Page 1
1
11
EVOLUTION AND
INTRODUCTION TO ELECTRONIC
MODELS
Unit Structure:
1.0 Objective
1.1 Introduction
1.2 Benefits and Challenges of E -Commerce
1.3 Business models of E -commerce
1.4 Concepts of othermodels ofE-Commerce
1.5 Business to consumer E -Commerce process
1.6 E-Commerce Sales Product Life Cycle (ESLC) Model
1.7 Summ ary
1.8 Exercise
1.0OBJECTIVES
After studying this unit the student will be able to -
Understand the concept of E-Commerce and its History/Evolution and
roadmap of E -Commerc e in India .
Know the functions, scope benefits and challenges of E -Commerce
Explain various business models of E -Commerce
Describe E-Commerce Sales Product Life Cycle (ESLC) Model
1.1 INTRODUCTION
Commerce is basically an economic activity involving trad ing or
the buying and selling of goods. The customer would physically visit to
the shop, pick up the product he/she wants to purchase and make payment .
As we enter the electronic age, all such activities are undertaken using
internet, which is known as E-Commerce.
Changing lifestyle, online banking facilities, plastic money in the
form of debit and credit cards, tech savvy generation, boom of IT
companies and increase in disposable income are few of the reasons for e -munotes.in
Page 2
2commerce boom in India. Apart from tech nical reasons one of the reasons
for this change is the avoidance of all sorts of traffic and mental stress on
the roads. To reach at the shopping place one has to travel through jam
packed streets. With increase in the number of smartphones, mobile
shoppi ng becomes part of e -Commerce boom in India.
It was mid 1990s when the Internet companies started rising in
India, but lack of awareness, low penetration of Internet and undeveloped
payment system were the bottlenecks. Online classified, matrimonial and
job portals were the main e -commerce portals at that time. The dot com
started gaining recognition in 2000s which gave a push to the e -commerce
industry in India. Along with the developments in dot com sector, India’s
retail sector started to excel. With ti me retail stores opened their virtual
stores.
Recently, India’s 14 billion e -commerce industry got a boost with
the announcement of a proposal in the Union Budget 2014 -15 which will
allow foreign retailers to sell their products in the country via e -comme rce
platform. Brands like Nike, Puma, Marks & Spencer which were selling
through licensing agents and franchisees will be benefited a lot with this
announcement.
1.1.1CONCEPT OF E-COMMERCE
E-commerce is a popular term for electronic commerce or even
internet commerce. The name is self -explanatory; it is the meeting of
buyers and sellers on the internet. This involves the transaction of goods
and services, the transfer of funds and the exchange of data
So when a customer logsinto his/her Amazon account
andpurchase a book, this is a classic example of an e -commerce
transaction. Here customer interact swith the seller ( Amazon ), exchange
data in form of pictures, text, address for delivery etc .and then he/she
make sthepayment .
In other words, E -Commerce refers to the buying and selling of
goods or services using the internet, and the transfer of money and data to
execute these transactions. E -commerce is often used to refer to the sale of
munotes.in
Page 3
3
3physical products online, but it can also describe any kind of commercial
transaction that is facilitated through the internet.
“E-Commerce describes the process of buying and selling or
exchanging of products, services and information, via compu ter networks
including the internet.” E. Turban .
E-Commerce is India’s fastest growing and most exciting channel
for commercial transactions. The Indian e -commerce market is expected to
grow to US$200 billion by 2026 from US$ 48.5billion as of 2018. This
growth has been triggered by increasing internet and smartphone
penetration.
The ongoing digital transformation in the country is expected to
increase India’s total internet user base to 829 million by 2021 from
560.01 million as of Septem ber 2018. India’s internet economy is
expected to double from US$125 billion as of April 2017 to US$ 250
billion by 2020, majorly backed by e -commerce. India’s E -commerce
revenue is expected to jump from US$ 39 billion in 2017 to US$ 120
billion in 2020, grow ing at an annual rate of 51 per cent, the highest in the
world.
(Source :https://www.ibef.org asof December 2018)
Current Market Trends
Online retail sales in India are expected to grow by 31 per cent to US$
32.70 billion in 2018, led by Flipkart, Amazon India and Paytm Mall.
Electronics is currently the biggest online retail sales category with
a share of 48 per cent, followed closely by apparel at 29 per cent.
E-Commerce has m ade it easier for top American brands to reach
Indian customers and has emerged as one of the fast -growing trade
channels available for the cross -border trade of goods and services.
There is a growing appetite for international brands and bette r-
quality foreign products amongst digitally connected Indian shoppers due
to rising income levels and increased awareness. Several categories
including lifestyle products, consumer electronics, clothing, footwear,
jewelry and accessories, health and beaut y, household goods, art and
collectibles, event tickets and online music are doing well for online sales.
Technology enabled innovations such as digital payments, hyper -
local logistics (Process of delivering goods directly from a seller to the
customer via courier agents), analytics driven customer engagement and
digital advertisements have enabled the E-Commerce industry in India to
grow at a much faster rate.munotes.in
Page 4
4Government initiatives such as Digital India, Skill India, Startup
India and Make in India are also contributing to the growth of the E-
Commerce industry.
E-commerce Sector Composition
Currently there are 1 to 1.2 million transactions per day in E-
Commerce retailing. Given below is the split of sectors according to
popular ity:
Electronics: 48%
Apparel: 29%
Home and Furnishing: 9%
Baby, Beauty & Personal care: 8%
Book:3%
Others: 3%
(Source: https://www.ibef.org/download/Ecommerce -March -2018.p df)
E-Commerce Services
There is a new trend of emerging E -Commerce aggregators aiming
to digitize several offline services to create a convenient ecosystem for
consumers.
Tourism: MakeMyTrip; Goibibo; Yatra; IRCTC
Education: EduKart; Meritnat ion
Healthcare: Portea; Healthkart
Entertainment/ Ticket booking: Netflix; bookmyshow
Real Estate: MagicBricks; Housing, 99 acres
Fin-tech: PayTM, Freecharge, PayUmoney, Mobikwik, PhonePe
1.1.2HISTORY/EVOLUTION OF E -COMMERCE
1)1969: CompuServe is founded.
CompuServe was f ounded in 1969 by electrical engineering
students Dr. John R. Goltz and Jeffrey Wilkins as a computer time -sharing
service (allowing many users to share the computer resources
simultaneously) .
In 1979, CompuServe became the firs t service to offer electronic
mail capabilities and technical support to personal computer users. In 1980
CompuServe introduced the first online service to offer real -time chat
online. By 1982, the company had formed its Network Services Division
to provid e wide -area networking capabilities to corporate clients.
2)1979: Michael Aldrich invents electronic shopping.
English inventor Michael Aldrich introduced and pioneered as e -
Commerce by connecting television and telephone lines.
He invented a system t hat advertised goods and services on
television, giving viewers the ability to call in to a processing center to
place orders .Aldrich called his system "teleshopping ."munotes.in
Page 5
5
53)1982: Boston Computer Exchange launches.
Technically, the first e-Commerce company was Boston Computer
Exchange, which launched all the way back in 1982.
It was primarily an online market that served people who wanted
to sell their used computers.
4) 1992: Book Stacks Unlimited launches as first online book
marketplace.
Charles M. St ack introduced Book Stacks Unlimited as an online
bookstore. Originally, the company used the dial -up bulletin board format
(Computerized system used to exchange public messages or files) .
However, in 1994 the site switched to the internet and operated fro m the
Books.com domain.
5)1994: Netscape Navigator launches as a web browser.
Marc Andreessen and Jim Clark co -created Netscape Navigator as
a web browsing tool. During the 1990s, Netscape Navigator became the
primary web browser on the Windows platform , before the rise of modern
giants like Google.
6)1995: Amazon and eBay launch.
Jeff Bezos introduced Amazon primarily as an e -commerce
platform for books.
Meanwhile, eBay emerged as a successful online auction website,
debuting in 1995.
7)1998: Pay Pal launches as an e -commerce payment system.
Originally introduced as Confinity by founders Max Levhin, Peter
Thiel, Like Nosek and Ken Howery .
PayPal launched in 1998 as a global eCommerce company that
offered payment processing for online vendors and other commercial
users. PayPal customers can hold, send, and receive funds in many
different currencies.
8)1999: Alibaba launches.
Alibaba Online launched as an online marketplace with more than
$25 million in funding. By 2001, the company was profitable. It went on
to turn into a major B2B, C2C, and B2C platform that’s widely used
today.
9)2000: Google introduces Google AdWords as an online advertising
tool.
Google Adwords was introduced as a way for e -commerce
businesses to advertise to people using Google search.munotes.in
Page 6
6With the help of short -text ad copy and display URLs, online
retailers began using the tool in a pay -per-click (PPC) co ntext. PPC
advertising efforts are separate from search engine optimization (SEO).
10)2004: Shopify launches.
Tobias Lütke and Scott Lake launched Shopify. Shopify is an e -
commerce platform that allows anyone to set up an online store and sell
their products. Merchants can also sell their products in
person with Shopify POS .
11)2005: Ama zon introduces Amazon Prime membership.
Amazon launched Amazon Prime as a way for customers to get
free two -day shipping for a flat annual fee.
The membership also came to include other perks like discounted one -
day shipping and access to streaming services like Amazon Video and
members -only events like “Prime Day.”
This strategic move helped boost customer loyalty and incentivize
repeat purchases. Today, free shipping and speed of delivery are the most
common requests from online consumers.
12)2005: Etsy launches.
In 2005, Etsy launched as a global marketplace where people could
create shops to sell their unique and often handmade items . These items
fall under a wide range of categories, including jewelry , bags,
clothing, home décor and furniture, toys, art, as well as craft supplies and
tools.
13)2009: Big Commerce launches.
Eddie Machaalani and Mitchell Harper co -founded Big Commerce
as a 100% bootstrapped (abusiness without outside investment funds) e-
commerce storefront platform.
Since 2009, more than $25 billion merchant sales have been processed
through the platform, and the company now has headquarters in Austin ,
San Francisco and Sydney.
14)2011: Google Wallet introduced as a digital payment method.
Google Wallet was introduced as a peer -to-peer payment service
that enabled individuals to send and receive money from a mobile device
or desktop computer.
By li nking the digital wallet to a debit card or bank account, users
can pay for products or services via these devices.
Today, Google Wallet has joined with Android Pay for what is
now known as Google Pay.munotes.in
Page 7
7
715) 2011: Facebook rolls out sponsored stories as a form of early
advertising.
Facebook’s early advertising opportunities were offered to
Business Page owners via sponsored stories. With these paid campaigns,
e-commerce businesses could reach specific audiences and get in the news
feeds of different targ et audiences.
16)2011: Stripe launches.
Stripe is a payment processing company. It was founded by John
and Patrick Collison.
17)2014: Apple Pay introduced as a mobile payment method.
As online shoppers began using their mobile devices more
frequently , Apple introduced Apple Pay, which allowed users to pay for
products or services with an Apple device.
18)2014: Jet.com launches.
Jet.com was founded by entrepreneur Marc Lore (who sold his
previous company, Diapers.com, to Amazon.com) along with Mike
Hanrahan and Nate Faust.
Jet.com is an online retailer offering discounted prices on a wide
variety of products, and its profits derive from annual subscription fees
that members pay. Using algorithms, prices change in real time depending
on the combinati on of products in the customer's shopping cart. Jet claims
that it makes its entire profit from the subscription fees, and that it does
everything possible to give customers the lowest possible prices .
19)2017: Shoppable Instagram is introduced.
Instagr am Shopping launched with e -commerce partner Big
Commerce. Since then, the service has expanded to additional e -
commerce platforms and allows Instagram users to immediately click an
item, and go to that item’s product page for purchase.
20)2020: COVID -19 Drives Ecommerce Growth.
COVID -19 outbreaks around the globe pushed consumers online to
unprecedented levels. By May of 2020, ecommerce transactions reached
$82.5 billion —a 77% increase from 2019. It would have taken four to six
years to reach that num ber looking at traditional year -over-year increases.
Consumers have moved online to make purchases normally made
in physical stores, such as food and household items, apparel, and
entertainment. Many consumers say they’ll continue to use online
storefront s until a COVID -19 vaccine is available .
E-Commerce Timeline: from the Beginning to Modern Day
1969: CompuServe is founded. It will go on to become what many
consider to be the first true e -Commerce company.munotes.in
Page 8
81979: Fed up with regular trips to the market, M ichael Aldrich
introduces the world to electronic shopping
1982: Boston Computer Exchange becomes one of the first e -
Commerce platforms
1992: Charles M. Stack launches Book Stacks Unlimited, one of the
first online marketplaces
1994: Netscape releases Netsca pe Navigator, which becomes the most
prominent of the early web browsers
1994: Jeff Bezos unveils Amazon
1995: AuctionWeb launches. Its name will eventually be changed to
eBay.
1998: PayPal revolutionizes e -Commerce with a secure way for
websites to accept pa yments
1999: Jack Ma launches Alibaba.com, a first -of-its-kind B2C, B2B,
and C2C e -Commerce company.
2005: Amazon changes e -Commerce forever by introducing flat -fee,
two-day shipping through Prime
2011: Facebook throws its hat in the e -Commerce ring with sp onsored
stories
2011: Stripe enters the world of online payments
2014: Apple follows suit with Apple Pay
2015: Google responds by introducing Android Pay
2015: Cyber Monday sales reach a new record high of more than $3
billion
2016: Alibaba sets a record with $17 billion in sales in just one day
2017: Instagram enters the e -Commerce game with shoppable posts
2019: ECommerce sales reach$3.5 trillion
1.1.3ROADMAP OF E -COMMERCE IN INDIA
On the back of growing internet penetration and evolving
consumer mindset the e -commerce space has touched new heights. The
market was initially limited to print media dominated classified services. It
has now expanded to include the new internet -focused business models.
Example -Group buying and social commerce.
The evoluti on of e -commerce in India can be broadly divided into
two phases based on the emergence of various sub -segments. Furthermore
distinct developments define each of these phases.munotes.in
Page 9
9
9Phase 1 1996 -2005
In 1995, India witnessed the launch of internet (via di al up) in 6
cities. The introduction of Internet in India marked the beginning of the
first phase of e -commerce in the country. The economic liberalisation after
the launch of the reforms in 1991 attracted MNCs and brought about the
growth of the IT indust ry.
Theimplementation of liberalisation policy has led to the demise
of the license regime, high taxes and import restrictions, as well as
facilitates the growth of SMEs. The IT industry and SMEs were the early
adopters of internet. This led to the emer gence of B2B and matrimonial
portals in 1996. In 1997, the job portals were launched for the job
searches.
B2B Directory: India's first online B2B directory was launched in 1996.
The liberalization of the country's international trade policies was the ke y
factor that accelerated the growth of B2B online portals. It enabled buyers
and sellers to easily connect with their global counterparts.
Online Matrimonial: In 1996, the first online matrimonial portal was
launched in India. A concept unique to India, online matrimonial portal
transformed the perception about matchmaking process from “marriages
are made in heaven" to “marriages are made in cyber space." Such portals
have now evolved to cater to various segments of the population such as
NRIs, widows or Widowers, divorcees and other special groups.
Online Recruitment: India's online recruitment industry took shape in
1997. The growth of service sector, following the launch of economic
reforms in 1991, resulted in the creation of additional jobs. In this
background, internet proved to be an efficient medium that allowed
employers and job seekers to connect. Prior to job portals weekly
government magazines such as 'Employment News' and newspaper
notifications were the primary means for employers and job se ekers to
interact.
Although online businesses had begun to develop in the late 1990s,
the supporting ecosystem had not been put in place. The first phase of e -
commerce in India was characterized by Low internet penetration, a small
online shopping user base, low internet speed, low consumer acceptance
of online shopping and inadequate Logistical infrastru cture. T hereafter ,
theITdownturn in 200 0 led to collapse of more than 1000 e -commerce
business in India . This led to muted activities in the cyber spa ce in India
between 2000 and 2005.
Phase 2 (from 2006 till date)
The entry of Low Cost Carrier (LCCs) in the Indian Aviation
Sector in 2005 mark edthe beginning of the second wave of e -commerce
in India. Travel emerge das the largest segment. People st arted relying onmunotes.in
Page 10
10the Internet to search for information and to book tickets .As a ripple
effect, the success of the online travel segment made consumers
comfortable through the medium, thus leading to the developmen to f
online retail.
Online Travel: The d ecision of LCCsto sell their ticket online and
through third parties enabled the development of Online Travel A gents
(OTAs). Priorto the entry of LCCs in 2005 -06,airtravel was considered a
luxury meant only for the rich and for corporate travels. LCCs change the
scenario by making travel affordable for a large number of people. Their
own website partnered with OTAs to distribute the tickets online and,
thus, contain costs. The Indian Railwa y had already implemented the e -
ticket booking initiatives by th et i m eL C C s commenced their online ticket
booking scheme s.
Online Retail: The growth of online retail was partly driven by changing
urban consumer lifestyle and need for convenience of shopping at home.
This segment develop ed in the second wave in 2007 wi th the launch of
multiple online retail websi tes. New businesses w ere driven by
entrepreneur who looked to differentiate themselves by enhancing
consumer experience and establishing a strong market presence.
Group Buying: Starting in 2010, the group buyi ng and the daily deals
models became the sought after space for entrepreneurs in India,
emulating the global trend. Group buying sites have seen a significant rise
in the number of unique visitors and members hip. T his group has attracted
investments from v enture capital funds.
Social Networking: The social networking was actively used by
organisation to reach out to customers. Social networking has gone on to
become an integral part of people's lives. Initially used for staying
connected with friends, soc ial networking websites have now become a
dominant force in any company's digital strategy. Termed as social
commerce, it is the key a venue for E -Commerce players to reach out to
target customers. Companies of started establishing their presence in the
social media space for branding activities, connecting with customers for
feedback and Advertising new products.
1.1.4MAIN ACTIVITIES OF E -COMMERCE
1)Registration :In order to make a purchase, the user must register on
the website by providing all necessary information for billing and
shipping purposes. It also enables a firm to send updates and various
offers to their customers. The information required for the registration
process includes name, address, contact details, an alternative to the
contact numbe r, Email -ID and other relevant data of the customer. The
system followed for the registration and shopping may vary from firm
to firm. Further, all the data of customers is stored on a database of the
e-commerce firm.munotes.in
Page 11
11
112)Information Search: After registratio n, users can surf for information
about the product which they desire to purchase. They can compare
different products before finalising what they wish to purchase. On
some e -commerce websites, information search can be made first, and
registration can be done at the time of purchasing a product.
