Introduction to E-Commerce

• Introduction to Electronic Business (e-Business):

Electronic business, often referred to as e-business, is the conduct of business activities using
electronic means. It involves the use of information and communication technologies (ICT) to
support various business processes, including buying and selling goods and services, marketing,
customer relationship management, supply chain management, and online collaboration.

E-business encompasses a wide range of activities, from establishing an online presence through a
website or mobile app to conducting online transactions and managing digital interactions with
customers, suppliers, and partners. It leverages the power of the internet and digital technologies to
streamline business operations, increase efficiency, and enhance customer experiences.

• Introduction to Electronic Commerce (e-Commerce):

Electronic commerce, commonly known as e-commerce, is a subset of e-business that specifically

focuses on the buying and selling of products and services over electronic networks, primarily the
internet. It involves online transactions, electronic fund transfers, electronic data interchange (EDI),
and other online processes.

E-commerce has revolutionized the way businesses operate and how consumers interact with them.
It has eliminated geographical barriers, allowing businesses to reach customers globally and enabling
consumers to access products and services from anywhere at any time. E-commerce encompasses
various models, such as business-to-consumer (B2C), business-to-business (B2B), consumer-to-
consumer (C2C), and consumer-to-business (C2B) transactions.

Type of Electronic Commerce Models:

1. Business-to-Consumer (B2C): This model involves transactions between businesses and

individual consumers. It refers to online retailing, where businesses sell products or services
directly to consumers through websites or online platforms. Examples include online
marketplaces like Amazon, online clothing stores, and food delivery services.

2. Business-to-Business (B2B): B2B e-commerce involves transactions between businesses. It

focuses on the exchange of goods, services, or information between companies through
online platforms or electronic data interchange (EDI). B2B e-commerce plays a crucial role in
supply chain management, procurement, and collaborative partnerships between
organizations.
3. Consumer-to-Consumer (C2C): C2C e-commerce involves transactions between individual
consumers. It facilitates direct interaction and exchange of goods or services without the
involvement of businesses as intermediaries. Examples include online classified
advertisements, online auction platforms like eBay, and peer-to-peer sharing platforms like
Airbnb.

4. Consumer-to-Business (C2B): In C2B e-commerce, consumers offer products or services to

businesses. This model is commonly seen in freelancing platforms, where individuals provide
their skills or expertise to businesses in exchange for payment. Crowdsourcing platforms,
where consumers contribute ideas or content to businesses, also fall under this category.

5. Business-to-Government (B2G): B2G e-commerce refers to transactions between businesses

and government entities. It involves online interactions related to procurement, licensing,
tax filing, and other business-related activities with government agencies. B2G e-commerce
streamlines processes and enhances efficiency in dealings with the public sector.

6. Government-to-Business (G2B): G2B e-commerce involves government entities providing

services, information, or products to businesses through online platforms. Examples include
online portals for business registrations, obtaining permits, and accessing government
databases. G2B e-commerce simplifies government interactions and reduces bureaucratic
hurdles for businesses.

7. Government-to-Consumer (G2C): G2C e-commerce refers to online transactions between

government agencies or authorities and individual consumers. It includes online services
provided by government entities, such as online tax filing, utility bill payments, and applying
for government benefits. G2C e-commerce enhances convenience and accessibility for
citizens.

8. Mobile Commerce (m-Commerce): Mobile commerce refers to e-commerce transactions

conducted through mobile devices, such as smartphones and tablets. It enables consumers
to make purchases, access services, and conduct online transactions using mobile apps or
mobile-optimized websites. Mobile commerce has gained significant popularity due to the
widespread adoption of smartphones and mobile internet connectivity.

9. Social Commerce: Social commerce involves the integration of social media platforms with
e-commerce. It leverages social networks to facilitate buying and selling, product
recommendations, and user reviews. Social commerce platforms enable businesses to
showcase products, engage with customers, and facilitate seamless transactions within
social media environments.
These are some of the common e-commerce models, each catering to different types of transactions
and interactions in the digital marketplace. Businesses often adopt multiple models or a hybrid
approach based on their target audience and goals.

E- Commerce in India

E-commerce in India has experienced remarkable growth and transformation, making a significant
impact on the country's retail landscape and consumer behaviour.

