E-commerce

Defination of E-commerce
E-commerce (electronic commerce) is the buying and selling of goods and
services, or the transmitting of funds or data, over an electronic network,
primarily the internet. These e-commerce transactions typically fall within four
types: business-to-business (B2B), business-to-consumer (B2C), consumer-to-
consumer or consumer-to-business.
The terms e-commerce and e-business are often used interchangeably. The
term e-tail is also sometimes used in reference to the transactional processes that
make up online retail shopping.
In the last two decades, e-commerce platforms -- such as Amazon and eBay --
have contributed to substantial growth in online retail. In 2011, e-commerce
accounted for 5% of total retail sales according to the U.S. Census Bureau. By
Q2 2020, after the start of the COVID-19 pandemic, e-commerce accounted for
16.5% of retail sales. Since then, it has fallen slightly to about 15% as physical
stores reopened.

How does e-commerce work?

E-commerce is powered by the internet. Customers use their own devices to
access online stores. They can browse products and services those stores offer
and place orders.
As an order is placed, the customer's web browser communicates back and forth
with the server hosting the e-commerce website. Data pertaining to the order is
relayed to a central computer known as the order manager. The data is then
forwarded to databases that manage inventory levels; a merchant system that
manages payment information using payment processing applications, such as
PayPal; and a bank computer. Finally, it circles back to the order manager. This
ensures store inventory and customer funds are sufficient for the order to be
processed.
After the order is validated, the order manager notifies the store's web server. It
displays a message notifying the customer that their order has been processed.
The order manager then sends order data to the warehouse or fulfillment
department, letting it know the product or service can be dispatched to the
customer. At this point, tangible and digital products are sent to the customer, or
access to a service is granted.

Types of e-commerce
B2B. This refers to the electronic exchange of products, services or information
between businesses rather than between businesses and consumers. Examples
include online directories and exchange websites that let businesses search for
products, services or information and initiate online transactions through e-
procurement interfaces.
B2C. These transactions are when businesses sell products, services or
information to consumers. There are typically intermediaries or middlemen that
handle shipping, delivery and customer service, however. The term was popular
during the dot-com boom of the late 1990s, when online retailers and sellers of
goods were a novelty.
Today, there are innumerable virtual stores and malls on the internet selling all
types of consumer goods. Amazon is the most recognized among these sites,
dominating the B2C market.
Direct-to-consumer (D2C). This is where a business that manufactures or
produces goods and services sells directly to consumers online without any
middlemen or distributors involved, in contrast to B2C e-commerce.
Consumer-to-consumer (C2C). This is a type of e-commerce in which
consumers trade products, services and information with each other online.
These transactions are generally conducted through a third party that provides
an online platform in which the transactions are carried out.
Online auctions and classified advertisements are two examples of C2C
platforms. EBay and Craigslist are two well-known examples of these
platforms. Because eBay is a business, this form of e-commerce could also be
called consumer-to-business-to-consumer. Platforms like Facebook marketplace
and Depop -- a fashion reselling platform -- also enable C2C transactions.
Consumer-to-business (C2B). This is a type of e-commerce in which
consumers make their products and services available online for companies to
bid on and purchase. This is the opposite of the traditional commerce model of
B2C.
A popular example of a C2B platform is a market that sells royalty-free
photographs, images, media and design elements, such as iStock. Another
example would be a job board.
Business-to-administration (B2A). This refers to transactions conducted
online between companies and public administration or government bodies.
Many branches of government are dependent on various types of e-services or
products. These products and services often pertain to legal documents,
registers, Social Security, fiscal data and employment. Businesses can supply
these electronically. B2A services have grown considerably in recent years as
investments have been made in e-government capabilities.
Consumer-to-administration (C2A). This refers to transactions
conducted online between consumers and public administration or government
bodies. The government rarely buys products or services from individuals, but
individuals frequently use electronic means in the following areas:
 Social Security. Distributing information and making payments.
 Taxes. Filing tax returns and making payments.
 Health. Making appointments, providing test results or information about
health conditions and making health services payments.
Mobile commerce. Also known as m-commerce, mobile commerce refers to
online sales transactions using mobile devices, such as smartphones and tablets.
It includes mobile shopping, banking and payments.

