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ELECTRONIC
COMMERCE
Course 2
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units
▶ Unit I: Introduction
▶ Unit II: Classification of e-commerce
▶ Unit III: Handling Payments and money on the
Net
▶ Unit IV: e-Supply Chain
▶ Unit V: e-commerce security
▶ Unit VI: Legal, ethical and societal impacts of
e- commerce
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Unit I: E-commerce
Introduction

E-commerce means using the Internet
and the web for business transactions
and/or commercial transactions, which
typically involve the exchange of value
(e.g., money) across organizational or
individual boundaries in return for
products and services.
TYPE 4

S Business to Business (B2B

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1.

▶This
refers to any type of electronic transactions of products
or services that take place between two companies.
2. Business to Consumer (B2C)
▶This refers to any type of electronic transactions of products or
services that take place between the seller and the customer. By
far, this is a very common type of E-C ommerce.
3. Consumer to Consumer (C2C)
▶This
refers to any electronic transaction of products or services
between one customer and another customer. Generally, this can
take place with the help of a third-party, for instance, Amazon,
eBay or Etsy as a marketplace for online selling and buying.
1.
Introduction
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1
3. Consumer to Consumer (C2C)
▶This refers to any electronic transaction of products or services between one
customer and another customer. Generally, this can take place with the help of a
third-party, for instance, Amazon, eBay or Etsy as a marketplace for online selling
and buying.
▶4. Consumer to Business (C2B)
▶Consumer to business is a type of business model where the customer or user creates a
product or provides a service that a business or company uses to complement its
business set-up, to enhance its business image or to gain advantages over its
competitors.
▶For instance, websites such as Fiverr, Upwork, etc. where their freelancers offer
their services like website or logo creations, and any business can use their
services if they want.
 Introductio 6
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nBusiness to Administration (B2A)

5.
▶Thisrefers to any type of transactions that are
conducted between business and government
through the Internet. It includes many different types
of services, such as fiscal, social security,
employments, legal documents, etc.

6. Consumer to Administration (C2A)

▶Thisrefers to any type of transactions that take
place between the consumer and the government.
For example, taxes, education, health, social
Definition of E- 7
1

Business
 The term E-Business is an acronym referring to
“Electronic Business,” and its business is
conducted with the use of the Internet, Extranet,
Intranet and website. In this sense, E-Business is
a bit similar to E-
Commerce, but it’s more than just selling and
buying products or services online.
 Essentially, E-Business encompasses a wider range
of business processes, such as electronic ordering
and processing, customer relationship
management, supply chain management, etc.
Generally, E- Commerce c an be construed as a
E- 8
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Business
There are two types of E-Business models:
1. Pure play
This refers to a company that only operates over
the Internet and offers only one particular type of
product or service so as to gain a larger market
share.
2. Bricks and clicks
It’s a business model adopted by merchants that
have physical retail outlets and run their business in
both online and offline ways. In other words, the
 1

E-Business
vs E-
commerce
Features of e-
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commerce
Feature # 1. E-Commerce is Technology-Enabled:
E-commerce is result of integration of digital
technology with business processes and
commercial transactions. The technological
foundations of E-commerce are internet,
WWW and various protocols.
Feature # 2. Technology Mediated:
In E-commerce buyers and sellers meet in cyber
space rather than physical place. Hence E-
commerce does not involve face to face
contact.
Features of e- 11
1

commerce
Feature # 3. Universality:
Buying and selling take place through websites in E-
Commerce. The websites can be accessed from anywhere
around the globe at any time therefore it possess the feature
of universality.
Feature # 4. Intercommunication:
E-commerce technology ensures two way communications
between buyer and seller. On one hand by using E-
commerce firms can communicate with customers through
E-commerce enabled websites. On the other end, customers
can also fill order forms, feedback forms and c an
communica te with business operating firms.
Features of e-
commerce
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Feature # 5. Delivery of
Information:
E-commerce serves as the best channel of communication. E-
commerce technologies ensure speedy delivery of information at very
low cost and considerably increase information density as well.
Feature # 6. Electronic Completion of Business Processes:
By using E- commerce we can perform business transactions
like accounting and inventory through computers at global
level.
Feature # 7. Virtual Communities:
Virtual Communities are online communities created by means such as
chat rooms and specifically designed sites like, where people can
interact with each other having common interest using the internet.
Features of e- 13
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commerce
Feature # 8. Inter-Disciplinary in Nature:
Implementation of E-Commerce needs a lot of knowledge of managerial,
technological, social and legal issues. Besides this, understanding of consumer
behaviour, marketing tools and financial aspects is as crucial as designing interactive
E- Commerce websites.
Feature # 9. Customization:
With the use of E-commerce technology, the world is moving from mass-production to
mass-customization. Product customization ensures that goods are tailor made as per
the requirements and preferences of customers.
Like Dell Computers Website www(dot)dell(dot)com enables the consumers to mention
configuration of a Computer and then the product is made available and delivered as
per the configuration ordered by the customer.
E-Commerce – Need in Modern Business
Era 14