3)Electronic Data Interchange (EDI): Electronic Data Interchange
(EDI) is the computer -to-computer exchange of business documents in
a standard electronic format between business partners. Many business
documents c an be exchanged using EDI, but the two most common are
purchase orders and invoices.
4)Negotiations: E-Commerce facilitates negotiations between the buyer
and the seller. A buyer can negotiate with two or more sellers through
video -conferencing especially in case of B2B e -commerce. The buyer
can negotiate for price, delivery schedule, quality, quantity and other
terms and conditions.
5)Placing order: The buyer can place the order. On receipt of the order,
the seller processes the order. The seller must under take proper order
management for timely delivery of product.
In case of B2C e -commerce, the customer adds the product in
shopping cart. Shopping cart is a tool which, like online basket, allows
users to select products they want to purchase and then add them in
their cart. After all the products are selected, the user can have a look
at the number and types of products purchased by her/ him and also
add or delete products as per their requirements.
6)Payment: After selecting products for purchase, the nex t step is to
select payment options. The variety of payment options offered are
cash on delivery, debit/credit card, net banking, payment by apps, etc.
Customers can select any mode of payment as per their convenience
and suitability.
7)Logistics: After the payment processing is done, logistics function
comes into the picture for delivery of the product. This involves order
processing, packaging, transportation, tracking of product, etc. It
ensures timely delivery of product to the customer at his/her doorst ep.
E-commerce firms need to make proper arrangement of logistic
activities so that the right product is sent to customers on time. Delay
in delivery of products can result in customer dissatisfaction.
8)After -sales Service: After timely delivery of produc ts to customers,
the firm undertakes after -sales service wherein it takes customer
feedback about delivery, quality, services, overall experience, etc. The
firms also make service calls in case of durable products. They solve
the queries of customers and p rovide information about latest offers
and other products via e -mail, calls and SMS. This allows the e -munotes.in
Page 12
12commerce firms to maintain long -term relationship with customers and
increase customer loyalty
1.1.5FUNCTIONS OF E -COMMERCE
1)E-Marketing: E-Marketing ( Electronic Marketing) is also known as
Internet Marketing, Web Marketing, Digital Marketing, or Online
Marketing. E -marketing is the process of marketing a product or
service using the Internet. E -marketing not only includes marketing on
the Internet, but also includes marketing done via e -mail and wireless
media. It uses a range of technologies to help connect businesses to
their customers. Internet marketing is associated with several business
models i.e., B2C, B2B, C2C. Internet marketing is inexpensive when
examine the ratio of cost to the reach of the target.
2)E-Advertising: It is also known as online advertising it is a form of
promotion that uses internet and World Wide Web to deliver
marketing messages to attracts customers. Example: Banner ads,
Social network advertising, online classified advertising etc. The
growth of these particular media attracts the attention of advertisers as
a more productive source to bring in consumers.
3)E-Banking: It refers to any user with a personal computer and
browse rcan get connected to his bank website to perform any of the
banking functions. In internet banking system the bank has a
centralized data base i.e., web -enabled. Best example for E -Banking is
ATM. An ATM enables handling cash deposits, transfer, Balance
enquiries, cash withdrawals, and pay bills.
Services through E -Banking:
Bill Payment Service
Fund Transfer
Investing through Internet Banking
Shopping
4)E-Learning: E-Learning comprises all forms of electronically
supported learning and teaching. E-Learning applications and
processes include web -based learning, computer -based learning.
Content is delivered via. The internet, intranet/extranet, audio, or video
tape, satellite TV. E-Learning is naturally suited to distance and
flexible learning, but can also b e used conjunction with face -to-face
teaching. E-Learning can also refer to the educational website such as
those offering learning scenarios worst and interactive exercises for
children. A learning management system (LMS) is software used for
delivering, tracking, and managing training /education.
5)Mobile Commerce: Mobile Commerce also known as M -Commerce
is the ability to conduct, commerce as a mobile device, such as mobile
phone. Banks and other financial institutions use mobile commerce to
allow their c ustomers to access account information and makemunotes.in
Page 13
13
13transactions, such as purchasing, withdrawals etc., Using a mobile
browser or apps customers can shop online without having to be at
their personal computer.
6)Online Shopping: Online shopping is the activity or action of buying
products or services over the Internet. It means going online, landing
on a seller’s website, selecting something, and arranging for its
delivery. The buyer either pays for the good or service online with a
credit or debit card or upon delivery.
7)Entertainment: The conventional media that have been used for
entertainment are Books/magazines, Radio , Television/films, Video
games etc.
Online books /newspapers, online radio, online television, online
films , and online games are common plac e in internet where we can
entertain. Online social networking websites are one of the biggest
sources of E -entertainment for today’s tech -savvy generation.
1.1.6SCOPE OF E -COMMERCE
E-Commerce is a general concept covering any form of business
transacti on or information exchange executed using information and
communication technologies ((ICT’s). It includes electronic trading of
goods, services and electronic material.
It takes place between companies, between companies and their
customers or between co mpanies and public administrations
1)Electronic Markets : An electronic market is the use of ICT where
seller offers a range of good and services so that the buyer can
compare the prices of the goods and services and make a purchase
decision. e.g. Airline B ooking System
2)Electronic Data Interchange : Electronic Data Interchange (EDI) is
the computer -to-computer exchange of business documents in a
standard electronic format between business partners. These are any of
the documents that are typically exchanged between businesses. The
most common documents exchanged via EDI are purchase orders,
invoices, payment document and advance ship notices. There is no
need for printed orders and invoices & delays & errors in paper
handling. It is used by organizations tha t make a large number of
regular transactions. Eg. The exchange of EDI documents is typically
between two different companies, referred to as business partners or
trading partners. For example, Company A may buy goods from
Company B. Company A sends orders to Company B.munotes.in
Page 14
143)Internet Commerce : Internet Commerce is the use of the Internet for
all phases of creating and completing business transaction. This
application is both for Business to Business (B2B) & Business to
Consumer (B2C) transactions.
1.2BENEF ITSAND CHALLENGES OF E -COMMERCE
A)Benefits to E -Commerce Firms
1.Global Reach: With e -commerce, a company can reach out to the
customers worldwide. Unlike physical stores where only a limited
number of customers can be served, e -commerce allows firms to
deliver products online to customers in any corner of the world.
2.Small Investment: E-commerce firms do not have to make
investment to purchase land or rent or lease space for physical stores.
E-commerce is operated online through websites. There are many
domains which allow firms to create websites, which is less costly and
far more convenient. The marketer has to only create a website to
target their customers. Logistic functions can be outsourced by them. It
reduces the need to make heavy investments and also provides quick
return on investment (ROI) to marketers.
3.Less Operating Costs: In e-commerce business, there is no need to
hire a large number of employees unlike physical stores. It reduces
training cost, salaries etc. that have to be paid to employ ees. Due to
opening an online store there is no need of payment of rent, utility bills
and other miscellaneous expenses which can be incurred in physical
stores. This results into less operating cost of e -commerce firms.
4.Higher profit margin: E-commerce offers benefit of global reach, so
the marketer can reach to customers located all over the world. There
is also large demand for the products from all over the world. There
are no intermediaries like agents, wholesaler or retailer. Mostly the
transactions are done directly between trader and customers. So the
commission of intermediaries is eliminated. So all this contributes to
higher profit margin.
5.Reviews of Customers: The customer can leave their reviews about
their experience with product. It can giv e more values to e -commerce
website and help customers to build more trust about the firm.
B)Benefits to Customers
1.Variety of goods: E-commerce makes a variety of products easily
available to customers. They can select products straightforwardly as
per th eir budget and requirements. Details of all the products are
available the websites, which makes it easy for customers to select the
right product.munotes.in
Page 15
15
152.Right Purchase Decision: E-commerce applications and websites
provide options to compare and select the be st product. Customers can
also read reviews and comments posted by other customers on the
website before making a final purchase.
3.24 x 7 services: E-commerce is not limited to running on schedules as
they function 24X7, unlike physical stores. Customers and clients can
buy whatever they want anytime on websites, which they cannot in
any physical store.
4.Increased Competition: Due to lack of entry barrier, less investment,
etc. the number of e -commerce firms entering the business is
increasing. It has res ulted in increase in competition in the e -
commerce industry. The competition may benefit customers in the
sense that they get better quality products at discounted prices due to
competition between the e -commerce firms.
5.Convenient Shopping: Due to busy s chedule, many people are unable
to go to physical stores for shopping. As a result, they prefer to shop
from e -commerce websites now. Online shopping saves their time and
also brings the products ordered at their doorstep which also saves
their money and e nergy .
6.Discounts and offers: Every e -commerce company offers discounts as
well as offers such as free gifts, extra quantity, warranty etc. on every
purchase.
1.2.1CHALLENGES OF E -COMMERCE
A) Challenges for E -Commerce Firms
1)High rate of return of go ods: E-commerce in India has many first
time buyers. This means that they have not yet made up their mind
about what to expect from e -commerce websites. As a result, buyers
sometimes fall prey to hard sell (Instant placing order for goods by
watching adver tisement or offers) . But by the time the product is
actually delivered, the y regret and return the goods. Though consumer
regret is a global problem, but it is all the more prevalent in a country
like India. Returns are expensive for e -commerce companies, as
reverse logistics (returning a product to the manufacturer or
distributor) create challenges. This becomes all the more complex in
cross border e-commerce .
2)Cash on delivery is the preferred payment mode: Low credit card
access and low trust in online t ransactions has led to cash on delivery
being the preferred payment choice in India. Unlike electronic
payments, manual cash collection is painstaking (be careful), risky,
and expensive.munotes.in
Page 16
16Though considered good from buyer point of view but for e -commerce
companies Cash on delivery (COD) mode of payment is regarded as a
drawback. COD delays the payment to e -commerce company because
buyer will pay when he or she will receive the product. It will then go
to the courier companies which after 2 -3 weeks give paym ent to the
actual seller. In the meantime the e -commerce companies have to
restock inventory.
3)Payment gateways have a high failure rate: Indian payment
gateways have an unusually high failure rate by global standards. E -
commerce companies using Indian pa yment gateways are losing out
on business, as several customers do not attempt making payment
again after a transaction fails.
4)Problem of Internet Access: E-commerce shopping requires Internet
facility to work. Nowadays, availability of internet connectio n is not a
problem in metro cities. However, internet connectivity is very poor in
many villages. Hence, these villages can be targeted only if they get
better internet connectivity.
5)Technical Problems: E-commerce functions through the Internet due
to wh ich technical problems such as slow speed of Internet can occur.
Sometimes, transactions are denied due to slow internet connectivity.
There may also be chances of double payment due to repetitive clicks
by users on the payment button.
6)Competition: Due t o a variety of benefits offered by e -commerce
industry such as global reach, high profitability, zero initial costs, etc.
many firms are encouraged to undertake e -commerce business. This
has led to increase in competition among the e -commerce marketers .
Competition is leading to decrease in profitability due to reasons such
as aggressive pricing strategies, heavy discounts and offers, free
delivery, high commissions to affiliates and vendors during sale period
etc. These firms are losing billions to attrac ting customers.
7)Poor logistic & supply chains: Underdeveloped logistics is one of the
main hurdles in the development of e -commerce in India.
Multinational carriers like DHL and Fed -Ex do operate in India but
generally third party services are hired for t he delivery in smaller
cities. Many a time last mile deliveries are made by bicycle. Some of
the large funded firms like Flipkart have established their own logistics
departments for the delivery of goods ordered online. But huge
investment in logistics is required to be done.
8)Other Challenges:
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 see m like a sure thing, the e -commerce industry has amunotes.in
Page 17
17
17high 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 a nd products like interior designing or the jewelry
business.
Sometimes address is not found or buyer does not like the product then
it has to send back to the company for restocking.
B) Challenges for Customers
1)Security Issue: E-commerce sites record cr ucial and sensitive details
of customers such as name, phone number, address and bank details.
Though many e -commerce firms try to make transactions over their
websites secure through SSL (https) that encrypts the transferred
information, still many cases of online password hacking has occurred.
It has adversely affected the trust and confidence of customers about e -
commerce shopping.
2)Inability to See and Feel Products before Purchase: Indian
customers prefer to see, touch, smell or taste products before making
purchase decisions. However, e -commerce does not facilitate this
arrangement due to which its advantages are missing in this shopping
option. Customers also have the impression that the products shown in
pictures on website can be different from wh at they actually turn out to
be after delivery. However, these days, many firms are adding real
images and videos of models using these products on their websites,
and also adding all possible information about products such as size,
quantity, colours etc. for the convenience of customers.
3)Uncertainty about Quality: One of the biggest problems with buying
things online is that customers may have no guarantee of a product’s
quality. Reviews provided by other customers are not always helpful.
Return policy of e-commerces firm is also not properly implemented,
so customers face problems in returning products and getting refund or
replacement for it.
4)Delay in Delivery: E-commerce firms can face the problem of
shortage of manpower. This may result in delay in delivery of product
to customers. In many cases, customers do not get delivery of products
on promised date or time, which results in customer dissatisfaction.munotes.in
Page 18
181.2.2E-COMMERCE BUSINESS STRATEGIES FOR
MARKETING, SALES AND PROMOTIONS
1)Feedback Forms :It is important for an e -commerce company to find
out what people think about their company than to solicit their opinion.
By u sing customer feedback ,an e-commerce can improve itssite and
provide better service to their customers. Using feedback forms also
shows that e-commerce company is interested in what their customers
have to say, and provides an opportunity to build relationships with
them.
2)Daily Give -Away/Coupons/Contests :E-commerce companies that
offer regular promotions such as a ‘give -away’ , coupons and contests
are in a solid position to capture a regular audience. The promotion s
act as the driver that attracts customers to visit initially .Italso
provides an opportunity to showcase new products and services, and
deliver important news abo ute-company. For example ,an e -
commerce company offers discount coupons to customers which can
be redeemed on next purchases .This encourages customers to
purchase goods in future.
3)Bookmarking :A good way to encourage customers to visit an e-
commerce co mpany’s site is to ask them to bookmark it. Through
bookmarking, they have easy access to asite and do not have to
remember your site’s exact URL to visit. Bookmarking a site is
particularly beneficial for web surfers who like to follow links. It
enables them to go back and take a more in -depth look at what
company hasto offer when they need to.
4)Surveys :Surveys provide an effective avenue through which
important customer data is gathered that will help an e-commerce
company to improve itsbusiness and p lan for the future. To encourage
visitors to complete the survey, the company can provide an incentive
such as an opportunity to win a prize.
5)Awards/Testimonials :Including awards and testimonials on e-
commerce site will provide credibility to itsbusines s.Itwill also
provide a foundation to build rapport and trust with customers, who
will be more willing to visit a site they can trust.
6)Online Chat :Online chat mechanisms provide a forum where
customers can come together and share their experiences with each
other and e -commerce Company . This interactive tool allows
companies direct access to customer opinions where they can gauge
trends and determine their views.
7)Product Tours :Online tours provide an e -commerce company with
an opportunity to showcase particular products and services, and
highlight their key benefits. Product tour is a better way to show how
the product works. Product tour makes complex product look simple
and easy to use.munotes.in
Page 19
19
198)Using Video :E-commerce business benefits not only from the use of
words, but the use of words, sound and images combined, making it a
wonderful way for businesses to quickly and very inexpensively share
information about their products, services and business activities. E-
commerce companies can create their own channe ls and link those
channels through their other online activities --web sites, blogs or
social media activities .
9)Relationship Building through social media: Relationship building
is a marketing strategy built on establishing a long -term and mutually
benefi cial relationship between businesses and customers. E-
commerce through social media allows ongoing two -way
communication. Google+, LinkedIn, Facebook, Twitter, YouTube and
Pinterest are social media platforms that businesses use to build
relationships and communities around their brands. Social media
allows businesses of all sizes to address public relations and customer
service issues quickly, announce time -limited offers and promotions,
and give customers a chance to share their product -related stories an d
images.
10)Make checkout process easy: An e-commerce company should t ry to
get everything on one page. If it has several pages, it should show a
progress bar at the bottom of each page so that customers can visualize
how much longer thecheckout process w ill take. The more time a
customer spends looking for the next button or the checkout button the
quicker they can become frustrated with thesite.
11)Give customers helpful product descriptions :E-commerce
companies selling any type of clothing or accessory should provide a
size guide. Not only will this help customers to select right product but
it will cut back on returns of such goods .E-commerce Company
should have a page dedicated to frequently asked questions.
It is desirable if company has descripti ons for every single one of their
products . These details tell customers what the product is made out of,
the size, fit and fabric, how to clean it and even tells customers the
height of the model in the photo. Not only will they be able to easily
find you r products, but it will also be easier for them to make a
purchase decision.
12)Retargeting :Customers who have already shown an interest in
website are more likely to make a later purchase.
Retargeting is a technique that tracks cus tomers who have visited
website. The e -commerce company can display ads to them while
they’re browsing the internet with the intent ionof getting them back
onthewebsite. When these visitors enter website again, they are far
more likely to make a purchase.munotes.in
Page 20
2013)Email Marketing :An e -commerce company can b uild an email list
by collecting email s when they make a purchase. They can also collect
emails through social media campaigns and on itswebsite in exchange
for coupons or discounts.
An e-commerce company can send different emails like:
Welcome Email: This email is received by customer when they
create account and login to the site.
Email Nurture series : This is a sequence of emails that company
sends to educate customers about the product and
Cart Abandonment email : This is the em ail sent when visitors fill
up the cart, then leave your store without checking out
Email Receipts : These are emails sent to confirm customer’s
purchase; it’s also a great time to send them further promotions.
14)Social Media Marketing :Using social media m arketing for e -
Commerce business has its benefits like user engagement and
increasing sales. User engagement involves likes, shares, comments
and general interaction on posts and thi s helps to create brand image in
the mind of target audience. It’s also crucial for word -of-mouth
marketing since it’s very easy to share information within and between
platforms (like from Facebook to whatsapp and so on).
Nowadays, social media platforms have made it easier for e -
Commerce businesses to create and maintain their presence. Instagram
allows swipe -up links on stories and product stickers on posts. When it
is clicked, take viewers directly to a product or catalog. Facebook has
a ‘dynamic ads’ feature that allows owners to upload entire catalogs
and promote relevant content to individual users
15)Build a Mobile App :There are several benefits to hav ean app for e -
commerce business. Apps tend to load more quickly that websites so
that users can sho p more efficiently. If an e -commerce company hasan
app customers are one tap away from viewing products. The e -
commerce company can also send push notifications through apps to
notify customers when company is having a sale or when their favorite
item is back in stock. Building an app is anexcellent way to boost
sales and drive growth.
