Introduction to Electronic Commerce – Evolution and Models

Main Activities of Ecommerce, Functions Of Ecommerce, Scope of Ecommerce, Benefits Of Ecommerce – E-Marketers, Challenges for E-commerce, E-commerce Business Strategies, Business Models of E-Commerce

1. Introduction to Electronic
Commerce –Evolution and Models
Module I –Ecommerce
Prof Amit A Bansod
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1

2. Main Activities of Ecommerce
•Information Sharing
–Information like product ,
price, discounts,
availability, terms &
conditions
–Shares it on email, website,
online catalogs, message
board system
Prof Amit A Bansod
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2

3. Main Activities of Ecommerce
•Registration
–Customer needs to register
–Provides Personal Details-
name , address, contact
details
–Login Id & Password is
created
–Membership confirmed by
SMS / Email
Prof Amit A Bansod
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3

4. Main Activities of Ecommerce
•Order Placement &
Processing
–Products added to Cart
–Can add/ delete / articles
to cart
–Needs to confirm delivery
address
Prof Amit A Bansod
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4

5. Main Activities of Ecommerce
•Processing of Payment
–Can make payment
–Cash on Delivery
–Debit / Credit Card
–Wallets
–Sellers prefer receipt of
payment to COD, give
additional discounts
Prof Amit A Bansod
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5

6. Main Activities of Ecommerce
•Shipment
–Can be shipped for
free / charges
–Online tracking
system has been
devised
–Logistic can be
handled in house or
be outsourced
Prof Amit A Bansod
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6

7. Main Activities of Ecommerce
•Delivery
–Delivery at scheduled
address
–Digital confirmation taken
–Cash collected in Case of
COD
Prof Amit A Bansod
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7

8. Main Activities of Ecommerce
•Service & Support
–Needs to provided to retain
customers
–Helps improve present
system
–Seller provides After sales
service like installation ,
fitting, training for usage
Prof Amit A Bansod
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8

9. Main Activities of Ecommerce
•Feedback
–Can ask online feedback
from customers
–Feedback regarding
product performance , ease
of transaction, satisfaction
Prof Amit A Bansod
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9

10. Main Activities of Ecommerce
•Customer Review
–Provided by
customer on sellers
website
–It attracts other
customers
–Educate and
motivate other
–Builds trust &
confidence
–Customer willing to
pay premium for + ve
feedback products
Prof Amit A Bansod
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10

11. Main Activities of Ecommerce
•Advertising and Sales Promotion
–Ecommerce site acts as advertising platform
–Reach a wider audience geographically
–Adds to brand value
Prof Amit A Bansod
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11

12. Functions Of Ecommerce
•Registration
–Need to register to
purchase
–Personal details asked
–Verification done to
avoid false placement
of orders
Prof Amit A Bansod
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12

13. Functions Of Ecommerce
•Information Search
–Provides option for search
–Helps comparison between products
–Information can be used for physical purchase of
product / services
Prof Amit A Bansod
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13

14. Functions Of Ecommerce
•Electronic Data
Interchange
–Helps facilitate
recurring transactions
–Use standard format for
ease of understanding
& interpreting
–Helps paperless flow of
information
–E.g. Invoices , trade
deals,
Prof Amit A Bansod
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14

15. Functions Of Ecommerce
•Negotiations
–Can negotiate based on
pricing , quality,
quantity , terms &
Condition
–Mostly in B2B deals
Prof Amit A Bansod
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15

16. Functions Of Ecommerce
•Orders
–Helps take & process
orders
–Order management helps
the organization to
maintain adequate stock
of goods
–Order management a key
function for smooth
function
Prof Amit A Bansod
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16

17. Functions Of Ecommerce
•Logistics
–Includes activities like
storing, packing
tracking, delivering
–Systems are to
created and
maintained so as to
reduce cost and
errors
–Online tracking helps
in enhancing
customer experienceProf Amit A Bansod
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17

18. Functions Of Ecommerce
•Payment
–It is a dialogue between the seller, buyer and banks
–Secured payments channels are necessary for
prevention of frauds
–Ease & Security are two main points to be looked
Prof Amit A Bansod
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18

19. Functions Of Ecommerce
•Promotion of
Products
–Alternate source of
advertisement
–Customer initiated
–No cost
–Directed towards the
target market
–Can interact with
customers
Prof Amit A Bansod
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19

20. Functions Of Ecommerce
•Consumer Research
–Absolutely necessary to
improve satisfaction
–Obtain online feedback
–Seek suggestions
–Helps improve product
offering, customizing
Prof Amit A Bansod
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20