Advantages of e-commerce
 Around-the-clock availability. Aside from outages and scheduled
maintenance, e-commerce sites are available 24/7, enabling visitors to browse
and shop at any time. Brick-and-mortar businesses tend to open for a fixed
number of hours and even close entirely on certain days.
 Speed of access. While shoppers in a physical store can be slowed by
crowds, e-commerce sites run quickly, depending on compute
and bandwidth considerations of both the consumer device and the e-commerce
site. Product, shopping cart and checkout page load in a few seconds or less. A
typical e-commerce transaction requires a few clicks and takes less than five
minutes.
 Wide selection. Amazon's first slogan was "Earth's Biggest
Bookstore." It could make this claim because it was an e-commerce site and not
a physical store that had to stock each book on its shelves. E-commerce enables
brands to make an array of products available, which are then shipped from a
warehouse or various warehouses after a purchase is made. Customers are likely
to have more success finding what they want.
 Easy accessibility. Customers shopping in a physical store might have
difficulty locating a particular product. Website visitors can browse product
category pages in real time and use the site's search feature to find the product
quickly.
 International reach. Brick-and-mortar businesses sell to customers
who physically visit their stores. With e-commerce, businesses can sell to
anyone who can access the web. E-commerce has the potential to extend a
business customer base.
 Lower cost. Pure play e-commerce businesses avoid the costs of
running physical stores, such as rent, inventory and cashiers. They might incur
shipping and warehouse costs, however.

 Personalization and product recommendations. E-commerce

sites can track a visitor's browsing, search and purchase histories. They can use
this data to present personalized product recommendations and obtain insights
about target markets.
Disadvantages of e-commerce
 Limited customer service. If customers have a question or issue in a
physical store, they talk to a clerk, cashier or store manager for help. In an e-
commerce store, customer service can be limited. The site might only provide
support during certain hours and its online service options might be difficult to
navigate or not able to answer specific questions.
 Limited product experience. Viewing images on a webpage can
provide a good sense of a product, but it's different from experiencing the
product directly, such as playing a guitar, assessing the picture quality of a
television or trying on a shirt or dress. E-commerce consumers can end up
buying products that differ from their expectations and have to be returned. In
some cases, the customer must pay to ship a returned item back to the
retailer. Augmented reality is expected to improve customers' ability to examine
and test e-commerce products.
 Wait time. In a store, customers pay for a product and go home with it.
With e-commerce, customers must wait for the product to be shipped to them.
Although shipping windows are decreasing as next-day and even same-day
delivery becomes common, it's not instantaneous.
 Security. Skilled hackers can create authentic-looking websites that
claim to sell well-known products.
Evolution of internet

Definition
Internet is a global network that connects billions of computers across the world
with each other and to the World Wide Web. It uses standard internet protocol
suite (TCP/IP) to connect billions of computer users worldwide. It is set up by
using cables such as optical fibers and other wireless and networking
technologies. At present, internet is the fastest mean of sending or exchanging
information and data between computers across the world.
It is believed that the internet was developed by "Defense Advanced Projects
Agency" (DARPA) department of the United States. And it was first connected
in 1969.

Why is the Internet Called a Network?

Internet is called a network as it creates a network by connecting computers and
servers across the world using routers, switches and telephone lines, and other
communication devices and channels. So, it can be considered a global network
of physical cables such as copper telephone wires, fiber optic cables, tv cables,
etc. Furthermore, even wireless connections like 3G, 4G, or Wi-Fi make use of
these cables to access the Internet.

Father of the Internet: Tim Berners-Lee: -

Tim Berners-Lee was the man, who led the development of the World Wide
Web, the defining of HTTP (Hyper Text Transfer Protocol), HTML (hypertext
markup language) used to create web pages, and URLs (Universal Resource
Locators). The development of WWW, HTTP, HTML and URLs took place
between 1989 and 1991. Tim Berners-Lee was born in London, and he
graduated in Physics from Oxford University in 1976. Currently, Tim Berners-
Lee is the Director of the World Wide Web Consortium, the group that sets
technical standards for the web

Evolution of the Internet

Although the Internet was developed much earlier, it only became popular in
households in the 1990s. The emergence of the Internet can be tracked by how
many businesses and homes started changing the way they worked and started
connecting their laptops and other devices to the Internet. However, the concept
of hypertext transfer protocol (HTTP) as we know it today, was created only
during this time. This meant that people could access the same web pages on
their devices now and share information.

