What is e-commerce?

Electronic commerce, commonly known as e-commerce is a type of industry where buying and selling of product or service is conducted over electronic systems such as the Internet and other computer networks. It draws on technologies such as mobile commerce, Electronic funds transfer(EFT), Internet marketing, online transaction processing, electronic data interchange (EDI).

The Seminal Act of e-commerce

In 1971 or 1972, Stanford students using Arpanet accounts at Stanford University's Artificial Intelligence Laboratory engaged in a commercial transaction with their counterparts at Massachusetts Institute of Technology.Before Amazon & before eBay, the first act ofe-commerce was a drug deal of MARIJUANA which later was described as"the seminal act of e-commerce“.

Steps of e-commerce

B2B C2B

B2C C2C

B2B (Business- to- Business)It involves the exchange of services, information &products between two businesses. It takes the form of automated processes between trading partners & is performed in much higher volumes than B2C applications. Example: UN/EDIFACT(United Nations/ Electronic DataInterchange For Administration, Commerce and Transport) are well known established B2B standards

C2B(CONSUMER –TO-BUSINESS)Consumers directly contacts business vendors by posting their Project work & budget online, so that needy companies review it & contact the customers directly with their bids. Customersthen review all the bids & selects the company for further processing.Example: getacoder.com, guru.com, etc

B2C( BUSINESS-TO-CONSUMERS)It involves the exchange of products, services &information

between business & a consumer.B2C is a form of electronic commerce

in which products .Services are sold from a firm to a consumer.Need to purchase a high- end computer or want to book your

trip for Holidays Or want to buy a book? With the advent of e-

commerce, all this can be one purchased in minutes without any human

intervention!!!

C2C(CONSUMER-TO-CONSUMER)It is an internet facilitated form of commerce that has existed forever in the form of Barter system, Flea Markets, etc.

ADVANTAGES

DISADVANTAGES

1. •Reduced Cost to Buyer & Supplier.

2. •Information Sharing, Convenience and Control.

3. •Higher Margins.

4. •Equal Access to Global Markets.

5. •Faster Time to Market.

6. •Being Able to Access Markets 24X7.

1. •Customer Relations Problem.

2. •Threat of Hacking.

3. •Loss of Paper Audit Trail.

4. •Exposure of Data to Third Parties.

5. •More Time Required for Physical Delivery of Products.

6. •System Scalability.

Some common applications related to electronic commerce are the following:Document automation in supply chain and logisticsDomestic and international Payment systemsEnterprise content managementGroup buyingAutomated online assistantsInstant messagingOnline shopping and order trackingNewsgroupsOnline office suitesShopping cart softwareTeleconferencingElectronic ticketsSocial-Networking

Electronic data interchange(EDI)

Electronic data interchange(EDI) is a method for transferring data between different computer systems or computer networks.

EDI is used for routine business documents like Purchase Orders and Invoices. It is not used for non-routine business documents like complicated contracts or information meant for humans to read and analyze.

ELECTRONIC FUNDS TRANSFER (EFT)

Electronic funds transfer (EFT) is the electronic exchange, transfer of money from one account to another, either within a single financial institution or across multiple institutions, through computer-based systems. One can transfer money from his account just by a single click.

The transfers are based on EDI technology transfer of funds and involves minimum amount of data interchange between two parties.

VALUE ADDED NETWORK (VAN)

Value Added Network (VAN)• VAN is a private network provide i.e. hired by a

company to facilitate EDI or provide other network services.

• Simplify the communication process by reducing the number of parties

• Typically operate on a mailbox scenario (intermediary)

• Intended to save cost and time.• Limited applicability now.(WWW)

VAN Model

RETAILER 1

RETAILER 3

RETAILER 2

RETAILER 4

WHOLESALER 1

WHOLESALER 4

WHOLESALER 2

WHOLESALER 3

VALUEADDED

NETWORK

E-Marketplace brings together buyers and sellers to

facilitate a mutually satisfying transaction. The

online markets which fulfill following criterion are

fitted to be E-Markets.Critical mass of buyers and sellers.Interactivity Negotiation and BargainingNew products & services.Less time consuming.

ADVERTISING AND ONLINE MARKETING

“Ignoring Online Marketing is like Opening a Business and but not telling anyone.”

What is Online Marketing?

• Uses the Internet to deliver promotional marketing messages to consumers

• Requires both Publisher and Advertiser• Benefits– Economical– Formatting(Interactive)– Measurability of Effectiveness– Speed– Mass Reach

How?