21. Scope of Ecommerce
•Electronic Market
–Is Inter organizational
information system
–Helps buyers & sellers
exchange information
–Works more in the search
phase of trading cycle
–Can be used for execution of
order
–Useful for one of Transactions
–E.g. Airline , Insurance,
Prof Amit A Bansod
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21

22. Scope of Ecommerce
•Electronic Data Exchange
–Standardized system for
transfer of structured data
–Papers working
–Used for large numbers of
repeated orders
–E.g. Medical reports,
Departmental stores with
their suppliers, Stock Market
transaction
Prof Amit A Bansod
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22

23. Scope of Ecommerce
•Internet Commerce
–Buying & selling of Goods &
Services
–Covers all phases of buying cycle
–Transaction include B2B, B2C,
B2I, B2G
Prof Amit A Bansod
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23

24. Benefits Of Ecommerce –E-Marketers
•Global Market
–Can reach across the
Globe
–Geographical restriction
is removed
•Audience Sizing
–Can measure no of Visits ,
Repeat Visit, Non
Purchase Visits
•Lower Investment
–No investment in Real-
estate (Shops , Godowns)Prof Amit A Bansod
[email protected]
24

25. Benefits Of Ecommerce –E-Marketers
•Lower Operating Cost
–Lower Rent
–Comparatively lower wage bill
–Low Insurance Cost
–Lower Maintenance Cost
•Improvement in Productivity
–High automation increases
efficiency and productivity
•Quality Procurement
–Can negotiate with multiple
Suppliers for Quality Material,
Price, Terms
Prof Amit A Bansod
[email protected]
25

26. Benefits Of Ecommerce –E-Marketers
•Customer Relationship
–Understand and predict
requirements
–Understand preferences
–Make individualized offers
•Benefits Government
Agencies
–Government Can use e-
tenders for purchases
–Improves transparency
–Can communicate for
fulfillment or urgent
requirements Prof Amit A Bansod
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26

27. Benefits Of Ecommerce –Customers
•Convenience Of Shopping
•Anytime Shopping
•Lower Prices
•Loyalty Incentives
Prof Amit A Bansod
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27

28. Challenges for E-commerce
•Declining Profit Margins
•Challenges of Ecommerce Law in
India
•Low Entry Barrier
•Problem of Rural Customers
Prof Amit A Bansod
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28

29. Challenges for E-commerce
•Shortage of Manpower
•Challenges of Customer
Loyalty
•Challenges of Return
Goods
•Challenges of Cash on
Delivery
Prof Amit A Bansod
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29

30. Challenges for E-commerce
•Problems of Payment
Gateway
•Problem of Touch & Feel
Experience
•Problem Of Delivery
•Problem of Confidence
Prof Amit A Bansod
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30

31. Challenges for E-commerce
•Unsuitability of Certain
Products
•Problem in Negotiation
•Problem Of language
•Low Internet Penetration
•Privacy Issues
Prof Amit A Bansod
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31

32. E-commerce Business Strategies
•Niche Market
–Focus on specialized
offering
–Serving the un-served
market
–Creating specialized
service and market
Prof Amit A Bansod
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32

33. E-commerce Business Strategies
•Sell Internet only Merchandize
–Build exclusive brand with
ecommerce
–Greater control over distribution
–Higher Profit Margins
Prof Amit A Bansod
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33

34. E-commerce Business Strategies
•Personalize
–Capture individual shoppers
interest
–Promotion as per interest
–Helps in greater Conversion
Prof Amit A Bansod
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34

35. E-commerce Business Strategies
•Using Third Party Logistics
(3PLs)
–Use 3pls for same day delivery
–Faster delivery key differentiator
–Focus on core business
Prof Amit A Bansod
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35

36. E-commerce Business Strategies
•Invest in mobile Platform
–Convergence of mediums
–Explosive growth in usage
–Helps any time access
–All communication with customer
done on Mobile
Prof Amit A Bansod
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36

37. E-commerce Business Strategies
•Consider Subscription Model
–Replenish a commodity for the
customer
–Send exclusive customized model
to customer
Prof Amit A Bansod
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37

38. E-commerce Business Strategies
•Consistency Across Channels
–Need to ensure that the
consumer experiences consistent
performance in terms of
products, delivery an other
deliverables
Prof Amit A Bansod
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38

39. E-commerce Business Strategies
•Implement Loyalty Programs
–Special prizing
–Loyalty points
–Exclusive offers
–Make the customer feel
appreciated
Prof Amit A Bansod
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39