There has been a dramatic growth in the number of internet users since its
inception. As a result, the number of computer networks that are connected has
grown exponentially too. It started with only connecting less than ten computers
initially. Today, 440 million computers can be connected directly, making life
easier for people across the globe. Sharing information and knowledge has
become extremely easy for those that have access to the Internet. The country
with the highest number of internet users is China, with 1.4 billion users,
followed by India with 1.3 billion and the United States of America with a little
over 0.3 billion users.

The Two Main Types of Computer Networks

There are different computer network types, depending on how large they are
and how much geographical area they cover. The most common types are Local
Area Network (LAN) and Wireless Local Area Network (WAN).

Local Area Network: This is a group of devices such as computers, servers,

switches, and printers that are located in the same building. These are near each
other. The most common use of LAN is in houses or offices. A common type of
LAN is an Ethernet LAN, where two or more computers are connected to the
Internet through switches.

Wireless Local Area Network: This is a local area network that uses wireless
communication instead of wired communication. In WLAN, two computers use
wireless communication to form a local area network. A wifi router is very
common in this case. There are no cables involved in this case.
 Online payment
What is Online Payment?
When it comes to knowing online payment meaning, in essence it is an
exchange of currency, electronically through the internet. The process in these
payments is the transfer of money from the bank account, debit card, or credit
card of a customer to the bank account of a seller. This online e-payment is
handy for purchasing the merchandise or services of sellers.

Buyers and sellers make online transactions with the help of online payment
apps. On the buyers' side, the transaction is to purchase goods and services and
products or services deliverance from the sellers' end. These easy online
payment options involve several steps while transferring a buyer's funds and
seller's offerings. Both parties will use some online payment apps to complete
their transactions successfully.

Types of online payments

The World Wide Web lets people know which is the best online payment app.
Different online payment methods have become extremely popular among
people, offering many benefits to them. Paying money online through trusted
platforms is the safest and best online payment mode amongst buyers and
sellers. Some of the common types of online payments are as follows:

Credit Cards
Credit cards are one of the payment sources in the list of payment methods
online. These online payment modes allow cardholders to buy their preferred
merchandise and services. Credit cards are one of the alternative online payment
methods, offering a higher rate of cash back. They allow users to have little to
no liability for fraudulent fees. They help users get reward points that they can
redeem for several purposes.

Paying with a credit card makes it easier to avoid losses from fraud. When a
thief uses your debit card, the money is missing from your account instantly.
Legitimate expenses for which you've scheduled online payments or mailed
checks may bounce, triggering insufficient funds fees and affecting your credit.

Debit Cards
Banks will issue debit cards to their account holders as part of their online
payment services. They allow them to use their cards to make purchases online.
The banks will deduct the amount automatically from the cardholders' bank
accounts. Similar to a credit card payment system, the debit card online
payment system is one of the most preferred online payment options among
people. The major ones are Visa, RuPay, and MasterCard. Visa cards are the
most acceptable cards by worldwide merchants for all online and digital
transactions. Debit cards provide an easy way for people who are seeking to
make online payments.

They offer the best online payment solutions, which makes them the most
sought-after payment tool amongst global buyers. They provide immediate
money access to users to perform many online transactions comfortably. Similar
to credit cards, debit cards are extensively accepted online.

Third-Party Payment Services

The most prevalent online payment method is third-party transfer. It entails
making out and depositing a sum into the account of a third party that receives
the payment. However, users need to know how to make payments online
through this transaction mode.

Third-party transfer in banking allows banks to manage it manually or use

digital technology to complete it. Buyers and sellers can send and receive
money through these services. They facilitate users to avail of these services
online or through their mobile phones by attaching their bank accounts to a
third-party payment service. These services help vendors that wonder how to
accept online payments on a website, allowing them to acknowledge payments
without opening a merchant account. However, they may need to open a bank
account to hold cash received through card payments.