E-commerce Company should design site with mobile visitors in mind
from start to finish. The company should have a bigger add to cart
button on all mobile product pages, m aking it easier for the visitor to
add to cart without zooming in. It should also present images in a
different format, making it faster for mobile visitors to load product
photos and easier to zoom in.
16)Search Engine Optimization (SEO): Search Engine Opt imization
(SEO) aims to draw the greatest amount of traffic possible to a website
by bringing it to the top of a search engine's (Google, Yahoo, andmunotes.in
Page 21
21
21Bing) results. SEO is used by businesses to maximize the visibility of
websites and content to boost traffi c and, therefore, business. Search
engines are the most common vehicle in bringing organic (non -paid)
traffic to a website, which makes SEO highly competitive: a successful
strategy can bring a business a high level of exposure.
17)Optimize website layout: After launching or redesigning e -commerce
site, it’s important to test website’s layout, language, and placement
different elements. When customers visit to the website, they should
feel easy and simple to check out products and information. They
should fe el naturally inclined to purchase products.
18)Influencer Marketing: Influencers are popular non -celebrity
individuals with a large following on social media platforms ( like
Instagram, YouTube and Facebook) or blogs and who can affect the
purchasing decisi ons of their audience. E-commerce companies can
make use of such influencers and gain their audience trust.
19)Affiliate Marketing: Affiliate marketers are the businesses promotes
content on their website to their audience and receive some percentage
of sale s when leads the product. Affiliate marketing looks like display
ads.With display advertising ,E-commerce company create sa d that
appear on other websites. When site visitors click on them, they’re
taken to a landing page where they can learn more about your product
and convert to become a paying customer.
20)Personalization strategy: With personalization strategies, the
company can target customers with tailor ed and dynamic offers, sales,
discounts, personalized emails, even recommended products and also
helps them find what they may need. The company can obtain these by
observing and analyzing customer -specific site behavior, cart items
and purchase history or demographic -specific history and data.
21)Use of Virtual Reality Technologies: Virtual reality (VR) is
asimulated experience that can be similar to or completely different
from the r eal world. Virtual Reality is often the best option for
ecommerce businesses. Examples could include:
Furniture stores lets customer upload pictures of their actual room
along with it’s dimensions and then scale the furniture so the
customer can see how it would look.
Apps allowing users to hold their phone over their wrist to see how
a bracelet would look.
Makeup retailers who let users upload pictures of themselves to see
how the different products would look on them. Sephora currently
uses this strategy .munotes.in
Page 22
221.3BUSINESS MODELS OF E -COMMERCE
1.3.1 B2B (BUSINESS -TO-BUSINESS)
When a business sells goods and services to another business
online, it is called B2B transaction.
In simple, one company will sell products or services to other
companies. (i.e.,) wholesale distributors will sell products or services to
retailers.
Normally this field includes the selling of goods that are not used
by customers. For instance, businesses that manufacture products sold in
Walmart stores are operating under a business to business e -commerce
model because they are a business selling products to another business.
Examples:
Walmart: Walmart India is based on the B2B process as it sells its
products only to traders. Walmart Indi a, a B2B website, landed on
many states in India and any vendors can easily sell their products on
Walmart’s B2C marketplaces.
Alibaba: Alibaba is a Chinese world -leading e -commerce, retail,
internet and technology company. It has supplying partners worldwide.
Those suppliers are business companies.
Amazon: Besides B2C ecommerce, Amazon plays a major role in
B2B ecommerce businesses as in the name of Amazon Business .
Indiamart: IndiaMart connects buyers and sellers with their high -
quality B2B products like Apparels, Industry Machinery, electrical &
electronics, etc.,
Slack: For communication, and sharing of files and documents, many
B2B companies use slack.
1.3.2 CHARACTERISTICS OF BUSINESS TO BUSINESS (B2B):
1)Custom pricing features :With a B2C e -commerce website, pricing is
usually simple as every customer gets the same price. B2B e -
commerce w ebsites, there might be different pricing for different
customers. It could be because of the volume of business they do with
them, the frequency of orders, or the type of products they buy.
2)Custom Bulk Discount: Bulk discounts are a common feature of B2 B
businesses. They are a way of encouraging higher order values and
building customer loyalty. They can be based on the quantity or
purchase amount.
3)Minimum order quantities: In addition to policies like discounts for
buying in bulk, many B2B stores also operate a minimum order value
for all or some of their products. Minimum order quantities are oftenmunotes.in
Page 23
23
23essential for managing margins and ensuring that B2B e -commerce
company remain profitable.
4)Flexible Payments: Having flexible payment options is an advisa ble
feature for any ecommerce store, but it is particularly important for
B2B businesses. B2B E -commerce company can offer flexible
payment option along with selected days credit facility.
5)Omni -Channel Presence: Scalable, responsive, and fully customized
e-Commerce platform solutions including mobile app and website for
B2B e -Commerce gives comfort and ease to customer at online store.
6)More business opportunities :A web store can help strengthen online
presence, letting potential clients and resellers fin dB2B e -commerce
Company through search engines.
This is especially effective the company choose sto make itscatalog
pages public. However, even if itdecide sto keep catalog private,
company can use targeted marketing content (Customers to whom a
compan y wants to direct its marketing efforts and o sell its products
and services) in web store to grab the attention of new clients.
7)Fewer customers: In the B2B e -commerce, there are fewer number of
customers. Although the market is small with fewer buyers an d sellers,
but their orders are big.
8)Stability and Loyalty: In B2B e -commerce, there is a very stable
relationship between buyer and seller that goes for years. Before
signing any contract, buyers and sellers both plan their budget,
revenues, and rates. W hen both parties close the deal, then they rely on
one another in terms of supplies and payments. So parties are loyal to
one another.
9)Lower cost :In B2B e -commerce, both parties spend a lot of time
planning and working on the details. In most cases, the work is done
through automation (including order entry, client information
provision and customer service) that eradicates the chances of errors
and undue expenditure. Therefore, it leaves no room for mistakes and
errors. As a result, everything works out as plan without costing any
extra expenses. This especially true with ERP-integrated B2B e -
commerce .
10)Design easy order system: B2B comp anies selling online need to put
much effort into designing a website and ordering system that buyers
find easy to use. This means presenting product and service
information clearly, offering online demos or consultations and using
order forms with appropr iate options for quantities and any special
customization needed.munotes.in
Page 24
2411)Reduces Distribution Costs: B2B transactions reduce marketing and
sales costs of the sellers. Eg. A sell er need not to advertise heavily to
attract customers. Also, the seller need not ma intain a large number of
sales force and support staff.
12)Reduces Inventory Levels: A seller need not maintain large
inventory levels in anticipation of demand. The seller can maintain the
level of inventory based on the orders received online. Therefore, the
cost of maintaining inventory is less.
Also, the buyer need not keep a large amount of inventory. He can
order for inventory as and when required. The seller can supply the
inventory under the just -in-time model. Therefore the cost of
maintaining inv entory is also less for the buyer.
13)Benefit of Negotiation: B2B permits negotiation between buyer and
seller relating to price quantity and other terms and conditions of sale.
However, negotiation is not possible in case of B2C model.
Negotiation benefits both the parties and therefore, there is higher
conversion of sales as compared to B2C model.
14)Lower Rejection Rate: Under B2B model, there is lower rejection
rate as compared to B2C model. B2B model permits negotiation
between the buyer and the seller. A lso the sales representatives of the
seller meet the buyer with samples and also provide clarifications,
whenever required. Therefore, the return of goods is lower in the case
of B2B model, which in turn reduces the cost for the seller.
1.3.3 B2C (BUSINE SS-TO-CONSUMER)
When a business sells goods or services to an individual consumer
online, it is called B2C transaction. Here, the consumer can view details of
products online and make purchase decision as per her/ his requirements.
E.g. individual buying c lothes, shoes, kitchenware, etc. specifically from
Amazon or Flipkart. These days, consumer awareness is increasing about
B2C e -commerce, because of factors like rapid use of internet facility,
computer literacy, revolution in technology, etc.
Further, t he Indian market for e -commerce has grown at a fast pace
in the past few years due to absence of major entry barriers and presence
of few e -tailers (electronic retailers). Omni -Channel retailers such as
Shoppers Stop, Reliance, Croma, etc. have also entere d the e -commerce
field to increase digital footprints.
1.3.4 CHARACTERISTICS OF BUSINESS TO CONSUMER (B2C)
1)Wide coverage: B2C e -commerce enables business persons to extend
their trade to a large number of consumers by providing them online
Global access t o their products. It can be said that B2C e -commerce
shrunk the world, and the international boundaries do not play any
role.munotes.in
Page 25
25
252)Effective promotion: Compared with the traditional products
promotional methods (advertisements in newspapers, on the radio and
on hoardings), products can be promoted and advertised in a more
innovative and interactive manner with the use of multimedia and
animation through B2C e -commerce. Using e -commerce, sellers can
promote their products either on their own websites or on soci al
networking sites such as Facebook Twitter and Gmail.
3)Low promotional cost and quick post sales services: B2C e -
commerce benefits businessmen because of its low promotional costs.
In addition, it also enables them to provide post -sale services through
their registered call centre, which facilitates cheaper and provide faster
resolution of complaints compared with traditional post sales services.
4)Consumer friendly payment methods: B2C e -commerce provides a
wide range of payment options such as via debi t card, credit card, cash
on delivery and Equated Monthly Installments (EMI) schemes, which
are consumer friendly. These methods save time and efforts and are
also considered safe.
5)Easy access: Unlike the t raditional modes of business, e -commerce
provide accessibility to consume around the clock at any time during
the day, throughout the year and in all seasons, customer can contact
the registered call centre and support centres.
6)Customised goods: In view of the growing complexities and
compe tition in to day's world, custom -made goods have become the
need of an hour. In this scenario, e -Commerce has emerged as a boon
for businessman, as it allows them to manufacture products according
to the individual taste sand preferences of their customers.
7)High rate of return of goods: B2C E -commerce in India has many
first time buyers. This means that they have not yet made up their
mind about what to expect from e -commerce websites. As a result,
buyers sometimes fall prey to hard sell (Instant placing order for good s
by watching advertisement or offers). But by the time the product is
actually delivered, they regret and return the goods. Though consumer
regret is a global problem, but it is all the more prevalent in a country
like India. Returns are expensive for e -commerce companies, as
reverse logistics (returning a product to the manufacturer or
distributor) create challenges. This becomes all the more complex in
cross border e -commerce.
8)Competition: Due to a variety of benefits offered by e -commerce
industry such as global reach, high profitability, zero initial costs, etc.
many firms are encouraged to undertake e -commerce business. This
has led to increase in competition among the e -commerce marketers
especially B2C e -commerce.munotes.in
Page 26
26Competition is leading to decrease in profitability due to reasons such
as aggressive pricing strategies, heavy discounts and offers, free
delivery, high commissions to affiliates and vendors during sale period
etc. These firms are losing billions to attracting customers.
9)Lower volume per transaction: Generally, there is lower volume and
value per transaction under B2C as compared to B2B model. This is
because, the B2C customers purchase goods or services for personal
use or consumption, whereas, under B2B the buyers purchase in large
quantities for business purpose.
10)Global Reach: With e -commerce, a company can reach out to the
customers worldwide. Unlike physical stores where only a limited
number of customers can be served, e -commerce allows firms to
deliver products online to customers in any corner of the world.
11)Small Investment: E-commerce firms do not have to make
investment to purchase land or rent or lease space for physical stores.
E-commerce is operated online through websites. There are many
domains which allow firms to create websites, which is less costly and
far more convenient. The marketer has to only create a website to
target their customers. Logistic functions can be outsourced by them. It
reduces the need to make heavy investments and also provides quick
return on inv estment (ROI) to marketers.
12)Less Operating Costs: In e-commerce business, there is no need to
hire a large number of employees unlike physical stores. It reduces
training cost, salaries etc. that have to be paid to employees. Due to
opening an online stor e there is no need of payment of rent, utility bills
and other miscellaneous expenses which can be incurred in physical
stores. This results into less operating cost of e -commerce firms.
13)Variety of goods: B2C E -commerce makes a variety of products
easily available to customers. They can select products
straightforwardly as per their budget and requirements. Details of all
the products are available the websites, which makes it easy for
customers to select the right product.
14)Discounts and offers: B2C e -commerce company offers discounts as
well as offers such as free gifts, extra quantity, warranty etc. on every
purchase.
15)B2C process: B2C process involves following steps:
Registration
Information Search
Placing order
Payment
Logistics
After -sales Serv icemunotes.in
Page 27
27
271.3.5 B2G (BUSINESS -TO-GOVERNMENT)
B2G e -commerce is one where a business sells its product or
service to the Government. Here is a government website that opens bids
for businesses with an online bidding system .If the business provides an
exact prod uct, within the delivery time frame, and under the previous
price, then the website awards the contract automatically to the lowest
bidder.
Advantages of B2G are that it's easy to start qu oting and it's
guaranteed that business will get paid in the end.
Disadvantages include low margin sales, inte nsive documentation
and labels.
1.3.6 CHARACTERISTICS OF BUSINESS TO GOVERNMENT
(B2G)
1)Mainly involved bidding: B2G models mostly involve bidding for
government projects. B2G model enable businesses to bid on
government projects or product which government agency or Public
Sector Unit in purchase for their organisation. B2G activities are
increasingly being conducted via the internet through real -time
bidding.
2)Transparency: B2G model provides transparency in t he government
contracts with respect to purchases. The government department post
tenders in the form of RFQ (Request for Quotation) or RFP (Request
for Proposals). The suppliers respond to such proposal. Accordingly,
the government department or agency se lects the best possible
quotation or proposal. Generally, there is less scope for underhand
dealings on the part of supplier to get the contracts.
3)Virtual workplace: B2G website could also support the concept of a
virtual work place where business organi sations and Government
agencies coordinate work on an ongoing project. Typical tasks
accomplished on such platform include project progress tracking,
project reviews and online meetings.
4)Improved efficiency : B2G model enables government departments to
improve efficiency in procurement and completion of projects. With
the help of B2G model, the government agency allocate the project to
the most cost efficient supplier (local or International), thereby,
reducing cost and delays in completion of the contrac ts.
5)High value per transaction: Under B2G model, the value per unit
transactions very is high. This is because; the Government departments
or agencies require huge purchases. Also, the Government projects are
of large size. Therefore, the value per trans action or project is very
high.munotes.in
Page 28
286)Rules and regulations: B2G contracts are subject to strict rules and
regulations of the government authorities. Violation of rules and
regulation would amount to termination of contracts by the
government authorities. The b usiness firms securing Government
contracts must complete the project as per the rules and regulations.
7)Absence of promotional tactic : Under B2G contracts, there is
absence of promotional tactics on the part of e -suppliers or sellers. The
contract is awa rded strictly as per the building norms or as per RFQ
(Request for Quotation)
8)International coverage : B2G e -commerce get international coverage.
The bidding on the Internet gest international coverage. The global
firms compete to get government projects or contracts. Therefore, the
Government agencies can take advantage of the expertise of
internationally reputed organisation in completing the projects.
1.4CONCEPTS OF OTHER MODELS OF E -
COMMERCE
1)B2B (Business -to-Business): When a business sells goods a nd
services to another business online, it is called B2B transaction.
In simple, one company will sell products or services to other
companies. (i.e.,) wholesale distributors will sell products or services
to retailers.
Normally this field includes the selling of goods that are not used by
customers. For instance, businesses that manufacture products sold in
Walmart stores are operating under a business to business e -commerce
model because they are a business selling products to another business.
2)B2C (Business -to-Consumer): When a business sells goods or
services to an individual consumer online, it is called B2C transaction.
Here, the consumer can view details of products online and make
purchase decision as per her/ his requirements. E.g. individual bu ying
clothes, shoes, kitchenware, etc. specifically from Amazon or Flipkart.
These days, consumer awareness is increasing about B2C e -commerce,
because of factors like rapid use of internet facility, computer literacy,
revolution in technology, etc.
Further, the Indian market for e -commerce has grown at a fast pace in
the past few years due to absence of major entry barriers and presence
of few e -retailer s (electronic retailers). Omni -Channel retailers such as
Shoppers Stop, Reliance, Croma, etc. have als o entered the e -
commerce field to increase digital footprints.
3)C2C (Consumer -to-Consumer ):When consumers sell their own
products or services to other consumer, it is called C2C transactions.munotes.in
Page 29
29
29Individuals may have new or used products that they sell on eBa yt o
another individual. eBay is a great example of C2C e -commerce
because consumers are interested in buying a used product for a
cheaper price.
These websites are usually free of cost as they promote products and
charge only nominal fees for doing it. C ustomers can upload images of
their old furniture, electronic goods or other things along with
description of products and their price. Other customers interested in
buying that product can communicate with the seller and place the
order.
5)C2B (Consumer -to-Business): Consumer -to-Business (C2B) is a
business model where an end user or consumer makes a product or
service that an organization uses to complete a business process or
gain competitive advantage. The C2B methodology completely
transposes (alters) the traditional Business -to-Consumer (B2C) model,
where a business produces services and products for consumer
consumption.
Example -To describe this business model we will use YouTube as an
example. Popular YouTubers (vlogers) sell their ad spaces to
advertisers (Businesses) .The YouTuber (vloger) is also paid to review
the product or service through vlog, posts and videos.
6)B2G (Business -to-Government): B2G e -commerce is one where a
business sells its product or service to the Government. Here is a
government website that opens bids for businesses with an online
bidding system. If the business provides an exact product, within the
delivery time frame, and under the previous price, then the website
awards the contract automatically to the lowest bidder.
1.5BUSINESS TO CONSUMER E -COMMERCE
PROCESS
1)Registration :In order to make a purchase, the user must register on
the website by providing all necessary information for billing and
shipping purposes. It also enables a firm to send updates and various
offers to their customers. The information required for the registration
process includes name, address, contact details, an alternative to the
contact number, Email -ID and other relevant data of the customer. The
system followed for the registration and shopp ing may vary from firm
to firm. Further, all the data of customers is stored on a database of the
e-commerce firm.
2)Information Search: After registration, users can surf for information
about the product which they desire to purchase. They can compare
different products before finalising what they wish to purchase. Onmunotes.in
Page 30
30some e -commerce websites, information search can be made first, and
registration can be done at the time of purchasing a product.
3)Placing order :The customer adds the product in shopping c art.
Shopping cart is a tool which, like online basket, allows users to select
products they want to purchase and then add them in their cart. After
all the products are selected, the user can have a look at the number
and types of products purchased by he r/ him and also add or delete
products as per their requirements.
After finalizing goods to be purchase, the buyer can place the order.
On receipt of the order, the seller processes the order. The seller must
undertake proper order management for timely delivery of product.
4)Payment: After selecting products for purchase, the next step is to
select payment options. The variety of payment options offered are
cash on delivery, debit/credit card, net banking, payment by apps, etc.