1. Rapid Growth: The e-commerce sector in India has witnessed exponential growth in recent
years. Factors such as increasing internet penetration, growing smartphone usage, and rising
consumer confidence in online transactions have contributed to the expansion of e-
commerce. According to reports, the e-commerce market in India is projected to reach
significant valuation in the coming years.

2. Dominance of Online Marketplaces: Online marketplaces have played a crucial role in

shaping the e-commerce landscape in India. Platforms like Amazon, Flipkart, and Snapdeal
have emerged as major players, offering a wide range of products across various categories.
These marketplaces provide a platform for sellers to reach a vast customer base, facilitating
convenient and secure transactions.

3. Shift in Consumer Behaviour: E-commerce has led to a significant shift in consumer

behaviour in India. Online shopping has become increasingly popular, offering convenience,
a wide selection of products, and competitive prices. Indian consumers are now more
comfortable with making online payments, leveraging digital wallets, debit/credit cards, and
other payment options.

4. Expansion into Tier 2 and Tier 3 Cities: While e-commerce initially gained traction in urban
areas, it has gradually expanded to tier 2 and tier 3 cities in India. Improved logistics and
delivery infrastructure, coupled with increased smartphone penetration, have made e-
commerce accessible to a wider population. This expansion has opened up new markets and
opportunities for businesses.

5. E-commerce Models: Various e-commerce models are prevalent in India. Business-to-

Consumer (B2C) e-commerce, where businesses sell products directly to consumers,
dominates the market. Additionally, Consumer-to-Consumer (C2C) platforms like OLX and
Quikr facilitate peer-to-peer transactions. Business-to-Business (B2B) e-commerce is also
gaining momentum, enabling businesses to transact with each other online.
 6. E-commerce in Different Sectors: E-commerce has made significant inroads into various
sectors in India. Online retailing of consumer goods, including electronics, fashion, and home
appliances, has witnessed tremendous growth. Additionally, sectors such as food delivery,
ride-hailing, travel, and hospitality have seen the emergence of successful e-commerce
platforms catering to the Indian market.

7. Challenges and Opportunities: The e-commerce industry in India faces several challenges,
including logistics infrastructure, last-mile delivery, and regulatory compliance. However,
these challenges also present opportunities for innovation and growth. Start-ups and
established players are working on addressing these challenges by leveraging technology,
developing efficient supply chains, and collaborating with logistics partners.

8. Government Initiatives: The Indian government has introduced several initiatives to

promote e-commerce and digital entrepreneurship. The "Digital India" campaign aims to
improve digital infrastructure, connectivity, and digital literacy across the country. The
government has also introduced regulations and guidelines to ensure consumer protection,
data privacy, and fair competition in the e-commerce sector.

The e-commerce industry in India continues to evolve, driven by technology advancements,

changing consumer preferences, and favourable market conditions. With increasing internet
penetration and a growing consumer base, e-commerce is expected to play a pivotal role in shaping
the future of retail and commerce in India.

Internet Infrastructure for E-Commerce

1. World Wide Web (WWW):

The World Wide Web, often referred to as the Web, is a global system of interconnected
documents and resources linked through hyperlinks. It was developed by Sir Tim Berners-Lee
in the late 1980s and has since revolutionized the way information is accessed, shared, and
communicated on the internet. The Web relies on the Hypertext Transfer Protocol (HTTP)
for transmitting data and encompasses various types of media, including text, images,
videos, and interactive elements.

2. Internet Architectures:
Internet architectures refer to the underlying design and structure of the internet. The
internet is a decentralized network that connects millions of devices globally. It is based on
the Internet Protocol (IP), a set of rules for transmitting data packets between devices. The
two primary internet architectures are the Internet Protocol version 4 (IPv4) and Internet
Protocol version 6 (IPv6). IPv4 is the older and more widely used version, while IPv6 was
introduced to address the limitations of IPv4 and provide an expanded address space.
3. Internet Applications:
Internet applications are software programs or services that operate over the internet and
provide specific functionalities to users. They leverage the internet's connectivity and
infrastructure to enable various activities such as communication, collaboration, information
retrieval, online transactions, and entertainment. Examples of internet applications include
web browsers, email clients, social media platforms, video streaming services, online
banking, and e-commerce platforms.