Electronic Cheques
Electronic cheques are one of the most popular online payment processing
systems. They will deduct money from a checking account. This online
payment mechanism eradicates the need for users to prepare their cheques in
written form, helping sellers deposit them into their bank accounts. Electronic
cheques have many security features compared to traditional paper checks,
including verification, digital signatures, public key cryptography, and
encryption.

Bank Transfers
Transactions involved in a bank transfer are the same as debit card transactions.
This transfer method transfers money from one bank account to another, so a
debit card is not required physically. Bank transfers provide a faster and safer
form of payment than other modes of transactions, such as paying or
withdrawing money from a bank account.

People can also set up online payment system on their telephones. If you are
wondering how to online payment, you need to access your online account and
choose the option for making your payments. Some banks also provide their
account holders with online payment apps, allowing them to transfer funds.

UPI
Unified Payments Interface (UPI)
Unified Payments Interface (UPI) is a system that powers multiple bank
accounts into a single mobile application (of any participating bank), merging
several banking features, seamless fund routing & merchant payments into one
hood. It also caters to the “Peer to Peer” collect request which can be scheduled
and paid as per requirement and convenience.
With the above context in mind, NPCI conducted a pilot launch with 21
member banks. The pilot launch was on 11th April 2016 by Dr. Raghuram G
Rajan, Governor, RBI at Mumbai. Banks have started to upload their UPI
enabled Apps on Google Play store from 25th August 2016 onwards.

What are the e-commerce applications?

E-commerce applications is a somewhat confusing terminology since it may
lead to two different interpretations: one that refers to the use of e-commerce as
a marketing medium; retail and wholesale; auctioning; e-banking; booking, and
so on.

E-commerce applications is a slightly confusing phrase since it leads to two

different perceptions: one where it refers to the use of e-commerce as a medium
of marketing; retail and wholesale; auctioning; e-banking; booking, and so on.

The second concept that comes to mind is a software program like Amazon,
eBay, Groupon, etc. It might be a web application or applications of e-
commerce (now popularly known as m-commerce applications). Mobile e-
commerce applications are just an extension of e-commerce. Mobile app
concepts are the driving force behind any successful business app, whether
a cab booking app or a food delivery app.

Some Popular E-commerce Applications

1. Retail
E-retailing, often known as online retailing, is the sale of products and services
by businesses to customers via online stores. This is done through the use of
tools such as virtual shopping carts and e-catalogs. There are several e-
commerce applications in this industry.

2. Accounting

Finance and e-commerce are more intertwined than ever before. Banks and
stock exchanges make extensive use of e-commerce in their operations. Balance
checks, bill payments, money transfers, and more services are available through
online banking. Online stock trading allows users to trade stocks online by
providing information about equities such as performance reports, analysis,
charts, and so on via websites.

3. Production

In the manufacturing industry, e-commerce serves as a platform for firms to

conduct electronic transactions. Groups of firms can carry out their activities
more smoothly by combining purchasing and selling, exchanging market
conditions, inventory check information, etc.

4. Trade

Applying e-commerce to trade elevates it to a higher level, allowing individuals

to participate without regard for geographical borders. This encourages more
participation, more bargaining and contributes to the success of the trade.

5. Advertising

Development and commercialization strategies like pricing, product

characterization, and customer relationship can be boosted by utilizing e-
commerce. This will give consumers a more enriched and personalized
purchasing experience. Digital marketing tactics have grown in importance as a
means of promoting enterprises.

6. Digital Shopping

People's buying habits have shifted dramatically in the previous several years.
"Go online" has become a success mantra for all enterprises. Online shopping is
easy, pleasant, and, in most cases, inexpensive. The success of online shopping
applications like Flipkart and Amazon demonstrates this.

7. Web and mobile applications

Mobile commerce or m-commerce application is a subset of retail e-

commerce. Mobile or web application development has become a must-have for
companies looking to showcase their skills. Purchases are made by the
consumer using mobile or web applications that are optimized for the merchant.
These programs also provide payment security by utilizing secure e-payment
mechanisms.