Wider Audience- The internet provides ,

1
▶
businesses access to millions and millions of
people. A 2010 survey by Internet World Stats
showed there are 266,244,500 internet users
in North America. On the World Wide Web,
companies move beyond geographic limits to
reach
▶ 2. Costwider audience.
Efficiency- At the beginning of the
internet age in the 1990s, creating websites
was a costly undertaking. As the years passed,
building websites became less and less
expensive. In fact, small businesses can now
build their own sites.
E-Commerce – Need in Modern Business
Era
▶3. Faster Information- The
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superhighway permits speedy

information
exchange of data across the world,
which also means new information, is
available faster.
▶4. Enhanced Service- Development of
E- Commerce equipped domestic
providers to offer more services to
clients.
E-Commerce – Business Applications:
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Following are the major business application

areas where E-Commerce is used widely:
▶ Sale,
▶ Purchase of Goods,
▶ Real Estate Market,
▶ Online Banking,
▶ Delivery of Goods,
▶ Import and Export,
▶ E-Tailing and
E-Commerce – Business Applications: 17
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Following are the major business application

areas where E-Commerce is used widely:
▶ Sale, Purchase of Goods,
▶ Real Estate Market,
▶ Online Banking,
▶ Delivery of Goods,
▶ Import and Export,
▶ E-Tailing and
E-Commerce – Business Applications:
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1. Sale, Purchase of Goods:
By using E-Commerce, consumers ca n buy the various
products and services from the different manufacturers.
Industries can purchase raw materials, c omponents etc.
using E- Commerce.
Sellers can sell their products by using E-commerce.
2. Real Estate Market:
Online real estate services are provided by websites that
show listing of houses, shops and flats put up for sale and
rent. Online real estate sites play supporting role for property
dealers.
Now builders can use virtual reality technology on their website
to demonstrate three dimensional floor plans to buyers.
E-Commerce – Business Applications:
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3. Online Banking:
Online Banking is also known as electronic banking, Net banking,
virtual banking and internet banking online banking is defined as
automated delivery of new and traditional banking products and
services through electronic and interactive communication
channels. Customers can access online banking services by using
electronic devices like personal computer, laptop, palmtop, ATM,
kiosks etc.
4. Delivery of Goods:
E-Commerce allows the delivery of products. For example, the
computer software is directly downloaded by the software
manufacturer on computer of the customer.
E-Commerce – Business Applications:
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5. Import and Export:
Electronic payments are playing a great role in import and export
business. The internet has simplified the import and export business.
By using E-commerce importers can make enquiries about the
products, their manufacturers, price, quality, other terms and
conditions etc.
Exporters can also make enquiries about suitable customers.
Payments can be made by electronic modes including digital
means like internet payment or internet money transfer.
E-Commerce – Business Applications:
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6. Supply Chain Management:
A supply chain is a set of relationships between a number of
companies who have a symbiotic relationship with each other in that
one company supplies commodities or services to other companies
which, in turn, supply commodities or services to other companies,
and so on.
7. E-Tailing:
E-tailing refers to retailing over the internet. Thus an e-tailer is a B2C
business that executes a transaction with the final consumer. E-tailers
can be pure play businesses like amazon(dot)com or businesses that
have evolved from a legacy business, Tesco(dot)com. E-tailing is a
subset of e-commerce
E-Commerce – Essentials
and Procedures:
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▶ Product/Service,
▶Processing
Mechanism,
▶ Payment Gateway,
▶ Delivery of Product,
▶ After Sale Service and
▶ Reverse Logistics
E-Commerce – Essentials
and Procedures:
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1. Product/Service:
▶ For E-commerce to happen there should be a prod¬uct or
service that has value and for which someone is willing to pay a
price. If this criterion is met, then you can sell anything on
ecommerce websites—gadgets, books, automobiles, grocery,
toys, apparel, vegetables and digital goods such as music, e-
books, software, air tickets, magazine subscriptions and the
like.
2. Processing Mechanism:
▶ The ecommerce website of a company should put an easy
process in place so that the customer browsing through the site
can place an order. The software that makes this happen is
called a shopping cart.
E-Commerce – Essentials
and Procedures:
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3. Payment Gateway:
▶ Once the customer fills the cart with items that he or she has
shopped, the site should take the customer towards the
payment gateway, which collects money electronically. If the
product is downloadable such as music, e-book etc., the
website must also provide for that after accepting payment
from customer.
4. Delivery of Product:
▶ Once c ustomers make the payment, the e-commerce site
must ensure the delivery of product in good condition on time.
Logistics is a specialized function, so most sellers outsource it to
third party logistics providers. Like Amazon using the services of
FedEx.
E-Commerce – Essentials
and Procedures:
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5. After Sale Service:

▶ Customers need to be serviced pre-sales as well as post sales.
Before the sale, customers might have queries about product
features that are not mentioned on the website. They might
have questions about customization and accessories. After the
sale, customers might have queries related to the usage, repair
or enhancement of the products or services that they have
already purchased.
6. Reverse Logistics:
▶ There is no guarantee of supplying an error-free product. If
products get damaged or stop functioning after a while, or a
wrong product is delivered—the ecommerce seller must ensure
the flow of products in the reverse direction—known as reverse
logistics—where goods flow from customer to the seller.
E-Commerce – Channels 26
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These are of following two types:

(i)Commercial Channels:
Various companies have set up on-line information and marketing
services that can be accessed by those who have signed up for the
service and pay a monthly fee. These channels provide
information, news, libraries, education, travel, sports and reference,
entertainment, shopping services, dialogues opportunities and e-
mail etc.
(ii)The Internet:
Users can surf the Internet and experience fully integrated text,
graphics, images and sound. Users can send e-mail, exchange
views, shop for products, and access news and business
information. The users need to pay an Internet provider-to be
hooked up to it through their computers.