4. Web-Based Tools for Electronic Commerce:

Web-based tools for electronic commerce are software applications or services that
facilitate online business transactions and operations. These tools are accessed through web
browsers and provide functionalities like online shopping carts, payment gateways,
inventory management, customer relationship management (CRM) systems, order
processing, and analytics. They enable businesses to establish and manage their online
presence, streamline e-commerce processes, and enhance customer experiences.

5. Intranet:
An intranet is a private network that uses internet technologies and protocols within an
organization or company. It functions as an internal communication and collaboration
platform, allowing employees to share information, access resources, and collaborate on
projects. Intranets are typically accessible only within the organization and may include
features like document management systems, employee directories, news portals, and team
collaboration tools.

6. Composition of Intranet:
The composition of an intranet typically includes various components and technologies. It
consists of web servers that host and serve intranet content, databases for storing and
retrieving information, security mechanisms to control access and protect data, content
management systems for organizing and presenting information, and collaboration tools to
facilitate teamwork and communication within the organization. Intranets may also
integrate with other internal systems and applications to provide seamless access to
business-critical resources.

7. Business Applications on Intranet:

Intranets support a wide range of business applications that enhance internal operations
and productivity. These applications may include employee portals for accessing HR
information, training materials, and company policies; project management tools for
tracking and managing projects; knowledge bases and wikis for sharing organizational
knowledge; internal communication platforms such as chat systems and discussion forums;
and workflow management systems for streamlining business processes.

8. Extranets:
 Extranets are secure networks that allow controlled access to specific external users, such as
business partners, suppliers, or customers. They extend the functionality of intranets by
providing limited access to authorized external entities. Extranets enable secure
communication, collaboration, and data sharing between an organization and its trusted
external stakeholders. They often utilize technologies such as virtual private networks
(VPNs) and secure login mechanisms to ensure data privacy and protection.

In summary, the World Wide Web revolutionized internet usage and connectivity, while internet
architectures and applications enable various online functionalities. Intranets serve as internal
communication and collaboration platforms for organizations, while extranets facilitate controlled
access for external partners. Web-based tools for electronic commerce empower businesses

Electronic Data Exchange in E-Commerce

Electronic Data Interchange (EDI) is a structured electronic communication method that enables the
exchange of business documents between trading partners in a standardized format. It eliminates
the need for manual data entry and facilitates seamless, efficient, and accurate data exchange. Here
is a short note on EDI, its components, and the communication process:

• Components of Electronic Data Interchange (EDI):

1. Standards: EDI relies on standardized formats to ensure compatibility and interoperability

between different systems. Popular EDI standards include ANSI X12, UN/EDIFACT, and XML.
These standards define the structure, syntax, and semantics of the data exchanged.

2. EDI Translator: An EDI translator is software that translates data between the internal
format used by an organization's systems (such as invoices, purchase orders, or shipping
documents) and the standardized EDI format. It converts the data into the appropriate EDI
format for transmission and vice versa.

3. Communication Protocol: EDI relies on communication protocols to facilitate the secure and
reliable transmission of data between trading partners. Common protocols used in EDI
communication include Value-Added Networks (VANs), File Transfer Protocol (FTP), Secure
File Transfer Protocol (SFTP), and Electronic Mail (Email).

4. Mapping and Transformation: Mapping and transformation tools are used to map data from
an organization's internal format to the EDI standard format and vice versa. These tools
ensure that the data elements are accurately matched and aligned during the translation
process.
 5. Data Validation: Data validation ensures that the exchanged data is accurate, complete, and
compliant with the specified EDI standards. Validation checks may include data format
validation, syntax validation, and data integrity checks to identify any errors or
inconsistencies in the transmitted data.

• Electronic Data Interchange Communication Process:

The communication process in EDI involves several steps:

1. Partner Agreement: Trading partners establish a formal agreement to exchange data using
EDI. This agreement outlines the standards, protocols, and specific document types that will
be exchanged, along with any business rules or requirements.

2. Document Preparation: The sender prepares the business document (e.g., purchase order,
invoice) in the organization's internal format. This document is then transformed into the
corresponding EDI format using an EDI translator and mapping tools.

3. Data Transmission: The EDI document is transmitted securely over a chosen communication
protocol. The sender's system sends the EDI document to the receiver's system using
agreed-upon communication channels, such as VANs or direct connections.

