KMBN 207 E-Commerce[1] [ReaJd-Only].pptx

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1. What Is Electronic Commerce (e- commerce)? Electronic commerce or e -commerce (sometimes written as e- Commerce ) is a business model that lets firms and individuals buy and sell things over the internet. E-commerce operates in all four of the following major market segments: Business to business Business to consumer Consumer to consumer Consumer to business

2. Types of E-Commerce Models Business to Business This is Business to Business transactions. Here the companies are doing business with each other. The final consumer is not involved. So the online transactions only involve the manufacturers, wholesalers, retailers etc. Business to Consumer Business to Consumer. Here the company will sell their goods and/or services directly to the consumer. The consumer can browse their websites and look at products, pictures, read reviews. Then they place their order and the company ships the goods directly to them. Popular examples are Amazon, Flipkart, Jabong etc.

3. Consumer to Consumer Consumer to consumer, where the consumers are in direct contact with each other. No company is involved. It helps people sell their personal goods and assets directly to an interested party. Usually, goods traded are cars, bikes, electronics etc. OLX, Quikr, etc. follow this model. Consumer to Business This is the reverse of B2C, it is a consumer to business. So the consumer provides a good or some service to the company. Say for example an IT freelancer who demos and sells his software to a company. This would be a C2B transaction.

4. E-Commerce – History of E-Commerce Early Development: The history of E-commerce begins with the invention of the telephone at the end of last century. EDI (Electronic Data Interchange) is widely viewed as the beginning of ecommerce if we consider ecommerce as the networking of business communities and digitalization of business information. Large organizations have been investing in development of EDI since sixties. It has not gained reasonable acceptance until eighties. The meaning of electronic commerce has changed over the last 30 years.

5. Originally, electronic commerce meant the facilitation of commercial transactions electronically, using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These were both introduced in the late 1970s, allowing businesses to send commercial documents like purchase orders or invoices electronically. The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of electronic commerce. Another form of E-commerce was the airline and railway reservation system.

6. Online shopping, an important component of electronic commerce was invented by Michael Aldrich in the UK in 1979. T h e w o r l d ’ s f i r s t r e c o r d e d b u s i n e s s t o b u s i n e s s w as T h om s o n Holidays in 1981. The first recorded Business to consumer was Gates head SIS/Tesco in 1984. From the 1990s onwards, electronic commerce additionally included enterprise resource planning systems (ERP), data mining and data warehousing. Although the Internet became popular worldwide around 1994 when the first internet online shopping started, it took about five years to introduce security protocols and DSL allowing continual connection to the Internet. By the end of 2000, many European and American business companies offered their services through the World Wide Web. Since then people began to associate a word “E-commerce” with the ability of purchasing various goods through the Internet using secure protocols and electronic payment services.

7. Advantages of E-Commerce E-commerce provides the sellers with a global reach. They remove the barrier of place (geography). Now sellers and buyers can meet in the virtual world, without the hindrance of location. Electronic commerce will substantially lower the transaction cost. It eliminates many fixed costs of maintaining brick and mortar shops. This allows the companies to enjoy a much higher margin of profit. It provides quick delivery of goods with very little effort on part of the customer. Customer complaints are also addressed quickly. It also saves time, energy and effort for both the consumers and the company. One other great advantage is the convenience it offers. A customer can shop 24×7. The website is functional at all times, it does not have working hours like a shop. Electronic commerce also allows the customer and the business to be in touch directly, without any intermediaries. This allows for quick communication and transactions. It also gives a valuable personal touch.

8. Disadvantages of E-Commerce The start-up costs of the e-commerce portal are very high. The setup of the hardware and the software, the training cost of employees, the constant maintenance and upkeep are all quite expensive. Although it may seem like a sure thing, the e- commerce industry has a high risk of failure. Many companies riding the dot-com wave of the 2000s have failed miserably. The high risk of failure remains even today. At times, e-commerce can feel impersonal. So it lacks the warmth of an interpersonal relationship which is important for many brands and products. This lack of a personal touch can be a disadvantage for many types of services and products like interior designing or the jewelry business.

9. Security is another area of concern. Only recently, we have witnessed many security breaches where the information of the customers was stolen. Credit card theft, identity theft etc. remain big concerns with the customers. Then there are also fulfillment problems. Even after the order is placed there can be problems with shipping, delivery, mix-ups etc. This leaves the customers unhappy and dissatisfied .