Customers can select any m ode of payment as per their convenience
and suitability.
5)Logistics: After the payment processing is done, logistics function
comes into the picture for delivery of the product. This involves order
processing, packaging, transportation, tracking of product ,e t c .I t
ensures timely delivery of product to the customer at his/her doorstep.
E-commerce firms need to make proper arrangement of logistic
activities so that the right product is sent to customers on time. Delay
in delivery of products can result in cu stomer dissatisfaction.
6)After -sales Service: After timely delivery of products to customers,
the firm undertakes after -sales service wherein it takes customer
feedback about delivery, quality, services, overall experience, etc. The
firms also make servic e calls in case of durable products. They solve
the queries of customers and provide information about latest offers
and other products via e -mail, calls and SMS. This allows the e -
commerce firms to maintain long -term relationship with customers and
increa se customer loyalty
1.5.1 NEED AND IMPORTANCE OF BUSINESS TO BUSINESS E -
COMMERCE
Answer same as “Characteristics of Business to Business (B2B)”
(Refer point no. 6 to 14)
1.5.2ALTERNATIVE MODELS OF B2B E -COMMERCE
1)Customer -Centric Model :In this model t he company prefers to
establish a long term profitable relationship with the customers even
after the sale. The value of the customer remains the same; it doesn’t
change after the transaction. When customers are the main focus of the
business, then they wo uld have a great influence over the branding and
other operations of the company.munotes.in
Page 31
31
31Amazon and Flipkart are the two major examples of e -commerce
businesses, and they follow the customer -centric model. It took them
years to develop reliable and trustworthy re lations with their
customers, and they are also loyal to their brand.
2)Buyer Centric Model: In this model, there are few buyers and many
suppliers .The buyer has his/her own online marketplace.
This model is mainly used among the big corporate companies as they
have a higher rate of purchases. Here the buyer sets a portal where the
sellers quote their price. The sellers approach the buyer with different
quotations. It is the buyer’s call to choose the most suited company
regarding its specifications and b udget.
Walmart is the best example of the buyer -centric model because it has
a shopping mall across the world. Every branch of Walmart has
different and multiple suppliers. However, different suppliers approach
the company and bid, and the best bidder bec omes the supplier of the
company.
3)Supplier centric Model: In this type of model, there are many buyers
and few suppliers . The supplier provides a common marketplace. This
market is used by both individual customers as well as businesses. For
the success o f this model, goodwill in the market and a group of loyal
customers is very important.
A successful example of this business model is Cisco. Cisco owns
anonline marketplace which goes by the name of Cisco Connection
Online. In 1997 Cisco sold US$1 billion worth of network products
such as routers and switches to business customers.
4)Intermediary Centric Model: In this type of model, there are many
buyers and many suppliers .This model provides a common platform
for both the sellers and buyers to interact and transact with one
another. This common platform is formed by the intermediaries. In
return, the intermediaries get their fair share as commission from the
parties that are involved.
Customers can’t check out all the products in the digital market. But
this intermediary provided platform is a great place to check out all the
products.
For instance, eBay and OLX provides a platform where seller can
connect ov er with potential buyers for product or service. They agree
to the terms of the commission that these third -party vendors would
charge. For every transaction made or sale happened, the intermediate
earns a certain sum of money.
5)Managed B2B Model: This mo del is a platform where the company
outsources its entire B2B process requirements to an outside servicemunotes.in
Page 32
32provider and benefits by lowering the resource needs. This also cuts
down the additional costs and complications of the process. The model
works on a s ystem that lets the Service Provider receive the business
documents through a direct medium of your ERP system.
The service provider would perform activities like translation,
mapping, tech support, document tracking, and data center operations.
1.6 E -COMMERCE SALES PRODUCT LIFE CYCLE
(ESLC) MODEL
Every business including e -commerce goes through different
stages of life cycle similar to human life cycle. Each stage poses a
different challenge and therefore, there is need to adopt different approach
or strategy to face that challenge.
The different phases of e -commerce sales life cycle (ESLC) are
explained as follows:
1)Seed (Development) Stage: At this stage entrepreneur generates idea
to set -up e-commerce business. This stage involves the birth of new
business. So there is no sales taking place. The e -commerce marketer
needs to design an attractive website and complete formalities for
starting the e -commerce business.
At this stage e -commerce marketer may face challenge of market
acceptance. Therefore ,e-commerce marketer needs to focus on niche
market (small market with one product category).
The marketer needs focus on business opportunity which matches with
the skills, experience and passion of the entrepreneur.
2)Start -up (Introductory) Stage: At t his stage the e -commerce
business begins to operate. Sales starts taking place at slow pace .
At this stage the e -marketer may face challenge of cash flow crisis
because of the set -up costs and unexpected expenses. Generally, at this
stage, the firm may h ave break -even (no profit and no loss)
The marketer needs to focus on establishing a customer base and
market presence.
3)Growth Stage: At this stage there may be a sharp increase in sales .
The e -marketer may start to gain profits. The e -marketer may cater to a
larger market area and sell new product categories.
At this stage, e -marketer may require more funds and human resources
to support the increased sales volume. Therefore, marketer needs to
raise finance from right source as well as train human resou rces to
handle sales activities.munotes.in
Page 33
33
33The marketer needs to focus on maintaining and enhancing customer
relations. They should undertake promotion activities to gain
competitive advantage. Customer feedback and review must be
monitored effectively.
4)Establishme nt (Maturity) Stage: This is the highest level of sales
growth and there is no further increase in the sales. In other words,
sales growth is stable at this stage.
At this stage, e -marketer may face the challenge of changing customer
taste which may adve rsely affect the sales of the firm.
The marketer needs to focus on maintaining and enhancing customer
loyalty.
5)Decline Stage :At this stage sale starts declining . The profit also
starts falling.
At this stage, e -marketer may face the challenge of changi ng business
environment such as competition, economic condition, customer
preferences etc.
The marketer needs to search new business opportunities and they
should cut down the costs.
6)Exit Stage :When efforts to revitalize the sales and profit fail, the e-
commerce marketer may sell business to third party or close down the
business.
1.7SUMM ARY
In this unit you studied ‘concept of e -commerce’ in detail. E -
Commerce refers to buying and selling of goods and services over the
internet.
It involves techn ology -enabled transactions. It enables seller to
expand his business and approach his prospect worldwide. It enables
buyer to select the product of his/her choice from the wide variety
available depending on his/her budget. E -Commerce may also have some
limitations in terms of speed and availability of internet and also attitude
of Indian people towards is yet to be completely positive.
E-commerce is classified as B2B, B2C, C2B, C2C and B2G
models .E-commerce Sales Product Life Cycle (ESLC) Model includes 6
stages such as Seed (Development) stage, Start -up stage, Growth Stage,
Established (Maturity Stage), Decline Stage and Exit Stage.munotes.in
Page 34
341.8 EXERCISE
FILL IN THE BLANKS
1)_____________ refers to the buying and selling of goods or services
using the intern et, and the transfer of money and data to execute these
transactions. ( E-Commerce ,E-mail, Establishment)
2)In E -commerce, ________ sector is leading. (Gold, Vehicles,
Electronics )
3)_________ became the first service to offer electronic mail capabilities
and technical support to personal computer users. (Hathway,
CompuServe , Jio)
4)During the 1990s, ____________ became the primary web browser on
the Windows platform, before the rise of modern giants like Google.
(Mozilla Firefox, Netscape Navigator , Apple Safari )
5)____________ emerged as a successful online auction website,
debuting in 1995. ( eBay, Jabong, Myntra)
6)In 1998, _______ launched ag l o bal e -Commerce company that
offered payment processing for online vendors and other commercial
users. ( PayPal , Amazon Pay, Beacon Payment)
7)______________ was introduced as a way for e -commerce businesses
to advertise to people using Google search. (Hoardin gs,Google
Adwords , Point of Purchase)
8)E-commerce offers _______________ benefit to the firm. ( Less
Operating Cost , Limited area coverage, No competition)
9)E-commerce firm faces ____________ challenge. (No return of goods,
strong internet connectivity in ru ral areas, Payment gateways have a
high failure rate )
10)____________ is one of the e -commerce business strategies. ( Search
Engine Optimization , Trade Fair and Exhibitions, Window
Shopping)
11)____________ is an example of B2B e -commerce model. (Olx, first
cry.c om,Walmart )
12)_____________ is one of the characteristics of B2C e -commerce
model. (Fewer Customers, Bulk Discounts, Lower volume of
purchase )
13)B2G stands for ___________ ( Business to Government, Business to
Group, Business to Gate)munotes.in
Page 35
35
35TRUE OR FALSE
1)JeffBezos founded Amazon in 1994. TRUE
2)In 2017, Stripe entered into the e -Commerce with shoppable posts.
FALSE
3)E-commerce provides variety of goods the customers. TRUE
4)In India, E -commerce does not face challenge of return of goods by
customers. FALSE
5)Influen cer Marketing refers to e -commerce marketer uses influencers
(who are non -celebrity individuals with a large following on social
media platforms) to influence purchase decision of their audience.
TRUE
6)When a business sells goods and services to final user of the product
online, it is called B2B transaction. FALSE
7)B2B permits negotiation between buyer and seller relating to price
quantity and other terms and conditions of sale. TRUE
8)B2G models mostly involve bidding for government projects. TRUE
9)OLX is an ex ample of B2G e -commerce model. FALSE
10)At growth stage of E -commerce sales product life cycle (ESLC)
model, the sales always starts declining. FALSE
MATCH THE PAIRS
Group -A Group –B
1)Amazon Prime a)Sponsored Stories
2)Facebook Advertising b)B2C E -commerce co mpany
3)E-Learning c)Customers get free two -day
shipping for a flat annual fee
4)Affiliate Marketing d)Learning Management System
(LMS)
5)Flipkart e)E-Commerce Business Strategy
(1-c,2-a,3-d,4-e, 5 -b)
ANSWER IN BRIEF
1)Write a note on History/Evol ution of E -Commerce.
2)Explain roadmap of e -commerce in India.
3)What are the main activities involved in e -commerce.
4)Discuss different functions of E -commerce
5)Describe scope of e -commerce.
6)Explain the benefits of e -commerce.munotes.in
Page 36
367)Highlight the challenges faced by e-commerce.
8)Write a note on ‘E -commerce business strategies for Marketing, Sales
and Promotions’
9)Discuss the characteristics of B2B model of e -commerce.
10)Write the characteristics of B2C model of e -commerce.
11)Bring out the characteristics of B2G model of e -commerce.
12)Write note on other models of e -commerce
13)Elaborate process involved in B2C e -commerce.
14)Describe need and importance of B2B e -commerce.
15)What are the alternative models of B2B E -commerce
16)Write a short note on E -Commerce Sales Product Life Cycle (ESL C)
Model.
munotes.in
Page 37
372
WORLD WIDE WEB AND E -ENTERPRISE
Unit Structure
2.0 Objective
2.1 World Wide Web (WWW)
2.2 Electronic Data Interchange (EDI)
2.3 Applications of E -Commerce and E -Enterprise
2.4 Managing The E -Enterprise
2.5 E -Organisation
2.6 Summary
2.7 Exercise
2.0 OBJECTIVE
After studying this unit the student will be able to -
Understand the concept world wide web
Know about the electronic data interinchange
Find out the application of E -Commerce and E -Enterprise
Understand the managing the E -Enterprise
Konw the E -Organisation
2.1 CONCEPT OF WORLD WIDE WEB
World Wide Web was created by Timothy Berners Lee in 1989
atCERN inGeneva . World wide web came into existence as a proposal
by him, to allow researchers to work together effectively and efficiently
at CERN. Eventually it became World Wide Web.
W3 is an information space where documents and other web
resources are identified by URIs, interlinked by hypertext links, and can
be accessed via the internet. It has become known simply as the Web.
Hypertext documents are commonly called web pages, which are
primarily text documents formatted and annotated with the Hypertext
Markup Lang uage (HTML).
Webpages may contain links to images, video and software
components that are rendered to users of a web browser application. It is
to be noted that all internet servers are part of the World Wide Web.munotes.in
Page 38
38The World Wide Web has been central to t he development of the
Information Age and is the primary tool which billions of people use to
interact on the internet. The terms Internet andWorld Wide Web are
often used without much distinction. The two are not the dame. The
internet is a global system of interconnected computer networks. In
contrast, the World Wide Web is a global collection of documents and
other resources linked by Hyperlinks and URLs .
A particular collection of web pages that belong to a specific URL
is called a website, e.g.,
www.facebook.com,www.google.com, www. gmail.com etc. In the
early 1990s, using a browser to view web pages and to move from one
page to another through hyperlinks came to be known as “web browsing,
‘or‘web suffering.”
The World Wide Web has evolved from simple file sharing
initiative to become a place where people go daily to share information,
transact business, conduct financial transactions and a host of other
activities.
From modest beginnings in the late 1980’s th e World Wide Web
has continued to evolve. Early uses of the web were from companies that
used the net as a place to have an electronic version of their business
offerings. These electronic brochures were handy since you now could
have access to information without having to physically go to the
business.
Over the years, the web started to have more practical uses.
Business started to use it as a place where they could interact with
potential customers and eventually conduct sales through the web.
Consumer s started to enjoy the convenience of shopping online as
opposed to going to retail locations. With the added convenience and not
having to have a physical storefront, e -commerce companies thrived
because they offer goods and services at lower price. There fore, e -
commerce is very much suitable to the large number of customers relate
to time consumption is possible and variety of goods and services are
easily available under one roof.
A few years back, social media and networking has become
popular. Sites c ontinue to come on the scene where people can interact
with each other either for personal or business purposes. Social media
sites such as Facebook, Twitter, LinkedIn, and others have enjoyed
tremendous popularity.
2.1.2 REASONS FOR BUILDING OWN WEBSITE
Now a days, running a business without a website is highly
impossible. It is almost a necessity to develop and manage own website
for business growth, expansion, modernization, development. For amunotes.in
Page 39
39business organisation, there are no. of reasons to build on e’s own
website.
1.A website Instantly Showcases Work or Talent: -Any type of
creativity can be displayed on a website. Your online portfolio can
include everything in one place, where it is your writing, artwork,
photograph, clothing, or any product. As a n artist, there are many perks
to a website, and you don’t have to be an internet expert to get started.
2.Your Employment Potential May Increase: -Prospective
employers often assess candidate by what is on their website. The quality
of your content and po rtfolio makes an impression that can get you hired.
Whether you are looking for work or would like to someday switch jobs,
think ahead, because building your own website may lead to
opportunities you never expected.
3.You Can Be an Instant Entrepreneur: -With the help of a Website,
you can effectively run a small business. Using your, website, you can
also:
Promote products and services to millions of people worldwide.
Impress prospects and clients with your knowledge.
Compete with large businesses in yo ur market.
Collect profits from the services you provide.
Communicate with customers, gauge their satisfaction, and help meet
their needs.
4.Knowledge Can Be Expanded: -Content is still an important aspect
of any website. Adding great content means you may write about
unfamiliar topics, which is effective for learning.
5.Reflects Creativity: -A website can reflect creativity of the
personnel of the firm. An innovatively designed website may make
people to appreciate the creativity and imagination of the web site
designer. Advertising agencies, consultants, and such other service
providers must design their websites in a creative manner to create a
good impression on the viewers or audience.
6.Promote Your Blog: -A website is the perfect medium for
integrating a blog. If the template supports frequent updates, blog entries
can be added directly. Having your own blog will also, improve writing
skills, have better listings on Google, help other people with your
knowledge, serve as a self -promotional tool, enable communication with
friends , family , and colleagues , help potential clients learn about
business , get your voice heard, which can influence change.
7.Corporate Image: -A business firm having its own websit ec a n
enhance its image in the minds of various stakeholders such as
shareholders, customers, employees, suppliers, dealers, and others. Formunotes.in
Page 40
40example, a company can provide information on its financial
performance on the website, and its plans, which may be useful to the
shareholders. Also, when a company provides instant information in
response to a query from the customers may enable a firm to develop a
good image in the minds of customer.
8.Convenience to Customers: -A Website provides convenience to the
customers for interacting with the firm also for transacting busines. For
example, in the case of air -travel or hotel booking, a customer can
directly book the air tickets or hotel room on the company’s Website or
through an agent online. The customers can save lot of time, effort and
even money in transacting business with the firm. A website may enable
a firm to generate customer loyalty.
A website also provides accessibility of information to the customers at
any time. An online site can be visited at a ny time of the day or night or
even on a holiday. People may prefer to visit the website for information
rather than going to the physical premises of the business firm for
information.
9.Tie-ups: -A website may enable a firm to get suitable tie -ups from
local or international firms. Based on website information, a firm seeking
at i e-up approach the website owner for a tie -up. It is up to the website
owner to accept or rejects such a proposal from the other firm.
Nowadays, in this competitive world, it may make sense to enter a tie -up
with another firm to remain competitive and for growth and expansion.
10.Competitive advantage: -A company may provide relevant
information about its products on the website with reference to price,
features, after sale service , warranty, and other relevant information. The
prospective customer compares this information with that of the
competitors and therefore, making a proper choice. Thus, a website
which provides relevant information enables a firm to face competition in
themarke
2.1.3 BENEFITS OF WEBSITE
In this digital age, a business firm cannot do without a website. A
business firms needs to develop, maintain, and manage one’s own
website, as there are several benefits or advantages.
1.Online Presence 24/7: -Having a w ebsite means customers are
always able to find business firm anytime, anywhere. Even outside of
business hours, the website continues to find and secure new customers.
It offers the user convenience as they can access the information they
need in the comfo rt of their own home, with no added pressure to buy.
Plus, as most companies nowadays have their own website.munotes.in
Page 41
412.Information Exchange: -A website provides a quick and easy way
of communicating information between buyers and sellers. A business
firm can list opening hours, contact information, show images of location
or products, and use contact forms to facilitate enquires from potential
customers or feedback from existing ones. Business firm can even upload
promotional videos to really engage the customers and sell the business
in an effective and most efficient way. This is also a good way to
promote social media channels and build up a community with the
customer.
3.Credibility: -In today’s modern world, there is an expectation for
any reputable company to have online presence. Potential customers
would likely be distrusting of any business that didn’t have a telephone
number or a physical address, and the same can be said for not having a
website and email address. Easy to use website makes cust omers feel
comfortable using the services, as customer will assume, they can expect
the same positive experience in all areas of business firm.
4.Market Expansion: -Business firm’s site is accessible to anyone all
over the world, e.g. (Myntra, Amazon, Snap deal, Shop clues, eBay), the
ability to break through geographical barriers has never been easier.