40. E-commerce Business Strategies
•Make use of Native Language
–For promoting the products
–Helps emotionally connects with
customers
–Provide translation features
Prof Amit A Bansod
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40

41. E-commerce Business Strategies
•Donate Product for others to
review
–Give to journalist, writers, editors,
opinion makers,
–Helps get free 3
rd
party review
–Helps in free publicity
Prof Amit A Bansod
[email protected]
41

42. E-commerce Business Strategies
•Understand the customer
–Segment the customer basis RFM
(Recency, Frequency & Monetary
value)
–Customer based marketing needs
to be done
Prof Amit A Bansod
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42

43. E-commerce Business Strategies
•Make an attractive website
–Ease of usage
–Able to use on all devices &
platforms
–Easy search methods
Prof Amit A Bansod
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43

44. Business Models of E-Commerce
•Business to Consumers (Flipkart, Amazon)
•Business to Business (India Mart)
•Consumer-to Business (Free Lancers,
Professional marketing websites)
•Consumer to Consumer (OLX, ebay)
Prof Amit A Bansod
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44

45. Business Models of E-Commerce
•Government to Business (Tenders, Revenue
GST)
•Business to Government ( Catering spefically
to government )
•Government to Consumers (Electricity ,
individual tax payers)
•Government to citizen (Birth Registration,
Passport Issuance)
•Peer to Peer (e.g. Upstart, Peerform)
Prof Amit A Bansod
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45

46. Prof Amit A Bansod
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46

47. Characteristics of B2B Ecommerce
•Higher Volumes
–Repeat purchases
–Large Volume
•Longer Lead Time
–Longer Selling Cycle
–Longer delivery time
•Credit Sales
–Credit period depends upon
•Creditworthiness
•Type of goods
•Business Relations
Prof Amit A Bansod
[email protected]
47

48. Characteristics of B2B Ecommerce
•Various Models
–Net Market Place
–Private Industrial Network
•Price Negotiations
–Negotiations take place for
price, quality, terms & condition,
Delivery method, Order
Rejection , Penalties,
Guarantees, Laboratory testing
•Specialize Promotions
–Less use of Mass media
–Trade Magazines, Trade Fairs,
Exhibitions used
Prof Amit A Bansod
[email protected]
48

49. Characteristics of B2B Ecommerce
•Customized Orders
–Orders made as per
specification
•Higher Risk
–Order Rejection
–Bad Debts
–Higher Volume
•High Degree of Personalized
Selling
–Far more Offline interaction
–Personalized selling
Prof Amit A Bansod
[email protected]
49

50. Models of B2B E-Commerce
•1
st
Model –Net Marketplace Model
–Internet Market place, bringing thousands of
buyers and sellers together
–Also Know as exchange Hubs
–Three main types of Net Market Models
•Supplier Oriented Market Place
•Buyer Oriented Market Place
•Intermediary-Oriented Market Place
Prof Amit A Bansod
[email protected]
50

51. Models of B2B E-Commerce
•Supplier Oriented Market Place
–Few Suppliers Many Buyers
–Operated by few large Buyers e.g. Dell Computers
–Supplier is able to forecast Demand & Invetory
Control
Prof Amit A Bansod
[email protected]
51

52. Models of B2B E-Commerce
•Supplier Oriented Market Place
–Provides the following Informatiion
•Order catalogue
•Procedure for Order Placement
•Customer Service
•Shipment & Schedule Procedures
•Invoicing & Payment details
Prof Amit A Bansod
[email protected]
52

53. Models of B2B E-Commerce
•Buyers Oriented Market Place
–Few Buyers & and Many Suppliers
–Suitable for Large Organization with Large
Purchase Volume & Varied Items
–They Open their own marketplace
–Provides great potential for saving
–Opened in Industrial Sector
–example GE Supplier Portal
Prof Amit A Bansod
[email protected]
53

54. Models of B2B E-Commerce
Process
include
Generation of
Requisition
Authorization
of Purchase at
different levels
Selection of
Potential
Suppliers
Generation of
RFQ
Obtaining BIDSNegotiations
Order
Placement
Monitoring the
delivery
Reminders if
Required
Payment to
Supplies
Prof Amit A Bansod
[email protected]
54

55. Models of B2B E-Commerce
•Intermediary-Oriented Market Place
–established by an intermediary company which runs a
marketplace
–where business buyers and sellers can meet
•There are two types of Intermediary-Oriented
Marketplaces:
–Horizontal marketplaces–Offer services to all industrial
sectors.
–Example of this market –Alibaba,Amazon Source
–Vertical marketplaces–Concentrates on one industrial
sector.
–Example of this market –Paper Exchange,Plasticsnet
Prof Amit A Bansod
[email protected]
55