10. E- business Model based on the relationship of transaction types This business model is usually controlled by two parameters namely Control and value Integration . Based on this six types of transaction can be identified: Brokerage Model Community Model Subscription Model Aggregator Model Infomediary Model Market place Model

11. Brokerage Model At the heart of this model are third parties known as brokers, who bring sellers and buyers of products and services together to engage in transactions. Normally, the broker charges a fee to at least one party involved in a transaction. While many brokers are involved in connecting consumers with retailers, they also may connect businesses with other businesses or consumers with other consumers. A wide variety of different scenarios or business configurations fall under the banner of a brokerage model. These include everything from Web sites posting simple online classified ads and Internet shopping malls (Web sites that sell products from a variety of different companies) to online marketplaces, online auctions, aggregators, and shopping bots. Ebay.com

12. Community Model The community model is a method of developing an online presence in which several individuals or groups are encouraged to join and participate in ongoing interaction designed around a common purpose. Communities utilize electronic tools such as forums, chat rooms, e-mail lists, message boards, and other interactive Internet mechanisms, which are usually tailored to the particular community. Ex: Facebook, Twitter

13. Subscription Model The ecommerce subscription model is a business model where a company provides ongoing services on a regular basis in exchange for regular payments from the customer” Ex: Netflix, Amazon Prime and Spotify

14. Aggregator Model Aggregators gathers the good/service suppliers from the single industry and puts them under own brand. For example, Airbnb for Hotel industry, OLA and Uber for taxis, Oyo for hotel rooms, etc. Attributes of an Aggregator Business Model Customers : Any aggregator business model has two customer bases - the consumers and the goods/service providers who act as customers for the aggregator. Industry : All goods/service providers associated with a particular aggregator belong to the same or similar industries. Partnerships : None of the goods/service providers are employed with the aggregator. On the contrary, they are business partners of the aggregator and are free to make independent business decisions.

15. Infomediary Model An infomediary is a Web site based model that provides specialized information on behalf of producers of goods and services and their potential customers. The term is a composite of information and intermediary . Policy Bazaar

16. Market Place Model Marketplace model of e-commerce means providing of an information technology platform by an e-commerce entity on a digital and electronic network to act as a facilitator between buyer and seller.” The main feature of the market place model is that the e- commerce firm like flipkart, amazon etc. will be providing a platform for customers to interact with a selected number of sellers. When an individual is purchasing a product from flipkart, he will be actually buying it from a registered seller in flipkart.

17. ESLC Model E-commerce sales have 4 four stages and life cycle has 7 stages: Pre-Sales: Online promotions are done to create excitement about the products that are being sold through online advertisements. Transaction Stage : The customers place their order for the products. The process should be user-friendly and secure. Delivery : It involves delivering the product to the consumer. Care should be taken in delivery with proper packaging and speedy delivery to make the customer happy. After Sales : This involves following up with the customer to let him know that the product has been delivered or if he is satisfied. The feedbacks from the customer can be furthers used in improving services by the company.

18. ESLC Model

19. Stages of ESLC Model Seed (Development) Stage Startup (Introductory) Stage Growth Stage Establishment (Maturity) Stage Renewed Growth Stage Decline Stage Exit Stage

20. E-Payment System An e-payment system is a way of making transactions or paying for goods and services through an electronic medium, without the use of checks or cash. It’s also called an electronic payment system or online payment system.

21. Electronic Payment Methods Credit Card — A form of the e-payment system which requires the use of the card issued by a financial institute to the cardholder for making payments online or through an electronic device, without the use of cash. Charge Card E-wallet — A form of prepaid account that stores user’s financial data, like debit and credit card information to make an online transaction easier. Ex: Paytm, Mobikwik, American Express, Apple pay, Microsoft Wallet, Samsung Pay Sm a r t c a r d — A p l a s t i c c a r d w i t h a mi c r o p r o c e ss o r th a t c a n b e loaded with funds to make transactions; also known as a chip card. A smart card is a device that includes an embedded integrated circuit chip (ICC) that can be either a secure microcontroller or equivalent intelligence with internal memory or a memory chip alone.

22. Direct debit — A financial transaction in which the account holder instructs the bank to collect a specific amount of money from his account electronically to pay for goods or services. E-check — A digital version of an old paper check. It’s an electronic transfer of money from a bank account, usually checking account, without the use of the paper check. EX: an electronic method of sending an employee’s wages directly into the employee’s bank account. Receiving tax return in your account Stored-value card — A card with a certain amount of money that can be used to perform the transaction in the issuer store. A typical example of stored-value cards are gift cards.

23. E - C a sh

24. Risks of E-Payment System Electronic payment systems are not immune to the risk of fraud. The system uses a particularly vulnerable protocol to establish the identity of the person authorizing a payment . Passwords and security questions aren't foolproof in determining the identity of a person. The payment is done usually after keying in a password and sometimes answering security questions. There is no way of verifying the true identity of the maker of the transaction Electronic payment systems encourage impulse buying, especially online and customers are likely to make a decision to purchase an item they find on sale online, because it will cost just a click to buy it through credit card. Impulse buying leads to disorganized budgets and is one of the disadvantages of electronic payment systems.

25. Electronic Data Interchange (EDI) EDI or Electronic Data Interchange is the virtual exchange of data or business documents in electronic format between trading partners Or The simple definition of EDI is a standard electronic format that replaces paper-based documents such as purchase orders or invoices. By automating paper-based transactions, organizations can save time and eliminate costly errors caused by manual processing. It consists of three stages Data Transport, Data Translation and Data Transformation. Many business documents can be exchanged using EDI, but the two most common are purchase orders and invoices. Ex: Dell Boomi, Mule soft

26. Benefits of EDI Minimal paper usage Improved timelines Costs saving in operational efficiency Enhanced quality of data Improved turnaround times: Business cycle is improved and stock levels are kept constantly up to date and visible Helps create a greener world