Anyone, from any country, will be able to find the company and as such,
is now a potential customer.
5.Advertising: -Tools like Google AdWords or advertising on
Facebook give the power to reach customers with much more accuracy
and reliability than with traditional offline advertising methods. SEO and
online advertising are a great way to help build up awareness, if it
correctly done traffic to business websit e can see an increase. Be the first
company that a potential new customer sees when searching for a
specific product or service online and use website’s contact page or e -
commerce features to make purchasing a product or finding a retail outlet
easier than ever before.
6.Organisational Objectives: -With the help of website, a business
firm can provide convenience to the customers, and therefore, the firm
gets a greater number of customers, which in turn helps the firm to
achieve its organisational objective s such as:
Increase in sales.
Increase in market share.
Increase in profits.
Growth and expansion of business, etc.
7.Benefits to Online Sellers: -There are several benefits of a website
to online sellers, which are as follows:
Global reach
Audience Sizing
Lower Investment
Lower Risks, etc.munotes.in
Page 42
428.Customer Reviews: -Website can provide a good learning
experience to the website owner. For example, a business firm may
request its customers to write a review of its products ‘or service
performance. The product reviews can a good learning experience to the
business firms, thereby, making product or service modification to satisfy
the customers.
9.Tie-ups: -A website may provide an opportunity to the business firm
for a tie -up with another firm. The tie -up may be in respect of R & D,
logistic, after -sale-service, etc. The website information may generate a
proposal to the business firm for a possible tie -up. The business firm may
either accepts or reject the same. If business firm accepts the proposal for
tie-up,it may enable the firm to grow and expand the business.
10.Links: -A website may get the business firm to get links to other
websites. Links are especially vital to viral marketing. When several sites
are linked to the website of the firm, the word about th e company gets
spread quickly throughout the globe. Therefore, it is advisable to develop
a website with good content. Others may recognise this vital content, and
therefore, they may link their website to the website of the business firm.
11.Cost Reduction: -Website can help to reduce certain costs. For
example, website enables a business firm to feature an electronic version
of product catalogue, with no limit on size. Because website space is
significantly less costly than a printed catalogue, one can eve n provide
additional product photos and descriptive text. Errors and typos can be
quickly corrected without ordering a full reprint of the catalogue, and
products can be added or removed as needed.
12.Growth opportunity: -Websites, in general, are great ways to in
providing a place that potential investors can be referred to. It shows
what the company is about, what it has achieved and what it can achieve
in the future.
NOTE TO STUDENTS: -From a business point of view -The
reasons for building own website are to attain benefits or advantages
of website. Therefore, the two topics –Reason to build own website
and benefits of website are more or less one and the same.
2.1.4 REGISTERING A DOMAIN NAME
Domain name is used to identify IP (Internet Protocol) address.
Domain name is used in URL to identify webpage. Domain name
provides an easy way to remember internet address which is translated
into its numeric address (IP address) by the domain name system (DNS).
It is the uni que address of a computer on the internet, which is
made up of three parts:
1) Name of the entity,
2) Type of the entity
3) Entity’s geographical location.munotes.in
Page 43
43For example: The domain name of Department of Electronics and
information Technology, Government of India: www.deity.gov.in
PROCEDURE FOR REGISTRATION OF A DOMAIN NAME
1.STEP 1: -Use the search function to verify that the Domain Name(s)
you did like is / are available.
2.STEP 2: -Select the Domain Name(s) you want to Regist er.
3.STEP 3: -Setup your Account Control Panel by entering a Username
and Password.
4.STEP 4: -Select the number of years you want to register.
5.STEP 5: -Enter information to register your ownership of the domain
name(s); click on “continue”.
6.STEP 6: -Review your contact information. If the same information
is to be used for the technical, Administrative and Billing Contacts,
nothing further needs to be done. However, if there is different person
to be listed as the technical, administrative and or Billing Contacts,
click on that title to enter their information. If these are not changed,
the registrant (owner)will be listed as all contacts. Click on “continue
“.
1.Domain Name: -The domain name or the web site name is the most
important step for the website. It should be easy and simple and should
be easy to type. The domain name ( www.deity ) along with the extension
(. gov.in) creates the URL. So, it is better that domain name can be easily
spelled by anyone and also can be easi ly typed in the search engine
browser.
2.Identify Registrar: -The registrar must be accredited by ICANN.
The internet corporation for Assigned Names and Numbers (ICANN) is a
non-profit organization that is responsible for coordinating the
maintenance and p rocedures of several databases related to the
namespaces of the internet, ensuring the network’s stable and secure
operation. There are various domain registrars in India such as
Big Rock
GoDaddy
Crazy Domains
Ip a g e
Zentlive
Hosting Raja, etc.
Some registrars do not charge for registration and they also do not
charge for monthly maintenance fee. There are others who charge for
registration about Rs.200 to Rs.600. They also charge monthly
maintenance fees which may range from Rs.69. Some charge d ifferent
rate for .in domain,.com domain, and .net domain.munotes.in
Page 44
443. Search for Domain Name on Registrar’s Website: -Once the
domain name registrar is short listed, the registrant needs to do a search
for the domain name on the registrar’s website.
4. Submission of information to Registrar: -The registrant needs to
submit the following information to the registrar: -
The desired domain name
The name and contact information (including email address, physical
address and contact phone number) for the dom ain registrant,
administrative and billing contacts.
The desired domain registration term/period.
5. Verification by the Registrar: -The domain name registrar verifies
the information submitted by the registrant. After verification, the
registrar will then initiate the domain name registration process. The
registrar sends the domain name request to the registry. The registrars are
responsible for processing the registration of the domain name, whereas,
a registry operator, sometimes called a network informat ion center
(NIC) maintains all administrative data of the domain and generates a
zone file which contains the addresses of the name servers for each
domain.
6. Submit an Authorization Letter: -In the case of.in. domain name
registration, the registrant must submit an authorization letter at the
earliest but not later than 30 days of completing the online registration.
The authorization letter must be sent to the GOV.IN Domain Registrar,
New Delhi. The authorization letter must be submitted to the following
address:
To,
GOV.IN Domain Registrar,
National Informatics Centre (NIC),
Ministry of Electronics and Information Technology
A-Block, CGO Complex,
Lodhi Road,
New Del hi:-110003
Fax: +91 -11-24368854
7. Registration of Domain Name: -The registry files the contact
information for the WHOS. The registry also adds the domain zone files
of the registrant to the master servers. These master servers tell other
servers on the internet where the registrant’s website is stored. The
domain name is registered and ready -to-use when all information has
been updated.
8. Payment to the registrar: -After registration, the registrant makes
the payment to the registrar. Digital payment is made either with
debit/credit card or any other digital mode of payment. The registrant is
also required to make payment of monthly fees to the registrar. As permunotes.in
Page 45
45
the present policy, ther e is no fee for the domain name registration under
GOV.IN.
NOTE: -Significance/Importance of Domain Name Registration -Refers
to benefits of website.
2.1.5 ROLE OF WEBSITE IN B2C E -COMMERCE
B2C e -commerce cannot operate without a website. The website is a
must for any business firm that sells online to the customers. The website
plays an important role to the online buyers as well as to the online
sellers.
In the B2C model, a consumer goes to the website, select a
catalogue, orders the catalogue, and an Emil is sent to the business
organization. After receiving the order, goods are dispatched to the
customers. Following are the key features of the B2C model -
Heavy advertisement required to attract the customers
High investment in terms of hardware/software.
Support or good customer care service.
Consumer Shopping Procedure
Following are the steps used in B2C e -commerce -
A Consumer –
Determines the requirement
Searches available items on the websi te meeting the requirement.
Compares similar items for price, delivery date or any other terms.
Places the order.
Pays the bill.
Receives the delivered item and review/inspect them.
Consults the vendor to get after service support or returns the product
if not satisfied with the delivered product.munotes.in
Page 46
46Disintermediation and Re -intermediation:
In traditional Commerce, there are intermediating agents like
wholesalers, distributors and reta ilers between the manufacturer and the
consumer. In B2C websites, a manufacturer can sell its products directly
to potential consumers. This process of removal of business layers
responsible for intermediary functions is called disintermediation.
Disintermediation
Nowadays, new electronic intermediary breeds such as
e-mail and product selection agents are emerging. This process of
shifting of business layers responsible for intermediary functions from
traditional to electronic medium is called re -intermediation.
PUSH AND PULL APPROACHES
Promotional strategy is to get our product or service to market can
be roughly divided into two separate camps.
1.PUSH STRATEGY: -A push promotional strategy involves taking
the product dir ectly to the customer via whatever means, ensuring the
customer is aware of the brand at the point of purchase.ManufacturerWholesalerDistributorRetailerConsumersManufacturer
Consumermunotes.in
Page 47
47“Taking the product to the customer”.
Examples of Push Approach: -
Trade show promotions to encourage retailer demand
Direct selling to customers in showrooms or face to face
Negotiation with retailers to stock the product
Efficiency supply chain allowing retailers an efficient supply
Packaging design to encourage purchase
Points of sale displays.
2.PULL STRATEGY: -A pull strategy involves motivating customers
to seek out the brand in an active process.
“Getting the customer to come to you.”
Example of Pull Approach: -
Advertising and mass media promotion
Word of mouth referrals
Customer relationship management
Sales Promotions and discounts
Pull and Push Promotional Strategies
Push strategies: -
Producer Intermediaries End User.
Pull strategies :-
Marketing Activit ies
Producer End users Intermediaries
PUSH STRATEGY/ APPROACH: -
The term ‘push strategy ‘ describe the work a manufacturer of a
product needs to perform to get the product to the customer.
This may involve setting up distribution channels and persuading
middle men and retailers to stock your product.
The push techniques can work particularly w ell for lower value items
such as fast -moving consumer goods (FMCG). When customers are
standing at the shelf ready to drop an item into their baskets and are
ready to make their decisions on the spot.
This term now broadly encompasses most direct promotio nal
techniques such as encouraging retailers to stock your product,
designing point of sale materials or even selling face to face.
New businesses often adopt a push strategy for their products in order
to generate exposure and a retail channel. Once the b rand has been
established, this can be integrated with a pull strategy.munotes.in
Page 48
48PULL STRATEGY / APPROACH: -
‘Pull strategy’ refers to the customer actively seeking out your
product and retailers placing orders for stock due to direct consumer
demand.
A pull strat egy requires a highly visible brand which can be developed
through mass media advertising or similar facts. If customers want a
product, the retailers will stock it -supply and demand in its present form,
and this is the basis of a pull strategy. Create the demand and the supply
channels will almost look after themselves.
A successful strategy will usually have elements of both the push and
pull promotion methods. If we want to starting a new business and intend
to sell a product through retailers, we will almost certainly need to
persuade outlets to purchase and stock our product.
We will also need to raise brand awareness and start building valuable
word of mouth referrals. If we have designed a product around the
customer and have considered all elements of the marketing mix, both of
these aspects should be achievable.
2.1.6 PRINCIPLES OF WEBSITE DESIGN: -
Usability and the utility determine the success or failure of a
website. Content is more important than the design which supports it.
While the look and feel of the website is important, most visitors are
more concerned to find certain information which they consider
important. Therefore, the website must be user -centric.
The following are some of the guidelines or Principles of website
designing.
1.Simple is the Best: -The Over -Designed website may not work.
Putting too many elements on the page may lead to distracting visitors
from the main purpose of the website. Simplicity always works in an
effective web page design. Clean and fresh design of website not only
makes the website appealing but also help the user to navigate from one
page to another seamlessly. Loading a website having design features
that do not serve the purpose may be frustrating. Keep website design as
simple as poss ible so that the visitors can feel it easy -to-use and can find
their ways easily.
2.Consistency: -Consistency in website design matter a lot. Give
attention to match design elements throughout each of the pages. It can
be understood that your fonts, sizes, headings, sub -headings, and button
styles must be the same throughout the website. Plan everything in
advance. Finalize the fonts and the right colours for your texts, buttons,
etc, and stick to them throughout the development. CSS (Cascading Stylemunotes.in
Page 49
49Sheet) would come in handy to keep the complete information about
design styles and elements.
3.Typography: -Text is the more important element of website
design. There certain factors need to be considered while designing
website:
Font selection: -Different type s of fonts say different things about
a design. Some look modern such as Times Roman or Georgia, some
look retro such as Monotype Corsiva or MS Mincho. At times, Italic and
Bold Variations of the font may be used. Make sure you are using the
right font for your website.
Font Sizes: -Make sure Your text sizes are consistent, large enough
to be read. The font size should not be less than 12 size for easy reading.
Larger font sizes (18 font size or so) may be used for headings, and for
copy text (12 to 14 fon t size will do). A common recommendation is to
use a maximum of three different typefaces in a maximum of three
different sizes.
Spacing: -Spacing between lines and away from other objects is
important to consider. Blank or white space is required between
elements.
Line Length: -Generally, your lines of text shouldn’t be too long.
The longer they are, the difficult they are to read. Small colum ns of text
are much better.
Colour: -There is a need to have proper colour contrast. The
colours that you use on the website must match with the type of your
product, and also the colour which your target audience may like.
Educated and upper income group audience may prefer lighter shades of
blue, green and so on.
Paragraphing: -Preferably justify the text to have a balanced look.
At times, one may adopt only left -aligned justification.
4.Mobile Compatibility: -Keeping in mind the ever -growing usage
of sm art phones, tablets, and phablets, web design must be effective for
various screens. If your website design doesn’t support all screen sizes,
the chance is that you will lose the battle to your competitors. There are a
number of web design studios or servi ce points from where you can turn
your desktop design into a responsive and adaptive one for all screen
sizes.
5.Colour Palette and Imagery: -A perfect colour combination
attracts users while a poor combination can lead to distraction. This
necessitates you to pick a perfect colour palette for your website which
can create a pleasing atmosphere, thus leaving a good impact on visitors.
Enhance user’s experience by selecting a complementary colour palette
to give a balanced -look to your website design. Remembe r to use white
spaces as they avoid your website from visual clutter and mess. Also,
avoid using too many colours. 3 or 4 tones for the whole website aremunotes.in
Page 50
50ample to give an appealing and colour design. The same is the case with
images. Don’t use multiple vib rant images.
6.Easy Loading: -No one likes the website that takes too much time
to load. So, take care of it by optimizing image sizes, combing code into
a central CSS or JavaScript file as it reduces HTTP requests. Also,
compress HTML, JavaScript, and CSS for enhanced loading speed.
7.Easy Navigation: -Study shows that visitors stay more time on the
websites having easy navigation. For effective navigation, you may
consider creating a logical page hierarchy, using bread scrums, and
designing clickable button s. You should follow the “three -click-rule”
So that visitors can get the required information within three clicks.
8.Communication: -The ultimate purpose of the visitors is to get
information, and if your website is able to communicate your visitors
efficie ntly, most probably they would spend more time on your website.
Tricks that may work to establish effortless communication with the
visitors are -organizing information by making good use of headlines and
sub-headlines, cutting the waffle, and using bullet points, rather than long
complicated sentences.
2.2 CONCEPT OF ELECTRONIC DATA
INTERCHANGE (EDI)
Electronic Data Interchange (EDI) is the computer -to-computer
exchange of business documents in a standard electronic format between
business partners.
By moving from a paper -based exchange of business document to
one that is electronic, businesses enjoy major benefits such as reduced
cost, increased processing speed, reduced errors and improved
relationship with business partners.
Computer -to-Computer: -
Computer -to-computer EDI replaces postal mail, fax and email.
While email is also an electronic approach, the documents exchanged via
email must still be handled by people rather than computers. Having
people involved slows down the processing of the d ocuments also
introduce errors. Instead, EDI documents can flow straight through to the
appropriate application on the receiver’s computer and processing can
begin immediately. A typical manual process looks like this, with lots of
paper and people involve ment:munotes.in
Page 51
51
The EDI process looks like this –no paper, no people involved:
Business Documents: -
These are any of the documents that are typically exchanged
between businesses. The most common documents exchanged via EDI
are purchase orders, invoices and advance ship notices. But there are
many, many others such as bill of lading, customs documents, i nventory
documents, shipping status documents and payment documents.
Standard Format: -
Because EDI documents must be processed by computers rather
than humans, a standard format must be used so that the computer will be
able to read and understand the d ocuments. A standard format describes
what each piece of information is and in what format. Without a standard
format, each company would send documents using its company -specific
format and, much as an English -speaking person probably doesn’t
understand J apanese, the receiver’s computer system doesn’t understand
the company -specific format of the sender’s format.
There are several EDI standards in use Today,
Including ANSI, EDIFACT, TRADACOMS and ebXML .and for
each standard there are many different versi ons. E.g. ANSI 5010 or
EDIFACT version D12, Release A. When two businesses decide to
exchange EDI documents, they must agree on the specific EDI standard
and version.
Businesses typically use an EDI translator -either as in -house software
or via an EDI ser vice provider to translate the EDI format so the data can
be used by their internal applications and thus enable straight through
processing documents.Buyer GeneratesPurchase OrderSupplier EntersOrder into
Internal System
and prints an
Invoice
Buyersinternal
System
munotes.in
Page 52
52Business Partners: -
The exchange of EDI document is typically between
two different Companies, referr ed to as business partners or trading
partners. For example, Company A may buy goods from Company B.
Company A sends orders to Company Company A and Company B are
business partners
2.2.1 PROS AND CONS OF EDI (ADVANTAGES AND
DISADVANTAGE OF EDI)
It is quite easy to see how the technology we use today has vastly
improved the processes of many industries. For one, Technology
improves the workforce by introducing something known as Electronic
Data Interchange, or ED I. According to the national Institute of
Standards and Technology, EDI is “the computer -to-computer
interchange of strictly formatted messages that represent documents other
than monetary instruments.”
The NIST states that EDI could also refer to “a seq uence of
messages between two parties, either of whom may serve as originator or
recipient. The formatted data representing the documents may be
transmitted from originator to recipient via telecommunications or
physically transported on electronic storage media.”
This Fence core process, then, involves using machines to perform what
would have traditionally been a human task.
EDI ADVANTAGES
It should not come as much of a surprise that there are many
advantages to using EDI in your business.
Cost effe ctive: -Cutting paper waste and all paper processing
quickly reduce paper costs.
Efficiency: -cloud -computing and machine learning eliminates
computational repetition, redundancies, and errors that would be
more common among humans.munotes.in
Page 53
53Speed: -The electron ic transfer of data ensures more consistency
and accuracy without sacrificing pace.
Accuracy: -By using cloud computing technology, you are able to
transfer documents faster than would have otherwise been possible.
Service: -Faster processing means bette r customer service, over all,
in turn, helping you to expand your customer base.