8. Digital Reservations

Travel and tourism are a flourishing sector today, and online booking is
an developing e-commerce application. Online booking allows customers to buy
travel necessities such as train/flight tickets, book hotel rooms, get tourism
packages, transportation services, and so on. It makes people's trips comfortable
and easy because everything can be set at the tip of their fingertips.
 9. Digital Media

E-books and digital periodicals are gradually displacing traditional printed

publications. It has numerous advantages, including portability, lightweight,
accessibility from anywhere, and so on. They are also environmentally friendly
because they assist in reducing paper use and saving forests. Because of these
factors, internet publication, often known as e-publishing, has grown in
popularity.

10. Internet Banking

E-Banking, often known as online banking, is an e-commerce program that has

streamlined people's time-consuming and complex banking operations. It allows
bank customers to do transactions online without having to wait in lengthy lines
at banks. To provide virtual banking services to their consumers, most of the
banks now have their web applications.

E-commerce Application Models

 Business-to-Business
Business-to-business (B2B) is a scenario or activity in which two firms conduct
a commercial transaction with one another. In short, commerce with other firms.
B2B transactions are different from other kinds of e-commerce as they sell
items to other businesses rather than to consumers. Alibaba, Woodpecker, e
World Trade, and other B2B companies are examples. This type of software is
created by a high-end web development firm.

 Business-to-Consumer
Business-to-consumer (B2C) is described as a transaction directly between a
business and an end consumer. A customer can view and choose the product
shown on the website and buy product/services as by the approval of business.
They are known as online retailers that sell products and services online. One of
the best online marketplace websites like Amazon is an example of a B2C
business model.

 Consumer-to-Consumer
Consumer-to-consumer (C2C) transactions are those that take place between
consumers. Consumer-to-consumer transactions made it easy for people to
purchase, sell, and exchange. eBay (online consumer auction site), newspapers
 (online ads), and Craigslist are all examples of C2C transactions. The primary
objective of C2C is to facilitate the connection between buyers and sellers. They
call it a peer-to-peer business model. Websites of this sort are created through
categorized app development.

 Consumer-to-Business
Another type of interaction between consumers and businesses is consumer-to-
business. The transaction takes place on a website where customers buy
products or services, and businesses bid on and buy. Examples of C2B
platforms include stock and employment boards.

 Business-to-Administration
Business-to-administration (B2A) is another term for e-government. It is a
transaction that takes place between businesses and the government sector. B2A
services include legal papers, employment, financial, and other matters.

Online retailing
What is online retail?
 Online retail is a type of e Commerce whereby a business sells goods or
services directly to consumers from a website. The website may be their own, or
it may be owned by a larger retailer or marketplace like Amazon.

Online retail is a similar concept to brick-and-mortar retail. Shoppers enter the

store, search through an organized inventory of products and then pay for their
goods at checkout. It’s just that online retail takes place over the Internet while
brick-and-mortar is done in person.

Online retail vs. e Commerce

e Commerce refers to the act of buying and selling goods, services or
information on the Internet. There are many e Commerce models. These are the
most common models:

Business-to-consumer (B2C)—Online retailers that sell goods or services to

consumers through their own websites or marketplaces.

Examples:
 Netflix
 Bank of America
 H&M

Business-to-business (B2B)—Online retailers that sell goods or services to

business customers through their own websites or through marketplaces.

Examples:
 Salesforce
 McKesson
 DocuSign

Consumer-to-consumer (C2C)—Consumers sell their own goods or services

to other consumers. Consumers typically facilitate the transaction using an
intermediary website

Examples:
 Craigslist
 eBay
 Etsy

Consumer-to-business (C2B)—Consumers sell their own goods or services to

business buyers. They may do this via their personal website or an online
marketplace.
 Examples:
 Upwork
 Shutterstock
 Instagram influencers

Online retail is a type of e Commerce. It typically falls under the categories of

B2C or B2B.