56. Models of B2B E-Commerce
•Intermediary-Oriented Market Place
–Neutral Business Platform, just like market place
–Contains catalogue where suppliers showcase
their product / service along with price
–Such sites helps also to search & compare
–Auction facility available
–Intermediary earns via
•Commission on Transaction
•Membership fee
•Advertising
•Through sale of own product
Prof Amit A Bansod
[email protected]
56

57. Private Industrial Network
•Small number of strategic business partners
who collaborate with one another to develop
effective market chain.
•ManufacturerWholesalerRetailerConsumer
•Two Types of PIN
–Single Firm Industrial Network –Single Large
Purchasing Firm
–Industry wide Industrial Network-group of Large
Firms in an Industry
Prof Amit A Bansod
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57

58. Private Industrial Network
–Characteristics of PIN
•Brings higher efficiency in supply chain
•Reduction in business risk
•Facilitates resources and capacity planning
•Better communication, improves relation between
buyers & sellers
•Examples –Walmart, Coca-Cola, Microsoft, Nike
Prof Amit A Bansod
[email protected]
58

59. Need /Importance Of B2B E-Commerce
•Reduces Distribution Cost
•Reduces Marketing Sales Cost
•Reduces Inventory Level
–Need not maintain Huge Inventory
–Both Buyer & Seller can use JIT
(Just In Time Model)
•Increase In Productivity
–Automated Bills
–Reduction in Procurement Process
–Limited Clientele
Prof Amit A Bansod
[email protected]
59

60. Need /Importance Of B2B E-Commerce
•Focused Brand Promotion
–Limited Target Audience
•Customer Loyalty
–Price in Not the only factor
–All Businesses know the
importance of good suppliers
•Wider Geographical Spread
–Reaching customers in
Remote Locations
•Scalability
–Can increase volume of
Business over time
Prof Amit A Bansod
[email protected]
60

61. Need /Importance Of B2B E-Commerce
•Reciprocal Buying
–Barter System possible
–Both can buy from each
other
•Benefits of Negotiations
–Terms of sale can be
adjusted
•Lower Rejection Rates
–More Samples &
Clarification leads to
lower RejectionsProf Amit A Bansod
[email protected]
61

62. Characteristics of B2C E-commerce
•Larger Number Of Customers
•Lower Entry Barrier
•Lower Volume per transaction
•Possibility of Return of Goods
•Global Reach
•Anytime Shopping
•Lower Operating Cost
•Lower Investment
•Stiff Competition
•Lower Price to ConsumersProf Amit A Bansod
[email protected]
62

63. B2C Process
•The B2C has activities involved are
•Pre-Purchase Stage
•Purchase Stage
•Post Purchase Stage
Prof Amit A Bansod
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63

64. Pre-Purchase Stage
This Stage Involves
•Information Search
–Customer searches various sites
for Product Description ,features,
Price, Discount, Availability,
Prof Amit A Bansod
[email protected]
64

65. Pre-Purchase Stage
•Pre-Purchase decision
–Makes comparison between
products available at
different site
–Takes decision based on
features, Price , Mode of
Payment available,
Guarantees , Return Back
Policy etc.
Prof Amit A Bansod
[email protected]
65

66. Pre-Purchase Stage
•Registration
–Customer needs to register with ecommerce site
–Mention contact details
–Create a login with password
–The customers becomes a member
Prof Amit A Bansod
[email protected]
66

67. Purchase Stage
•Placement of Order
–Adds / Deletes items to
shopping cart and confirms
the address of Delivery
•Processing of Order
–Gives other details as
preferred time of delivery
Prof Amit A Bansod
[email protected]
67

68. Purchase Stage
•Processing of Payment
–Chooses the payment COD,
Net-banking, Credit Card,
Debit Card, Digital Cash
(Paytm)
•Operations Management
–Order passed to logistic
Department for further
processing
Prof Amit A Bansod
[email protected]
68

69. Post Purchase Stage
•Shipment
–Goods shipped
–Tracking Facility Provided to
customer
–Automated info of shipping sent
through App messages, SMS ,
Emails
•Delivery of Goods
–Logistic company delivers, takes
confirmation from customer and
informs the company
–Takes Cash in case of COD
Prof Amit A Bansod
[email protected]
69

70. Post Purchase Stage
•Feedback
–Seller may ask feedback of
•Product performance
•Ease of Process
•Customer Satisfaction
•Overall Experience
Prof Amit A Bansod
[email protected]
70