EDI DISADVANTAGES: -
As with all things, wherever there are advantages there might also
be disadvantages. So, with that, here are some ways that EDI might not
serve your business; which means you should consider a different way to
network and incorporate information technology.
EDI uses multiple standards which can often limit have too many
rigorous standards bodies with too many document formats which
can malfunction in the face of cross -compatibility issues, which you
will definitely encounter as you continue to apply more standards.
EDI has a higher price point, which can be a little pricey for new
business owners.
Large Companies might actually find that EDI can limit the types of
partnership you can develop with.
2.2.2 RELATED NEW TECHNOLOGIES USE IN E -COMMERCE
Most people are now familiar with the term e -commerce because
of the emerging online retail stores like eBay, Flipkart, Amazon, and
many more. E -commerce stands for electronic commerce which involves
the commercial transaction across the internet. A vendor can sell his or
her product by displaying the pictures and the consumers can buy
through online payment. This is the basic definition but with time the
technology needs to evolve so as to maintain the consumer’s interest as
well as to exist in the competitive world. Following are th e latest e -
commerce technologies that will be used in future and some of them has
started as well currently only at limited geographical location.
1.Storefront Digitizing: -
Now to maintain people’s interest something very innovative
could be adopted. In order to make an impact even more to customers,
firms like eBay, Walmart, Delta Airlines, have all started the Storefront
Digitizing. They use the memory mirror technology.
It is nothing but a virtual mirror where a customer sees him/herself and
visualize how they would look by a particular outfit. They don’t have to
literally wear it. The mirror is able to store their information, their likes
and dislikes, and accordingly can interact with them later if a particular
item arrives, say of particular size an d colour. This technology is going to
offer reduction in return to a greater extent.munotes.in
Page 54
54
2.Chatbot :-
While Chatbots were in existence since 1966 but the technology
has evolved to much smarter and better In terms of processing speeds and
giving response to contextual awareness, all credits go to machines
learning and big data technology. The enables the human interaction only
when extremely necessary. The bot acts more like a friend than someone
who is into this busin ess talking very formally. The navigational
experience is less text -based but more conversion -based in order to find
any information.
3.Beacon Technology: -
This technology is a kind of application which enables different
devices connect with each other via Bluetooth Low Energy -that acts
some as the classic Bluetooth but extends do not more than 50 meters,
and doesn’t need high battery power either. What the Beacon technology
do is sending the current deals and of fers, or anything related to product’s
promotion, right at the moment the consumer enters the ‘zone ‘. But
before that, the device needs to be connected with each other, that we call
‘beacons’ post connectivity. This technology originally belonged to
Nokia in 2006 but now marketed by Bluetooth Special Interest Group.
The Apple’s iBecon is capable to connect with iPhone as well as Android
Phones.munotes.in
Page 55
554.Direct Social Media Purchase: -
Social media websites like Facebook, Pinterest, Instagram and
Twitter are already into this move and successfully covering the sales
over 60 percent. The customers can now click the ‘Buy now’ button
directly from the site’s page and proceed for online paym ent.
5.Voice Assistants: -
It is a voice -activated, convenient and efficient technology which
is based on the loT (Internet of Things.). It listens to the user’s voice
commands and is capable to perform tasks like purchases, searches, help,
etc. It can tur n off the light while performing the commanded tasks
together, so that the energy could be saved. The prime examples are
Amazon’s Echo Alex and China’s WeChat. WeChat can buy movie
tickets, book a taxi, takeout an order, and so on.
6.Self-Check Out Technology : -
In December 2016, Amazon introduced a new self -checkout
technology. If it works as advertised –could totally transform the retail
sector. Called “ Amazon Go “, the technology literally allows people to
walk into a store, select items they want to Purchase, and walk out.
There’s no checkout process at all.
Amazon is opening1,800 -square -foot convenience store in
Seattle(USA) to test out the technolog y. It’s being beta tested now, and
amazon says it will be open to the general public early 2017. If its
sucessful,we can assume the technology will find its way into other
retailers. Self -check -out technology operates like the shopping -cart
approach of Ama zon’s website. Customers supply their payment
information before they set foot in the store.Then there is a series of
cameras and sensors that literally follow the customer’s every step as
he/she walks around the store. If he/she takes an item off a shelf,
Amazon’s software find out what the item is and immediately adds it to
the customer’s bill. If he/she puts the item back, the Amazon’s softwear
delets the charge.
When the customer is ready to leave the store, there is no need for
a checkout process. Am azon already knows the value of what themunotes.in
Page 56
56customer has selected and has his/her payment information, so it can
make the appropriate charge automatically through e -wallets or
registered debit/credit cards.
7.Drive -in Grocery Store : -
It is a typical c onvenience store started in USA in November 2016.
The store functions around a drive -in concept, which features a large
titled awning. Customer who come at such stores will not browse the
aisles.The customer will order their goods online in advance, and th en
stay in their car while their groceries are brought out to them. This is a
combination of online ordering coupled with drive -in delivery of goods.
Cutomer can save a lot of time in this tyoe of shopping.
8.Drone Technology for delivery : -
Dron e Technology can now be used for delivery of packages to
customers at their doorstep within a short time of ordering. The growing
popularity and availability of drone delivery is expected to be one of the
most innovative technologies in the retail industry over the next decade.
On December 1,2013,Amazon.com CEOJeff Bezos revealed plans
for Amazon Prime Air.Amazon Prime Airto use Miniature Unmanned
Air Vehicle ( Miniature UAV),otherwise known as drone technology to
autonomously fly individual packa ges to customer’s doorsteps within 30
minutes of ordering .
To qualify for 30 minute delivery, the order must be less than 5
pounds(2.26kg),must be small enough to fit in to the cargo box that the
craft will carry, and must have a delivery loca tion within a 10 -mile radius
of a particpating Amazon order fullfillment center. 86% of packages sold
by Amazon fit the weight qualification o the program,
On December 7,2016, Amazon sucessfully delivered a Prime Air
Psrcel to an actual customer in the Cambridge area of England,U.K. They
havel also built a Prime Air fulfillment center in the Cambridge area
which will soon be opened to several custom ers in the future.
9.Augmented Reality Technology : -
Retailers have implemented the use of augmented reality to
increase online sales.In -home augmented or virual reality technologymunotes.in
Page 57
57comes in the form of headsets or goggles that create an iteractive, 3 -D
shopping experience for the user. It provides retailers an in -home
extension of their physical stores and can potentially increase sales with
simplistic user experience and built -in up -selling features.
Goggles tecnologies or virtual reality headsets are growing in
popularity due to their multi -use properties in terms of retail marketing.
With goggles, shoppers can look into their mirror at home and
transform it into an interactive dre ssing room. The goggles can then help
the shopper choose correct clothing sizes with a virtual view of how the
garments will fit as well as suggest matching accessories. By utilizing
this technology to accurately choose garment sizes, the percentage of
online return shipments may also decrease.
10.Advanced Real Time Analytics : -
Generally, analystics were used at the end of the month,where the
company management would try to find out what aspects of the site were
affecting business.
However, since 2016, there is growing focus on advanced real time
analytics, so as to find out how customers react while on the site, an
online company may make improvements in the site so as to obtain
favourable customer buying decisions on the spot.
2.3 APPLICATION OF E -COMMERCE AND E -
ENTERPRISE
2.3.1 CONCEPT OF E -ENTERPRISE
The internet revolutionized every facet of modern living, from
entertainment to communication. Similarly,e -business enterprise changed
the way companies operate and interact with consumers and clients.
An e -business is a company operati ng via the internet. This
business can have off -line counterparts, or be a stand -alone enterprise
consisiting entirely of Internet operations.munotes.in
Page 58
58E-business enterprise can fill a number of roles, from the buying
and selling of goods to providing vari ous services.In addition, e -business
enterprise can also provie customers service and support for real -world
firms, and collaborate with business partners.
2.3.2 APPLOCATION OF E -COMMERCE AND E -ENTERPRISE
E-commerce is a trnsaction of buying or selling online. Electronics
commerce draws on technology such as mobile commerce, electronic
funds transfer, supply chain management, internet marketing, online
transaction processing, electronic data inter change (EDI), inventory
management systems, and automated data collection systems. Modern
electronic commerce typically uses the World Wide Web for at least one
part of the transaction’s life cycle althrough it may also use other
thchnologies such as e -mail.
The application of E -commerce are used in various business areas
such as retail and wholesale and manufacturing. The most common E -
commerce applications are as follows :
1.Online marketing and purchasing : -Data collection about customer
behaviour , preferences, needs and buying patterns is possible through
Web and E -commerce. This helps marketing activities such as price
fixation, negotiation, product feature enhancement and relationship with
the customer.
2.Retail and Wholesale : -E-Commerce has a number of applications
in retail and wholesale. E -retailing or on -line retailing is the selling of
goods from Business -to-Consumer through electronic catalog and
shopping cart model. Cybermall is a single Website tha t offers different
products and services at one Interent location. It attracts the customer and
the seller into one virtual space through a Web browser.
3.Finance : -Financial companies are using E -commerce to a large
extent. Customer can check the balances of their savings and loan
account, transfer money to their other account and pay their bill through
on-line banking or E -banking. Another application of E -commercer is on
-line stock trading. Many Websites provide access to news, charts,
information about company profile and analyst rating on the stocks.
4.Manufacturing : -E-commerce is also used in the supply chain
operation of a company. Some companies form an electronic exchange
by providing together buy and sell goods, trade market information and
run b ack office information such as inventory control. This speeds up the
flow of raw material and finished goods among the members of the
business community. Various issues related to the strategic and
competitive issues limit the implementation of the busines s models.
Companies may not trust their competitors and may fear that they will
loss trade secrets if they participate in mass electronic exchanges.munotes.in
Page 59
595.Auctions : -Customer -to-Customer E -commerce is direct selling of
goods and services among customers. It als o includes electronic auctions
that involove bidding.Bidding is a special type of auction that allows
prospective buyers to bid for an item. For example. Airline companies
give the customer an apportinity to quote the price for a seat on a specific
route o n the specified date and time.
6.E-banking : -Online banking or E -banking is an electronic payment
system that enables customer of a financial institution to conduct
financial transactions on a website operated by the institution, online
banking is also re ferred as internet banking, e -banking, virtual banking
and by other terms.
7.Online Publishing : -Electronc publishing ( also referred to as e -
publishing or digital publishing) includes the digital publication of e -
books, digital magazines, and the development of digital libraries and
catalogs.
8.Online Booking( ticket,seat etc ): -AnInternet Bookin (IBE) is an
application which helps the travel and tourism industry support
reservation through the internet. It helps consumers to book flights,
hotels, holiday packages, insurance and other services online.This is a
much needed applicatio n for the aviation industry as it has become one of
the fastest growing sales channels.
9.Distribution : -E-commerce has grown in importance as companies
have adopted pure -click and brick -and-click distribution ch annel
systems. The pure -click and brick -and-click channel system adopted by
companies are stated as follows : -munotes.in
Page 60
60Pure-click companies launch a website without any previous
existence as a firm.
Brick -and-click companies are exisiting ones that have later adde d
an online site for e -commerce.
Click -to-brick are online retailers that later open physical locations
to supplement their online efforts.
Nowadays, modern technologies are used for delivery of e -
commerce products such as drone technology,droid technology.
10.Inventory Management : -E-business facilitates inventory
management. Should inventory reach a specific threshold, a company’s
inventory management system can be programmed to tell managers to
recor der that product. This helps companies avoid running out of
products or blocking too much capital in inventory.
For instance, Inventory management software is a computer -based
system for tracking inventory levels, orders, sales and deliveries. It can
also be used in the manufacturing industry to work order, bill of materials
and other production -related documents.
Companies use inventory management software to avoid product
overstock and outages. It is a tool for organizing inventory data that
before wa s generally stored in hard -copy form or in spreadsheets.
11.Electronic Data Interchange : -Electronic data Interchange (EDI) is
the computer -to-computer exchange of business documents between
companies. EDI replaces the fixing and mailing of paper documents. EDI
documents use specific computer record formats that are based on widely
accepted standards.
EDI is the electronic data interchange using a standard format, a process
with allows one company to send information to another company
electronically rather than with paper.
Many documents can be exchanged using EDI, such as purchase orders,
invoices, and shipping documents. For instance,EDI is widely used by
large online retailers when trading with their suppliers, and also by
automobiles companies when tra ding with suppliers for bulk supply of
parts.
12.E-Research and E -Commerce : -Electronic Commerce Research and
Application aims to create and disseminate enduring knowledge for the
fast-changing e-commerce environment.
An online seller may also obtain prod uct feedback and product
reviews from customers, which would enable the e -seller to improve the
product offerings in terms of product design, pricing, promotion, and
distribution strategies.munotes.in
Page 61
612.3.3 APPLICATIONS TO E -CRM
The concept of relationship marketin g(RM)was established by
marketing professor Leonard Berry in 1983. Later this concept was
developed into CRM. Philip Kotler states that CRM refers to managing
detailed information about individual customers and all customer touch
points to maximise cutomer loyalty.
TheeCRM or electronic customer relationship management
encompasses all the CRM functions with the use of the net environment
i.e, intranet,extranet and internet. Electronic CRM concerns all forms of
managing relationship with customers making use of information
technology(IT).
eCRM is enterprises using IT to integrate internal organization
resources and external “marketing”strategies to understand and fullfill
the customer’s needs. Comparing with traditional CRM, the integrated
information fo r eCRM intra -organizational collaboration can be more
efficient to communicate with customers.
eCRM can be defined as activities to manage customer
relationships by using the internet,web browsers or other electronic touch
points.The challenge hereby i s to offer communication and information
on the right topic, in the right amount,and at the right time that fits the
customer’s specific needs.
As the internet is becoming more and more important in business
life, many companies consider it as an apportu nity to reduce customer -
service costs and improve customer relationships. ECRM is being
adopted by companies because it increases customer loyalty and
customer retention by improving customer satisfaction.
E-loyalty results in long -term profits for onlin e retailers because
they incur less costs of recurring new customers, plus they have an
increase in customer retention. Together with the creation of sales force
automation(SFA), where electronic methods were used to gather data and
analyze customer inform ation, the trend of the upcoming internet can be
seen as the foundation of what we know as eCRM today.
The main difference between CRM and e -CRM is that the first
does not acknowledge the use of technology the use of technology, where
the latter uses inf ormation (IT) in implementing relationship management
strategies.
E-COMMERCE APPLICATIONS TO CRM
Electronic customer relationships management(E -CRM) is the
application of the Internet -based technologies such as emails, websites,
chat rooms, forums and ot her channels to achieve CRM objectives. It is
well-strutured and coordinated process of CRM that automates the
processes in marketing,sales and customer service.munotes.in
Page 62
62An effective E -CRM increases the efficiency of the processes as
well as improves the interact ions with customers and enbles businesses to
customize products and serices that meet the customer’s individual
needs.
1.Sales Force Automation : -Sales Force Automation (SFA)solutions
are aimed to streamline sales process phases, minimizing manual data
entry and adminidtration time for the sales representatives -leading to
more number of potential customers being attended in shorter time spans.
TheSFA solutions are centered on a robust and easy to use Sales Contact
Mangement and Tracking System(SCMTS)for tracking and managing
every stage in the sales process for each potential customer, from first
call to final disposition.
Additional management f unctionalities like Opportunity Management,
sales Area Management, Pipeline Mangement, Quote Generator, and
Product Knowledgebase Management are also handled.
2.Marketing Automation Solutions : -Marketing Automation
Solutions are aimed to help the organizat ion’s marketing policy makers
to identify and target the right segment of customers and generate
prospective leads for the sales force.
The functional modules are built to provide easy -to-use interfaces for
managing and measuring multi -channel marketing c ampaigns, including
email, search, social media, and direct mail.
The imapct measuring metrics monitored include clicks, responses, leads,
deals and revenue. The system also includes tools for creating internal
marketing resources and knowledgebase sharin g, managing customer
lists and trend prediction tools.
3.Customer Service and Support (CSS) Systems : -The CSS
systems are aimed towards improving customer’s experience. These
systems also maintain a logical and collaborative environment to provide
24*7 cus tomer service and technical support at a low cost.
The functional modules of these solutions encompass ticket based
support( a computer software package that manages and maintains lists
of issues, as needed by an organization)system, live chats,
knowledgeb ase mangement, email response management and media -rich
help workshops.
The customer service and support applicaions include customer
care,incident,defect and order tracking,field service,problem and solution
database,repair scheduling and dispatching, se rvice agreements and
contracts, and service request managemen.munotes.in
Page 63
634.Integrated Solutions : -These systems combine the power of all the
above three mentioned systems and provide an integrated CRM
solutions. An elaborate user and roles management system facilita tes
inter-department and intra -department collaboration in this integrated
environment. This along with document and resource sharing, workflow
automation and performance analysis tools helps all the personnel
involved in customer centric activities work i n an integrated collaborative
environment and reduce time overheads at lower costs.
5.Sales Applications : -Common applications include calendar and
scheduling contact and account manage ments, compensation, opportunity
and pipeline management, pricing, territory assignment and management,
and expense reporting.
6.Field Service Automation : -With field service autoamtion software,
organizations can eliminate redundancy, digitize the collect ion and
utilization of task -related inforamtion, and help dispatchers assign and
schedule appointments quickly. With field service software,
organizations can achieve. Shorter resolutions times . Lower cost
operations.
7.Personalised Web Pages : -PWP can record customer purchases and
perferences. Typical personalized Web pages include those for bank
accounts, stock portfolio accounts, credit card accounts. On such sites,
users can see their balances, records of all current and historical
transactio ns. American Airlines is an example of one company that uses
personalized Web sites to help increases its profits. Amercian
Airlines(aa.com)began offering personalized Web sites as far back as
1998. At the time,it was one of the most innovative sites, gene rating
PWP for more than 1million registered, travel palnning customers.
8.Web Self Service : -Web Self -service is a type of electronic
support(e -support)that allows customers and employees to access
inforation and perform routine tasks over the internet, w ithout requiring
any interaction with a representative of an enterprise. Web self service is
widely used in customer relationship management (CRM) and employee
relationship management(ERM). For employees and customers, self
service offers 24 hrs -a-day supp ort, and immediate access to information
without having to wait for an email response or a returned telephone
call.The success of Web self -service depends upon the quality and
quantity of information available and the ease with which it can be
accessed. De ploying Web self -service applicaions benefits a company in
a variety of ways. The most prominent motivation is the lower cost, as
compared with telephone or email delivered by a company
representative.munotes.in
Page 64
642.3.4 TYPES OF E -CRM
Patricia Seybold Group classi fied E -CRM into four groups:
1.Customer -Facing Applications : -The key, customer -facing CRM
applications are contact center, sales force automation , and field service.