• Banners • Search Engine Marketing• Social Media Marketing• Online Classified Advertising• Mobile Advertising• Adware

ONLINE PURCHASE

Online Purchase Procedure

ORGANISATION YOU

PRODUCTWEBSITE

MARKETING

PROCESS

CREA

TES

DISPLAYED ON

ACCESS

SELECTION

THIRD PARTY OR FINANCIAL INSTITUTIONS

RETURNS

SERVICES

http://www.google.co.in/url?sa=i&rct=j&q=electronic+payment+system&source=images&cd=&cad=rja&docid=5cJ4oAhLP0urYM&tbnid=C91dY5LHXOqZkM:&ved=0CAUQjRw&url=http://currencies-systems.blogspot.com/p/how-do-modern-payment-system.html&ei=HnvnUaCDK8byrQfe0oDoCg&bvm=bv.49478099,d.bmk&psig=AFQjCNGj9K1xK3QFRJzrfLe4ps7XDVLkXA&ust=1374211185169664

Electronic Payment is a financial exchange that takes Place Online between buyers and sellers by usingIntegrated hardware and software. The main objectives of EPS are to increase efficiency, improve security, and enhance customer convenience and ease of use. Advantages of electronic payment system:

Reduced operational and processing costIncreasing online commerce Decreasing technology cost

PAYMENT(EFT, E-CASH, E-

CHEQUE ,etc)

CUSTOMER

BUSINESSMAN

CUSTOMER

VIRTUAL BUSINESSMAN

PAYMENT(CREDIT CARD, CHEQUE,CASH)

PRODUCT/SERVICES

PRODUCT/ SERVICES

CREDIT CARDS

TRANSACTIO

N USING THIRD PARTY VERIFICATIO

N

SECURED

ELECTRONIC

TRANSACTIO

N

JOINT ELECTRONIC

TRANSACTIO

N

ELECTRONIC

CHEQUES

SMART CARDS

ELECTRONIC

PURSES

CREDIT CARDSIn a credit card transaction, the consumer presents preliminary

proof

of his ability to pay by presenting :his credit card number to the

merchant. Merchant in return verifies it with bank and endorses

payment slip to the consumer.

The same scenario is followed in payment over Internet. A high level

of security & authentication is provide to buyers and sellers.

Credit cards can be handled online in two different ways:

Sending unencrypted credit card numbers over the internet.

Encrypting credit card details before any transactions

are transmitted.

TRANSACTION USING THIRD PARTY VERFICATION

A third is an independent party like exchange which maintains details of

buyer and supplier accounts. They are also known as clearing house or

settlement house.. After the execution and receipt of any transaction , the

exchange transfers funds from buyer to supplier account as a statement.

SECURED ELECTRONIC TRANSACTION (SET)SET was developed by a consortium led by MasterCard and Visa. SET

uses

digital signature to ensure that identities of all parties involved in a

purchase while designing for cardholders, merchants, banks, and other card

processors are kept safe. It also encrypts credit card and purchase

information before transmission on the internet.

JOINT ELECTRONIC TRANSACTIONJoint Electronic Payment Initiative is an attempt to

standardize payment negotiations. On the buyer’s side it serves as an

interface to use variety of payment protocols. On the merchant’s, side it

acts between the network and transport layers to pass off the

incoming transactions to the proper transport.

ELECTRONIC CHEQUESTransferring money from your checking account to another

over the internet. The two system have been developed i.e. FSTC

(Financial Services Technology Consortium) and Cyber cash have been developed to let consumers use electronic cheques to pay

Webmerchants directly.

SMART CARDSSmart Cards have an embedded microchip instead of

magnet strip. It contains all the information about the balance in

account and deduct the purchases made from that total. There are three types

of smart cards :- Contact Cards, Contactless Cards and Combi Cards.

ELECTRONIC PURSESElectronic purses is a way to make payment

electronically which is similar to a prepaid cards and can be used as an ATM and credit

cards as well. Validation in it is done through Personal Identification Number

(PIN Number). No credit check or signature is needed.

BENEFITS OF EDI

BENEFITS OF EDI

Faster business cycles

Accurate because of no re-keying of data

Simple

Secure

Lower inventory

Streamlines the ability to enter new territories and markets.

Research has consistently shown that EDI costs only one third of its paper-based equivalent.

India's e-commerce market was worth about $2.5 billion in

2009, it went up to $6.3 billion in 2011 and to $14 billion

In2012. About 75% of this is travel related. Online Retailing

comprises about 12.5%. Unique to India (and potentially

to other developing countries), cash on delivery is a preferred payment method. India has a vibrant

cash economy as a result of which 80% of Indian e-

commerce tends to be Cash on Delivery. Demand for

international consumer products is growing much faster than in-

country supply from authorized distributors and e-commerce offerings. Electronics and Apparel are the biggest categories in terms of sales.

Key drivers in Indian e-commerce are:Increasing broadband Internet and 3G penetration.Rising standards of living and a burgeoning, upwardly mobile middle class with high disposable incomesAvailability of much wider product range compared to what is available at brick and mortar retailersBusy lifestyles, urban traffic congestion and lack of time for offline shoppingReduced inventory and real estate costs.Increased usage of online classified sites, with more consumer buying and selling second-hand goods.

Evolution of the online marketplace model with sites like eBay, Infibeam, and Tradus. The evolution of ecommerce has come a full circle with marketplace models taking center stage again.

The e-commerce market in India is set to grow the fastest within the

Asia-Pacific Region at a CAGR of over 57% between 2012–16.

SOME FACTS

• IRCTC (Indian Railways), MakeMyTrip and Yatra are amongst the most visited travel sites in India.

• Flipkart leads the way among the online retailers in India with 7.4 million unique visitors a month, growing at 431% annually.

• Snapdeal has been close second with 6.9 million unique visitors.

• Apparel has been the fastest growing subcategory in retail and reaches 13.4% online users in India.