4. Data Reception and Translation: The receiver's system receives the EDI document and uses
an EDI translator to convert it into the organization's internal format. Mapping and
transformation tools ensure accurate conversion and alignment with the receiver's system
requirements.

5. Data Integration: The translated EDI document is integrated into the receiver's system,
allowing seamless processing and integration with internal workflows, systems, and
databases.

6. Acknowledgment and Error Handling: Upon successful receipt and integration of the EDI
document, the receiver sends an acknowledgment (e.g., an EDI 997 Functional
Acknowledgment) to the sender, indicating successful transmission and receipt. If any errors
or discrepancies are identified, error messages or rejection notifications are sent for
resolution.
 7. Business Process Integration: The integrated data from the EDI document is used for further
processing, such as order fulfilment, inventory management, billing, or other business
operations.

The EDI communication process enables automated, standardized, and efficient exchange of
business documents, reducing manual efforts, improving accuracy, and enhancing business
relationships between trading partners.

Electronic Payment system

Electronic Payment System (EPS) refers to the infrastructure and processes that enable the
electronic transfer of funds between buyers and sellers in a secure and convenient manner. It
eliminates the need for physical cash or checks and allows for seamless transactions using electronic
devices and networks. Here is a short note on EPS, including the concept of money, types of
electronic payment systems, smart cards, infrastructure issues, and electronic fund transfer:

• Concept of Money:

Money is a medium of exchange that facilitates the transaction of goods and services. Traditionally,
money took the form of physical currency, such as coins and banknotes. However, with the
advancement of technology, electronic forms of money have emerged, enabling digital transactions.

• Electronic Payment System:

An electronic payment system enables the transfer of funds electronically, replacing traditional
payment methods. It involves the use of digital devices and networks to initiate, authorize, and
complete financial transactions securely. EPS provides convenience, speed, and security, benefiting
both consumers and businesses.

• Types of Electronic Payment Systems:

1. Card-based Systems: These systems utilize payment cards, such as credit cards, debit cards,
or prepaid cards, to facilitate transactions. Card-based systems typically involve card
readers, point-of-sale (POS) terminals, and secure networks to authorize and process
payments.

2. Digital Wallets: Digital wallets, also known as mobile wallets, are smartphone applications
that store payment card information securely. Users can make payments by tapping their
smartphones or scanning QR codes at compatible payment terminals. Examples of digital
wallets include Apple Pay, Google Pay, and Samsung Pay.
 3. Online Payment Gateways: Online payment gateways enable secure online transactions by
connecting e-commerce websites with financial institutions. These gateways process online
payments, verify user credentials, and facilitate the transfer of funds between buyers and
sellers.

4. Peer-to-Peer (P2P) Payments: P2P payment systems allow individuals to transfer funds
directly to one another using mobile apps or online platforms. Examples include PayPal,
Venmo, and Zelle, which enable users to send money to friends, family, or businesses
without the need for physical cash or checks.

5. Smart Cards and Electronic Payment Systems: Smart cards, also known as chip cards or
integrated circuit cards (IC cards), are plastic cards embedded with microprocessors that
store and process data securely. They can be used in electronic payment systems to store
payment information and enable secure transactions. Smart cards may require a card reader
or contactless technology, such as Near Field Communication (NFC), for payment processing.

6. Electronic Fund Transfer: Electronic Fund Transfer (EFT) refers to the electronic transfer of
funds from one bank account to another. EFTs can be used for various purposes, such as
salary transfers, bill payments, and online purchases. Examples of EFT systems include
Automated Clearing House (ACH) transfers, wire transfers, and electronic check processing.

• Infrastructure Issues in EPS: Implementing an effective EPS requires a robust and secure
infrastructure. Infrastructure issues that can affect EPS include network connectivity, system
reliability, data security, and interoperability between different payment systems. These
issues need to be addressed to ensure smooth and secure electronic transactions.

In summary, an electronic payment system enables the electronic transfer of funds, replacing
traditional payment methods. It encompasses various types of payment systems, including card-
based systems, digital wallets, online payment gateways, and P2P payments. Smart cards and EFTs
play a crucial role in facilitating secure electronic transactions. However, infrastructure issues and
data security considerations must be addressed to ensure the reliability and security of EPS.