. Advertising Revenue Model:
In the advertising revenue model, a web site that offers its users content,
services, and products also provides a forum for advertisements and receives
fees from advertisers.

2. Subscription Revenue Model:

In the subscription revenue model, a website that offers its users content
or services charges a subscription fee for access to some or all of its offering.

3. Transaction fee Revenue Model:

In the transaction fee revenue model, a company receives a fee for
enabling or executing transaction.

4. Sales Revenue Model:

In the sales revenue model, companies derive revenue by selling goods,
information, or services to customers.

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