Benefits of online retail

 Since online retail stores operate 24/7, owners can generate money when
physical retailers close up shop for the day.
 Online retailers can sell their goods and services to consumers located
around the world, creating more profits for their brands.
 Online retail offers shoppers a convenient way of perusing a store’s
inventory and buying goods.
 Customers have access to much more information about a retailer’s
goods, including customer reviews and ratings, which can boost their confidence in
making a purchase.
 Online stores can offer more value to customers through online account
management, order tracking and management, rewards programs, and so on

Online auction
An online auction (also electronic auction, e-auction, virtual auction, or e
Auction) is an auction held over the internet and accessed by internet connected
devices. Similar to in-person auctions, online auctions come in a variety
of types, with different bidding and selling rules.
E Commerce sales for businesses have been steadily increasing for years, and
with the migration of virtually all transactions to digital due to the COVID-19
pandemic, worldwide sales through ecommerce channels such as websites and
online marketplaces increased overall in 2020 and beyond.
There are two primary markets for online auctions: business to
business (B2B) and business to consumer (B2C). B2C is forecast to have over a
1% annual growth rate, achieving a nearly 22% share of total global retail sales
by 2024. B2B ecommerce gross merchandise value showed a similarly steady
rate through 2019, as to mirror its retail B2C counterpart.
The largest consumer-to-consumer online auction site is eBay, which
researchers suggest is popular because it is a convenient, efficient, and effective
method for buying and selling goods.
Despite the benefits of online auctions, the anonymity of the internet, the large
market, and the ease of access makes online auction fraud easier than in
traditional auctions. The Federal Trade Commission (FTC) categorizes online
auction fraud reports with online shopping categories.

History
Online auctions originated on web forums as early as 1979 on CompuServe and
The Source, as well as through email and bulletin board systems. Auctioneers
and sellers would post notices describing items for sale, minimum bids, and
closing times. As the popularity of online auctions grew, websites dedicated to
the practice began to appear in 1995 when two auction sites were founded. The
first online auction site was Onsale.com, founded by Jerry Kaplan in May
1995. Onsale's business model had the company act as the seller.
In September 1995, eBay was founded by French-Iranian computer
scientist Pierre Omidyar using a different approach to online auctions by
facilitating person-to-person transactions. This was a popular choice with
consumers, leading eBay to become the largest e-commerce site in the early
2000s.

ONLINE AUCTION
Benefits of Online Auctions
A core benefit of an online auction is the removal of the physical limitations of
a traditional auction that require attendees to be geographically located together,
which greatly reduces audience reach.
Online auctions offer advantages to users that traditional auction formats do not
offer such as the use of automated bids. Along with these benefits, online
auctions have greatly increased the variety of goods and services that can be
bought and sold in an auction format.
English auctions
English auctions are also known as open outcry or raise prices. In live settings,
English auctions are announced by either an auctioneer or by the bidders, and
winners pay what they finally bid to receive the object. English auctions are the
most common third-party online auction format and are known for their
simplicity. The format is popular due to its ease-of-use in an online environment
(since computers are capable of tracking and awarding an auction to the highest
bidder from many bids).

Reverse auction
Reverse auctions are used primarily to place multiple sales offers before
potential customers. Multiple sellers compete to obtain a buyer's business, and
prices typically decrease over time as new offers are made by sellers. They do
not follow the typical auction format in that the buyer can see all the offers and
may choose which they would prefer. Reverse auctions are used predominantly
in a business context for procurement.

Bidding fee auction

A bidding fee auction (also known as a penny auction) requires customers to
pay for bids, which they can increment an auction price one unit of currency at a
time. The most notable bidding fee auction was Swoopo.
Critics compare this type of auction to gambling, as users can spend a
considerable amount of money without receiving anything in return.
The auction owner makes money in two ways: the purchasing of bids, and the
actual amount made from the final cost of the item.
Fraud
The increasing popularity of using online auctions has led to an increase in
fraudulent activity. This is usually performed on an auction website by creating
a very attractive auction lot, such as a low starting bid level. Once a buyer wins
a lot and pays for it, the fraudulent seller will either not proceed with the
delivery or send a less valuable version of the purchased item (replicated, used,
refurbished, etc.). Protection to prevent such acts has become available, for
example PayPal's buyer protection policy. As PayPal handles the transaction, it
has the ability to hold funds until a complaint is resolved, and the victim can be
compensated.
Index
S.no Topic Page no Remark

1 E-commerce 1-7

2 Evolution of internet 8-10

3 Online payment system 11-14

4 Application of E-commerce 15-19

5 Online Retailing 20-24

6 Online Auction 25-26