We call these” customer facing “ because your sales, field service and
contact center rep resentatives actually interact with your customers.
Customer -facing CRM applications support those staff members.
Customer -facing applications have been around for many years. You
probably had sales force and field service automation applications before
you even thought about CRM, maybe you even built them before
commerical products were available. Those products that do implement
these applications also predate CRM, but have now bee n repositioned to
take advantage of the CRM trend. For Example, many of the products
that implement teleservice were developed as help desk products, dating
back to the late 1980’s. SFA application, originally known as contact
management applications, have been around even longer.
Because the implementation of these applications predates CRM, they
may need to be upgraded to reflects a customer focus. These upgrades
should give them that single and consistent view of your customers and
your company and inte grate them with the business processes that
support their marketing, sales and service functions.
Touchpoints
Business Processes
Applications
Customer DataCustomer SystemsDirect salesContact CenterWebE-mailPOSContactCenterContactCenterContactCenterCRM ApplicationsBack Office ApplicationsSupplier ApplicationsCustomer Datamunotes.in
Page 65
652.Customer -Touching Applications : -The Key customer -touching CRM
applications are campaign management, ecommerce, and self -service
customer support. We say “ customer touching “ because your customers
interact directly with the applications rather than thro ugh a company
representative. Customer -touching applications are relatively new -
certainly much never than customer -facing applications. Most date from
the mid to late 1990’s. It not inconceivable that your company has not
implemented any or all of these ap plications. Campaign management was
the first attempt to automate the marketing business process,allowing
companies to deliver offers to more markets more cost efficiently.
a)Personalized Web Pages (PWP): -With the help of PWP,companies
can efficiently del iver customized information, such as product
information and warranty inforamtion,when the customer logs on to the
personalized page. Not only can a cutomer pull information form the
vendor’s site, but the vendor can also push information to the customer.
PWP can record customer purchases and preferences. Typical
personalized Web pages include those for bank accounts,stock portfolio
accounts,credit card accounts and so on. On such sites users can see their
balances,records of all current and historical tr ansactions.
American Airlines is an example of one company that uses personalised
Web sites to help increase its profits. American airlines (aa.com)began
offering personalized Web sites as far back as 1998. At the time, it was
one of the most innovative s ites,generating PWP for more than 1million
registered,travel planning customers.
b)Web Self -Service (WSS): -The Web environment provides an
apportunity for customers to serve themselves. WSS provides tools for
users to execute activities previously done by corporate customer service
cell.
Most frequently used WSS systems are the package tracking
systems provided by FedEx and UPS. In the past, if FedEx or UPS
customers wanted to know the whereabouts of a package, that had to call
a representative, give the information about their shipment and wait for
an answer. Today,customers go to fedex.com or ups.com,insert their
tracking numbers,and view the status of their packages. The benefits of
web self -service for customers are quick response time, consistent and
sometimes more accurate replies or data, the possibility of getting more
details, and more satisfication. The benefits for organizations are lower
expenses of providing service, the ability to scale service without adding
more staff, strengthening business partnerships, and improved quality of
service. It is not easy to implement large -scale self -service systems. They
require a complex blend of work processes and technology. Also, only
well-defined and repeatable procedures are well -suited for such systems.munotes.in
Page 66
66Of the various self -service tools available, three are of special
interest: Self -tracking, FAQs, and self -configuration.
Self-tracking systems : -like that of FedEx, where customers can
find the status of an order or service in almost real time. Most large
delivery services provide such services as to direct marketers such
as Dell, Amazon.com, and staples. Some auto manufacturers (such
as Ford )allow customers to track the progress of the production of a
customized car. Some employers,universities, and public agencies
enable job applicants to track the status of their job applications.
FAQ ( Frequently Asked Questions ): -Most Web sites provide a
FAQs page. A FAQs page lists questions that are frequently asked
by customers along with the answers to those questons. FAQ page
enable customers to easily find answers to their questions, thereby,
saving time and effort for both the Web site owner and the
customer. The FAQ’s page also provides an apportunity to easily
ask a question not on the FAQ’s page.
Self-Congiguration and Customization : -Customers can be satisfied
by providing customised products. This is especially true for
complex products with many options.This is why many build -to-
order vendors, from Dell to Mattel, provide customers with tools t o
self-configure products or services.
3.Customer Centric Intelligence Applications (CCIA): -CCIA are
synonymous with CRM analytic techniquesc and business
intelligence such as data mining and online analytic processing.
CCIA aalyze the results of operationa l processing and use the
results of the analysis to improve CRM applications. Reporting, data
warehousing, and data mining are the main elements of CCIA.
Analytics Tools the main tools used in CRM analytics include
reporting, online analytical processing (OLAP), data mining, and
Web analytics. The following discussion covers the first three tools:
a)Reporting : -Reports can range from simple lists or charts of data
and information to more complex analyses of CRM performance
metrics.
Reports come in one or tw o forms:
Standardized reports : -are generated from predefined templates and
provide little in the way of customization outside of reformatting.
Query -based reports : -provide the end users with a set of tools for a
constructing the query against which the report is run.
b)Data Warehousing : -Medium and large corportations often organize
and store data in a central repositry called a data warehouse. A data
warehouse has a specialized structure that makes it easy to view and
analyze measures from a variety of d imensional prespectives ( Such
as comparing sales data for different products sold at different stores
at different times ).munotes.in
Page 67
67The technologies used to view and analyze the data in a data
warehouse are called online. Analytical Processing (OLAP). OLAP
tools enable the end user to “slice and dice”the measures by various
dimensions (such as products,locations,customers,and time) and
“drill down”to more detailed information and “drill up” ino
aggregated or summary information.
c)Data Mining : -Data mining is ano ther analytic activity that involves
sifting through an immense amount of data to discover hidden
patterns. The process of discovery can involve:
Classification: -assigining cases into predetermined categories based
on a predictable attributes.
Clustring : -identifying natural groupings of cases based on a set of
attributes.
Association : -Searching for relationships between variables.
Regression : -Determining a statistical function that models the data.
Miscrosoft is one of a number of companies that pro vides data
mining capabilities. It has identified a number of arens where data
mining and other sophisticated analytical procedures are applied to
customer data:
Market Basket Analysis : -Discover which items tend to be bought
together to create recommenda tions on -the-fly and to determine
how product placement can directly contribute to your bottom line.
Churn Analysis : -Anticipate customers who may be considering
canceling their service and identify benefits that will keep them
from leaving.
Market Analysis : -Define market segments by automatically
grouping similar customers together. Use these segments to seek
profitable customers.
Forecasting : -Predict sales and inventory amounts and learn how
they are interrelated to foresee bottlenecks and impr ove
performance.
Data Exploration : -Analyze profitability across customer, or
compare customers who prefer different brands of the same product
to discover new apportunities.
Unsurprised Learning : -Identify previously unknown relationships
between variou s elements of your business to better inform your
decisions.
Website Analysis : -Understand how people use your Web site &
group similar usage patterns to offer a better experience.
Campaign Analysis : -Spend marketing dollars more effectively by
trageting the customers most likely to respond to a promotion.munotes.in
Page 68
68Text Analysis : -Analyze feedback to find common themes and
trends that concern your customers or employees , informing
decisions with unstructured input.
CRM analytics lead not only to better and more productive customer
relations in terms of sales and service but also to improvement in
promotion planning and analysis, marketing strategies, and supply
chain management and thus,lower costs and more competitive
pricing.
4.Online Networking Applications : -
Online networking refers to methods that provide the apportunity to
build personal relationships with a wide range of people.Online
networking and other applications support communications and
collaboration among customers, business parterns and company
employees.
Represntatives online networking tools and methods include the
following:
a)Forums : -Available from internet portals, forums offer users the
opportunity to participate in discussions as well as to lead forums
on”niche”topics.
b)Chat Rooms : -Foun d on a variety of Web sites , they offer one -to-
one or many -to-many real -time conversations.
c)Usenet Groups : -These are collections of online discussions
grouped into communities. Usenet groups existed well before the
advent of the Web.
d)Blogs and Wiki s:-Blogs and wikis are becoming a major online
networking tool. Blogs enable companies to approach focused
segments of customers. Many B2C and B2B sites sponsor blogs for
their customers. By monitoring the discussion on a blog, companies
can gain insight into factors such as customer satisfication.
e)E-mail Newsletters : -These newsletters usually offer the
opportunity for readers to write in, particularly in”let us hear from
you”sections. Because of the current bulk of e -mail advertising and
marketing, cus tomers may initially be distrustful of e -mail
marketing. Therefore,newsletter articles, commentry, special offers,
tips, quots and other pieces of information e -mailed to people must
be presented in a professional on e -mail newsletters are list -
universe.co m and new -list.com.
f)Discussion Lists : -A discussion list is a distribution tool through
which an e -mail is sent to one address and then is automatically
forwarded to all the people who subscribe to the list.
The three main reasons a company may use such l ists are:
To learn more about custmoers in a particular industry.
To market the company’s products and services.munotes.in
Page 69
69To gather and share information with a community of individuals
with similar interests.
2.3.5 FUNCTIONAL COMPONENTS OF E -CRM
When enterprise integrate their customer information,there are
three eCRM strategy components:
1.Operational Component : -This component encompasses various
back-office processes such as order management and order processing. It
also includes the automation of a variety of front-office customer -facing
and customer -supporting processes such as selling, marketing, and
customer service.
The follwing are the main elements of operational components:
Customer interaction Center
Sales Force Automation
Field Service Automation
Automated Response to E -mail
Personalised Web Papers
Web Self -service
Because of sharing information with customers, the business
process should focus on customer needs. Therefore,customers must be
provided with quick information relating to a firm’s operations.
2.Analytical Component : -It is concerned with capturing , storing ,
extracting , processing , mining , and analyzing customer -related data to
enhance both customer and company value. At the heart of this
component are data warehouses , data mar ts , and various business
intelligence and statistical technologies used to mine and analyze the
data. It helps to maintain long term relationship with customers, which
results in customer loyalty.
The main elements of this component are:
Reporting
Data Warehousing
Data Mining
3.Collaborative Component : -Due to improved communication
technology, different departments in company implement or work with
business partners more efficiently by sharing information.
This component applies technology acr oss organizational
boundries with a view to optimizing company, partner, and customer
value. It is used to describe the strategic and tactical alignment of
normally separate enterprises in the supply chain for the more profitable
identification, attraction , retention, and development of customers.munotes.in
Page 70
70Key to the collaborative component is a variety of customer
interaction systems.
Chat Rooms
Blogs and Wikies
Discussion Lists
E-mails
Internet Portals
2.4 MANAGING THE E -ENTERPRISE
An-e-business of e -enterprise is a company operating via the
Internet. This business can have off -line counterparts, or be a stand -alone
enterprise entirely of Internet operations.
E-Business can fill a number of roles, from the buy ing and selling
of goods to providing various services. In addition, e -business firms can
also provide customer service and support for real -world firms, and
collaborate with business partners.
2.4.1 FEATURES OF E -ENTERPRISE
1.Flat Organisation Structure : -The nature of organisation structure in
e-enterprise is flat. There are limited levels of management.There is
limited number of workforce including managers, also the administration
and managent overheads are lower.
2.Global Reach: -E-enterprise permits global reach. Due to internet
and web technology , traditional business organisation defination has
undergone a change where scope of the enterprise now includes other
company location, business partners, customers and ve ndors.
3.Information Driven : -Due to Interent and web, the e -enterprise is
nformation driven rather than paper driven organisation. E -business
enterprises is open twenty four hours, and being an public domain;
managers,suppliers,customers and business part ners can transact business
anytime from anywhere.
4.Competitive Advantage : -Internet capabilities have given e -
business enterprise a competitive advantage to increase the business
value. It has opened new channels of business as buying and selling can
be done on internet.
It enables to reach new markets across the world anywhere du to
communication capabilities. It has empowered customers and suppliers
through secured access to information to act, wherever necessary. The
cost of business operation has come down significantly due to the
elimination of paper -driven processes, faster communication and
effective collaborative working.munotes.in
Page 71
71The internet based transactions resulted in the reduction of
administrative and management overheads, reduction in inventory,
quicker delivery of products.
5.Absense of Command Control : -In e-enterprise, organisations are
empowered by informaion and knowledge to perform various activities.
In e-enterprise, people work in a network environment or in a virtual
mode. The decision in e-enterprise are supported by information systems,
application packages and decision -support systems.
6.Process driven : -E-business enterprise is more process driven,
technology enabled and uses its own information and knowledge to
perform activities. In E-business enterprise, most of the activities are
electronic -based,use of digital technologies and work on
databases,knowledge bases,directories and document repositories.
The business process are conducted through enterprise software like
ERP(Enterprise Resourse Planning),SCM(Supply chain management)
and e -CRM supported by data warehouse, decision support and
knowledge management systems.
7.E-business Solutions : -E-business enterprises are using Internet
technology, network, and wireless technology for im proving the business
performance measured in terms of cost, efficiency,competitiveness and
profitability.
E-enterprise are using e -business solutions to reach faraway locations to
deliver product and services. The enterprise solutions like ERP, SCM and
e-CRM run on Internet and Wide Area Network(WAN).
8.Transformation : -The paradigm shift to e -enterprise has brought
four transformations, namely:
Domestic business to global business.
Industrial manufacturing economy to knowledge -based service
economy.
Enter prise resource management to Enterprise network
management.
Manual document driven business process to paperless automated,
electronically transacted business process.
9.Trading of goods and services : -In E -enterptrise, business is
conducted electronic ally. Buying and selling is possible for a wide
range of products such books, readymade garments, jewellery,
electronic items, white goods and many such goods are bought and
sold on internet. Also, a number of services such as banking,
insurance, healthcar e, education, tourism industry are being
managed through internet.munotes.in
Page 72
7210.Mangement Information Systems : -MIS for e -business is different
compared to conventional MIS design of an organisation. The role
of MIS in e -business organization is to deal with changes i n global
market and enterprises. MIS produce more knowledge -based
products. Knowledge management system is normally recognised as
a part of MIS. It is effectively used for straegic planning for survival
and growth, increase in profits, productivity.
11.Challe nges for E -enterprise: -
The organisation structure should be lean and flat
Employees should allow to work from anywhere
Re-engineer the processes to cut down process cycle time
Make use of groupware technology on internet platform for faster
response proce ssing.
Enlarge the scope of organisation where customers, suppliers, and
others become a part of the organisation with the help of e -
technology.
Change the organisation behaviour to gain competitive advantage by
using e -technolgy to communicate,coordinate and collaborate with
customers, suppliers and businss partners.
2.4.2 DISTINGUISH BETWEEN CONVENTIONAL ENTERPRISE
V/S E -ENTERPRISE
Conventional Organisation E-Enterprise
1)Meaning : -It is traditional
form of organisational
structure wherein business
activities take place in a
physical environment.It is a modern form of
organisational structure wherein
business activities take palce in
a virtual environment.
2)Nature of Organisation
Structure : -Tall organisational
structure is followed in most
of the conventional
organisations.Flat organisational structure is
follwed in most of the E -
enterprise
3)Paper Work : -There is greater
use of paper work in
conventional business
organisation.In e -enterprise,there is more
emphasis on electronic process,
and ther e is limited use of paper
work.
4)Technology : -There is limited
use of modern technology.There is greater use of internet,
wireless and networking
technologies.munotes.in
Page 73
735)Overheads : -There are high
overheads, in the form of
office rent, electricity, and
mainten ance charges, and also
high staff overheads.There are limited overheads, as
the e -enterprise uses virtual
premises and limited amount of
physical premises.
6)Marketing Research : -There
is less emphasis on marketing
research and if conducted, it is
mostly done offline.There is greater emphasis on
marketing research and it is
mostly done online.
7)Business Process Systems : -
Private business process
systems for organisation’s
use. The customers, suppliers,
and business partners are not
allowed to use them.Public business process systems
for organisation’s use , the
customers, suppliers and
business partners are allowed to
use them.
8)Payment : -The payment is
done through physical means
such as cash,cheque, and to
lesser extent credit cards.The paymen t is done
electronically with the help of
credit cards, debit cards, and
other forms of digital payment.
COD is alos allowed under
B2C.
9)EDI : -There is less emphasis
on EDI.Lot of Paper work is
involved in placement of
orders, invoices, and other
related activities.There is greater emphasis on
electronic data interchange ,
which involves paperless
trading.
10)Investments: - Higher
investments are required to set
up conventional organisatons.Lower investments are required
to set up E -Enterprise.
11)Promotion : -Conventional
organisations may place
emphasis on traditional forms
of promotions such as
advertising,salesmanship, and
sales promotion.E-enterprise may make more
use of promotions
12)Business Process : -Private
Business system for self use.
They are barre d for usage to
customers,vendors and
business partners.Public business process and
systems for use by customers,
vendors and business parners.munotes.in
Page 74
7413)Price : -The price of goods
and services may be higher
due to high administrative and
management expenditure and
other overheads.The price of goods and services
may be lower due to lower
administrative and management
expenditure and other
overheads.
14)Touch and Feel Expenditure : -
This type of organisation
enables customers the touch
and feel experience in
shoppi ngThis type of organisation does
not permit touch and feel
experience in shopping.
15)Return of goods : -The return
of goods is easier for
customers.Customers may find it difficulty
in return of goods .
2.5 E -ORGANISATION
An E -commerce organisation is the organsational structure with
which a company operates its onine busines. The basic parameters and
requirements for this organisation are usually defined within the
framework of an e -commerce distribution strategy or the individual
channels strategie s. Regardless of which of the three e -commerce pillars
i.e online marketplaces, third party e -retailers,direct sales + affliate. Are
actively being persued by a company, certain basic rules exist for
ensuring high performance. According to our experience, the most
important of these is that a global, dedicated e -commerce organisational
unit is set up for the successful pursuit of online business. The two main
aspects of this are as follows: -
Global : A features of online commerce that is easily apparent bu t
typically goes unconsidered from an organisational prespective is that it
essentially has no national boundaries. Particularly in the case is
simplified international trading within Europe, this means that end
consumers, presented with an ever -greater de cline in shipping costs,
perceive cross -border trade to be completely normal. What is true for end
consumers also applies to international purchasing organisations, such as
those from large online marketplace like Amazon. In the case of cross -
border sourci ng, the manufactuer’s organisational structure is exploited
by buyers, who purchase from different country organisations (e.g
Poland, Austria) depending on the destination country (e.g.Germany).
Against this backup, a global e -commerce organisaional unit i s needed to
control and coordiante online business in the interests of the company as
a whole.
Dedicated : -In many companies, online business accounts for a
smaller share than brick -and-mortar business, at least initially.