71. Characteristics of B2G Ecommerce
•Involves Business selling Products / Services
/Information to Government / Govt. Agencies
Characteristics are
•Mainly involve Bidding
–Bidding for supplies to Govt.
–Conducted through online real-time bidding
•Transparency
–Brings Transparency
–GovtAgencies ask for RFI, RFP, RFQ (Request For
Information/ Proposal/ Quotation)
–The winning Bid is publicly announced , thus removes
controversy
Prof Amit A Bansod
[email protected]
71

72. Characteristics of B2G Ecommerce
•Virtual Work Place
–Virtual Space for Co-ordination of work, task on
ongoing projects
–Review of project Process, project review, online
virtual meeting
•Improved efficiency
–Improves efficiency in procurement, completion of
projects
–Reduces delays and red tapeism
Prof Amit A Bansod
[email protected]
72

73. Characteristics of B2G Ecommerce
•High value transactions
•Rules and Regulation
–B2G Contracts are subject very strict guidelines
–Violation leads to termination of contract
•Promotional Tactics
–The is no promotion from the e supplier
–All bids are subject to specific bidding norms
Prof Amit A Bansod
[email protected]
73

74. Characteristics of B2G Ecommerce
•International Coverage
–Bidding can be done internationally
–International experts can also participate
Prof Amit A Bansod
[email protected]
74

75. Ecommerce Sales Life Cycle
•Similar to Human Life Cycles , E-Commerce also goes
through various stages of development
•These Stages include
–Seed (Development) Stage
–Start-up (Introduction) Stage
–Growth Stage
–Established ( Maturity) Stage
–Expansion Stage
–Decline Stage
–Exit Stage
Prof Amit A Bansod
[email protected]
75

76. Ecommerce Sales Life Cycle
•Similar to Human Life Cycles , E-Commerce also goes
through various stages of development
•These Stages include
–Seed (Development) Stage
–Start-up (Introduction) Stage
–Growth Stage
–Established ( Maturity) Stage
–Expansion Stage
–Decline Stage
–Exit Stage
Prof Amit A Bansod
[email protected]
76

77. Seed (Development) Stage
•Starts with an idea for ecommerce business
•Stage involves conception of idea
•Requires to do complete Ground Work
•Challenges
–Marketplace acceptance
–Advisable to focus on niche / untapped market
•Focus
–To choose area of expertise/ experience/ passion
•Money Sources
–Own funds
–Borrowed fund from friends and family
–Fund requirement is limited
Prof Amit A Bansod
[email protected]
77

78. Start-up (Introduction) Stage
•Ecommerce Business begins to operate
•The business gets its 1
st
Customer
•Challenges
–Can face cash crunch as set up cost , purchasing of
assets, un planned expenses
–Main aim to survive and stay in business
•Focus
–To create customer base and create awareness
–Need to conserve cash
•Money Sources
–Own Funds
–Revenue flow from sales
–Supplier CreditProf Amit A Bansod
[email protected]
78

79. Growth Stage
•There Sharp growth in sales, revenue, customers
•Business will see profit
•Tries to enter new Geographical Areas and Products
•Challenges
–Lack of experienced Manpower
–Creating Control Systems
•Focus
–To maintain & enhance Customer relationship
–Increase Promotional Activity
–Seek customer feedback for improvement
•Money Sources
–Bank Loan
–Venture capital / Investor Funding
Prof Amit A Bansod
[email protected]
79

80. Maturity Stage
•Strong Foothold in Market
•Sales is Stable, Operations are manageable with
available HR
•Challenges
–Stiff Competition due to low entry barrier
–Changing Customer Preference
•Focus
–Improving Efficiencies
–Strong tie up with suppliers
–Monitoring outsourced services
–Maintaining Customer Loyalty
•Money Sources
–Internal Cash Flows
–PloughingBack of Profits
Prof Amit A Bansod
[email protected]
80

81. Decline Stage
•Decline happens due to stiff competition, economic
condition, change in customer preferences, poor
management
•Decision to revitalize or sell business
•Challenges
–Declining sales profit customer base
–Negative Cash Flow
•Focus
–Search for new opportunities, new business venture
–Cutting cost
•Money Sources
–Retained Earning, Supplier Credit, revenue from sales
Prof Amit A Bansod
[email protected]
81

82. Exit Stage
•Efforts to revitalize sales
•Looks to sell business / close down business
•Decision to revitalize or sell business
•Challenges
–If business closes-bare financial & psychological
challenge
–To get proper valuation in case of selling
•Focus
–To get proper valuation done
–Valuation depends on customer base, goodwill
Prof Amit A Bansod
[email protected]
82