Companies tend to approach the online segment as an additional businessmunotes.in
Page 75
75area that can be accommodated for with the existing organisational
structure and resources. Successful e -commerce development can only be
achieved with a dedicated organisational unit and corresponding
resources. Ex isting sales force typically lack both the necessary global
reach and resources to develop the business quickly and sustainably.
In simplifed terms, a global, dedicated relate to organisation of business
in e-enterprise consists of the three core areas.
E-Commerce Sales : Depending on the e -commerce distribution
strategy, the roles of different channel -specific key account managers can
be combined. Sub -organisation may exists depending on the size of the
individual channels (e.g Amazon unit with vendor account management)
Digital marketing : Central coordination of online marketing
activites. This foundation may be modified slightly for specific channels,
but does not deviate significantly from a set of key tasks.
Product data management : As an interface between product
management and marketing, this section is responsible for the central
provision and administration of product data required for various online
channels.
2.5.1 BENEFITS OF E -ENTERPRISE
E-Enterprise is the conduct of business processes on the internet.
These electronic business processes include buying and selling products,
supplies and services, serving customers, processing payment, managing
production control, collaborating with business partners, sharing
information, running automated employee services, re cruiting etc. The
benefits or advantages of E -enterprise is as follows : -
1.Provides Flexibility : -E-enterprise interact with more customer,
can entail more, and can offer an innovative experience through website.
It offers a platform for organizations to interact with the customers in a
creative way and provides flexibility to realise creativity along withGlobal Director E-enterpriseOnline MarketplacesThird Party e-RetailersDirect Sales &AffiliatesDigital MarketingCooperativeOnline MarketingProduct DataManagementData Distributionmunotes.in
Page 76
76infrastructure that decides the scope. The restructuring of organizational
processes and functions are much easier and they contribute to better
utiliza tion of resources and assets. In this age of information explosion,
e-enterprise offers a platform for information utilization and allow
building an edge through creative use of information. It comes in various
ways such as outsourcing, off shoring, and in tegrating various business
components.
2.No need for physical preserence : -Business are no longer dependent
on physical reach because most of them have expanded through the
internet. This has increased the visibility of the companies.Increased
connectivity has enhanced responsiveness mainfold. Introduction of
new service have changed their management and treatment in
marketplace.
3.Cost Reduction : -E-enterprise reduces the cost information
collection, inforamtion stortage and information analysis. Most
impor tantly, it reduces the communcation costs.
4.Transparency : -In e-enterprise, marekets, prices, transaction, and
cost become more and more transparent. This transparency leads to
more efficient markets. Cost transparency refers to the ability of the
customer to determine that actual costs.
5.Personalization : -Another importanta aspect of e -enterprise is
personalization. E -enterprise allows one to have targeted marketing
message and even customers can select their messages of interest.
They can keep their trans actions listed and merchants can give
personalized service as e -business allows very easy information
handling.
6.End-to-end information flows : -E-enterprise transforms business
relationship traditionally working in hierachy and many indirect
connections. T he old indirect connectivity and hierachy was
responsible for the market inefficiencies and loss of information. E -
enterprise with end -to-end relationship empowers efficient
information flow. This allows customer demands at different levels
being addressed more efficiently.
7.Integrated solution : -E-enterprise even helps in managing the chain
of networks linking customers, workers, suppliers, distributors, and
even competitors within an integrated or extended supply chain
management solution. Supply chain ma nagement(SCM) is defined
as the management of supply -related functions and activities, that
is,materials, information, and finance as they move from source to
destinationm that is, form the supplier to manufacturer to wholesaler
to retailer and, finally, t o consumer. It involoves the coordination
and integration of parties involved in it and flows both within and
among companies.
8.Saves time : -One of the major driving forces behind
implementation of e -business is that is saves time. The savings in
time take s place on different fronts. The customer saves timemunotes.in
Page 77
77because he/she can perform different transactions at any time and at
any place. The turnaround time for transactions is reduced to a great
extent. Overall connectivity empowers the organization to delive ra n
efficient service. Time is also saved in other transactions,
information transefers, and ultimately helping in decision making.
9.Improved communication with customers and suppliers : -The
communication and interaction of customers with suppliers has
become easier. Finacial transactions have become efficient and that
allows both customers and suppliers to concentrate on other fronts.
Electronic communication makes overall communication efficient.
10.Online publishing : -Text, graphics, and multimedia files are used in
web-based documents for web publishing. The examples of web -
publishing include various e -magazines, web based newspapers, and
e-books that are published on website. Other materials used for
promotional purpose and published on websites also com e under
web publishing. Low -cost univesal access, the independence of time
and place, and ease of distribution are some of the advantage of
online publishing. There are mangement issues and public policy
issues that need to be considered before online purc hasing. The
measurement and profitability related issues come under
management issues , while copyright, censorship related issues, and
legal aspects come under public policy related issues. Online
publishing uses both business -to-business (B2B) and busine ss-to-
consumers(B2C).
11.Benefits for the retailer: -E-enterprise provides benefits to the
buiness houses, customers and even retailers.These benefits come
from information efficiencies and penetration made available in the
form of market exposure and cost re duction. Following are the
benefits for a retailer:
Increase market exposure : -It is possible for the retailers to sell the
products not only to those who have easy access to them but also to
customer accessing the website from far -off places. It improves
market exposure and reaches of the retailer and makes a bigger
market available for him/her to compete.
Increase sales : -Increased time saving and market exposure enables
the organization to increase their sales.
Reduce Cost : -The reduction in delay and elimination of obstacles
allows to get rid intermediate losses of communication and further
overall pace of communication is increased. The traditional
business, the customer has no choice but to go through the
intermediate dealers. The establishement of d irect channels, allows
customer flaxibility and reduction of cost, resulting in better
experience. Information efficiency and reduction delay and
inaccuracies contribute to cost reduction.munotes.in
Page 78
782.5.2 LIMITATIONS OR DISADVANTAGES OF E -ENTERPRISE
Though e-commerce offers many advantages to
customers,business,society and nation, there are still some areas of
concern that need to be addressed. The following are some of the
disadvantages or limitations of e -enterprise.
1.Security : -The biggest drawback of e -business is the issue of
security. People fear to provide personal and financial information,
even though several improvements have been made in relation to
data encryption. Certain websites do not have capabilities to
conduct authentic transactions. Fear of providing credit card
information and risk of identity limit the growth of e -business.
2.Lack of privacy : -Many websites do not have high encryption for
secure online transaction or to protect online identity. Some
websites illegally collect statistics on consumers without their
permission. Lack of privacy discourages people to use internet for
conduction commercial transactions
3.Tax issues : -Sales tax is another big issues when the buyer and seller
are situated in different locations. Computation of sales t ax poses
problems when the buyer and seller in different states. Another
factor is that physical stores will lose business if web purchases are
free from tax.
4.Fear : -People fear to operate in a paperless and faceless electronic
world. Some of the business organizations do not have physical
existence, people do not know with whom they are conducting
commercial transactions. This aspect makes people to opt physical
stores for purchase.
5.Legal issues : -The cyber laws that govern the e -business
transactions ar e not very clear and very from country -to-country.
These legal issues prevent people from entering into electronic
contacts.
6.Sectoral Limitations : -The main disadvantage of e -business is the
lack of growth in some sectors on account of product or sector
limitations. The food sector has not benefited in terms of growth of
sales and consequent revenue generation because of number of
practical reasons, like food products becoming perishable items.
Consumers do not look for food products on the interent, since they
prefer to going to the supermarket to buy the necessary items as and
when its require. Therefore, e -business gets the online orders relate
to food, grocery related products.
7.Costly e -business solutions for optimization : -Substantial resources
are re quired for redefining products lines in order to sell online.
Upgrading computer systems, training personnel, and updating
websites requires substantial resources. Electronic Data
management (EDM) and Enterprise resourse planning(ERP),munotes.in
Page 79
79necessary for ensuri ng optimal business process, may be pose
challenges to e -enterprise.
8.Challenges of low Entry Barriers to existing Firms : -In e-commerce
there is low entry barriers. The rapid growth of e -commerce sector
is attracting new entrants. One can start e -business venture with an
initial investment of as low as rs.5 to rs 10 lakhs, thereby leading to
reduced competitive advantages. The sector is also attracting the
interest of Venture Capital Funds, and thus enabling e -commerce
enterpreneurs to secure funds easily. This enables new companies to
easily replicate the existing business models and , thereby ,increase
competiton in the sector.
9.Low Pentration of Internet in Rural Areas : -India’s e -commerce
market is mainly dominated by urban areas, with the bulk of the
business being restricted to cities. Internet useage in rural areas is
limited, although 70% of india’s population lives in rural areas. The
limited internet useage in rural areas could be due to several factors
such as low internet speed and internet user base. The inadequacy of
vernacular content of e -commerce websites is another reason for
low penetration in rural areas.
10.Problem in payment gateways : -Indian payment gateways have
high failure rate as comapred to other countries. Several customers
do not a ttempt payment after a transaction fails. Therefore, online
sellers using payment gateways are losing out on online sales.
2.6 SUMMARY
The entire module is based on various concept which is useful for
the students to understand the e -enterprise (e -commerce) very well.
The www project merges the techniques of networked information
and hypertext to make an easy but powerful global informa tion system.
W3 was originally developed to allow information sharing within
internationally dispersed teams and give the more focus on developing
own website for the expansion and modernization of business.
Net commerce or the undertaking of all types o f activities over the
internet, has developed rapidly, starting from the days of electronic
brochure hosting. There are two stages of Net Commerce, who have
created a wide range of new applications and business models. Such as
EDI concept, applications of e-commerce and e -enterprises, application
to CRM. E -commerce is the first stage of Net Commerce. It involved the
creation of B2C services and E -business is the second stage of Net
Commerce, which involved the development of business and application
models focused on the needs of the B2B marketplace. In this module the
students are going to learn the key factors relate to e -enterprise like
Continuous Development relate to e -enterprise and e -CRM
Application and technology Architecture
Benefits and limitations of e-enterprise within an organisationmunotes.in
Page 80
80Business and technology.
EDI concept: -Now a days most of the corporate sector use electronic
data interchange (less paper work transactions, mostly work done
through electronically)
Comparison between conventional organisation and e -enterprise.
Making the transition from e -commerce to e -business -to e-enterprise
means understanding and anticipating the changes that must occur in
every aspect of the enterprise: culture, people, business model,
Organizational model, ap plication, Pros and cons of EDI, various
technology used in E -commerce.
As per the current business scenario, the business persons give more
focus on customer satisfaction rather than making more profit. In that
case www and e -enterprise definitely play an important role.
2.7 EXERCISE
1.Explain the reasons for building website by e -marketers.
2.Discuss the benefits of website.
3.Describe the procedure in registering a domain name.
4.Discuss the role of website in B2C e -commerce.
5.Write a note on push and pull approaches of e -enterprise.
6.Discuss the pros and cons of electronic data interchange.
7.Explain the related new technologies which can be used in e -
commerce.
8.What are the various applications of e -commerce in e -enterprise?
9.Discuss the applications to e -CRM.
10.Discuss the types of e -CRM.
11.Describe the functional components of e -CRM.
12.Discuss the features of e -enterprise.
13.Bring out a comparison between Conventional Organisation and E -
enterprise.
14.Discuss the different aspects relating to organisation of business in
E-enterprise.
15.Discuss the benefits of E -Enterprise.
16.What are the limitations of e -enterprise?munotes.in
Page 81
81OBJECTIVE QUESTIONS
A.Select the most appropriate option given in the bracket and
rewrite the sentence:
1._______ is a system of internet servers that support specially
formatted documents.
(WWW, URL, Domain Name)
2.The_____ is a global system of interchanged computer networks.
(Internet, HTML, WWW)
3.____is a smart computer programme designed to handle
conversations on a human level.
(Chatbot, Beacon, Droid)
4.____ r efer to payments made over the internet.
(E-Payment, Cash on Delivery, E -CoD)
5._____ allows customers to locate the status of the order in real time.
(Self-Tracking System, Field Service Automation, Personalised Web
Pages)
6._____ predicts sales and inventory requirements.
(Forecasting, Regression, Association)
7.____ are collection of online discussions grouped into communities.
(Usenet Groups, Chat -rooms, Forums)
8._____ name is used to identify Internet Protocol address.
(Domain, Internet, E -mail)
9.Under_____ promotional strategy, the intermediaries get incentives.
(Push, Pull, Please)
10.UX stands for_____ experience in website design.
(User, Universal, Ultra)
11.____ Technology can be used for delivery of packages to customers.
(Drone, Dried, Drip)
B. State whethe r the following statements are true or false:
1.URL helps to identify web resources through the internet.
2.Social Medias are non -interactives sites for networking purpose by
individuals.
3.Websites restricts global reach for business firms.
4.CRM helps to maximize brand loyalty.
5.There are limited levels in tall organization structure.munotes.in
Page 82
826.Touch ID is a fingerprint recognition designed by Apple Inc.
7.Normally, viewing a web page on the World Wide Web begins with
the typing the URL, of the page into a web browser or by following
a hyperlink to that page.
8.ICANN stands for international Council of Names and Numbers.
9.Under pull promotion strategy, the dealers are motivated to stock
the product.
10.Test Early, Test Option Principle can be used for testing website
design.
11.Smart Refrigerators enable shoppers to view the contents in the
refrigerators on their websites.
12.WeChat is the US popular messenger.
13.Pure click companies launch a website without any previous
existence as a firm.
14.The concept of relationship marketing was d eveloped by Philip
Kotler.
Match the Groups.
GROUP A GROUP B
1)WWW Founder a)Computer Data Interchange
2)Push Strategy b)Element Of Typography
3)Pull Strategy c)Directed Towards Consumers
4)Paragraphing d)Directed Towards intermediaries
5)EDI e)Tim-Berners -Lee
Group A Group B
1)Self-Check -Out Technology a)Leonard Berry
2)Drone Technology b)Autonomous Robots
3)Virtual Fitting Technology c)Online Trial Rooms
4)Droid Technology d)Flying Autonomous Craft
5)Relation Marketing e)Amazon Go
munotes.in
Page 83
833
E-MARKETING AND
ELECTRONIC PAYMENT SYSTEM
Unit Structure
3.0 Objectives
3.1 Introduction
3.2 E-Marketing
3.3 E-Commerce Customer Strategies
3.4 Electronic Payment System
3.5 Operational, credit and legal risks of E -payment system
3.6 Summary
3.7 Exercise
3.0 OBJECTIVES
After studying this unit the student will be able to -
Understand the changing marketing and business processes and its
transition to E -marketing and E -Comm erce.
Know the various evolving methods of E -Marketing and its scope.
Understand E -Commerce, its growing importance.
Know the pros and cons of E -Commerce.
Understand the payment systems have also changed and its
security issues too.
3.1 INTRODUCTION
E-Commerce is the term to reckon with changing times and
unprecedented worldwide outbreak of Covid -19, businesses have taken a
complete turn from its run of the mills activities. Ithas forced the entrepreneurs
to switch gears and go online with no time t o prepare. E -commerce, Electronics
Marketing and digitalization of payments have made the job of entrepreneurs
difficult on the other hand increased the complacency for the customer. Also with
advent of such system, arise problems of equal magnitude. This module
discusses various ways of Electronic Business and Marketing and also various
technical aspects of payments and its safety related measures as well as
government intervention.munotes.in
Page 84
843.2 E-MARKETING
3.2.1 MEANING:
E-marketing is a process of planning and executing the
conception, distribution, promotion, and pricing of products and services
in a computerized, networked environment, such as the Internet and the
World Wide Web, to facilitate exchanges and satisfy customer demands -
Marketing (also referred to as web marketing or internet marketing) uses
electronic communication technologies including the Internet, mobile
phones and digital media
Definition:
According to Kotler and Keller, E-Marketing portrays company
efforts to inf orm and communicate with buyers, and promote and sell its
products and services over the Internet.
3.2.2 SCOPE OF E -MARKETING:
1. Advertising:
Ecommerce advertising is the practice of disseminating paid
messages to sell a product online. The advertiser will pay for placement,
impressions, clicks, etc. on a publisher. E marketing forms a better way for
advertising as major population has access to internet and also adv ertising
will have a better reach and ultimately better conversion
1.Promotions:
E-Marketing can be used for promotions of either an existing product
or a new product. With the help of emerging technology marketers can
make use of creativity and promote the ir products in a better manner
which was not possible in traditional method
2.Market Analysis
Market analysis forms a very important and one of the primary
activities of any business activity. It helps the business to understand
the market standing. It help s the organization to identify its
competitors and form a combat force to fight the same. This basically
forms a source of primary first -hand information for the business. E
Marketing can be used for gathering this crucial information.
3.Strategic Web activ ities
To be in constant touch with the customers andprospects, it is very
important for the business to be in news and do things differently. It is
often said ‘Out of Sight is Out of Mind’. Hence, companies must keep
engaging themselves in strategic activi ties over different platform to
be visible. This can be done through E -Marketing.
4.Business expansion
After survival and Growth, Expansion is an inevitable part of any
business organization. For expansion, its is not just enough to escalatemunotes.in
Page 85
85the R & D proce ss but also to communicate it efficiently in the market.
Unless a better communication is done, even the best of products
cannot pick up sales. E -Marketing, can be seen as a platform for
launch of new products as well business expansion.
5.Customer response
Business and marketing are a continuous activity. Its continuity is
largely based on the feedback that is received from the customer. In
today’s era, its difficult to pay attention to individual responses and
letters/ Grievances/ Satisfaction, but much easier when E -Marketing
tools are used. It helps the organization to gauge the exact summary of
customer feedback.
3.2.3. TECHNIQUES OF E -MARKETING:
1.Search Engine Marketing (SEM)
This is a type of marketing that seeks to promote websites by
increasing their visibility in Search Engine Result Pages. This is done
through the use of paid inclusion, contextual advertising, and paid
placement, and search engine optimization.
2.Blog Marketing
Blog marketing is internet marketing by way of web logs (blogs).
Blogs are different than corporate websites because they contain daily or
weekly postings, many times around a single subject. Many corporations
use b logs to foster a dialog with customers so that they can explain the
features of their products and services.
3.Email Marketing
This is a type of direct marketing that uses Email to communicate
commercial or fundraising messages to an audience. Emails are sent with
the purpose of:
•Strengthening the relationship of the business person with his/her
previous and current clients to create customer loyalty
•Acquiring new clients or convincing existing clients to purchase
something
•Adding advertisements sen t by other businesses to their clients.
4.Viral Marketing
Viral marketing is a marketing technique that creates brand
awareness by using social networks that already exist. Viral marketing
increases brand awareness and achieves other marketing objectives (such
as product sales) through self -replicating viral processes, analogous to the
spread of pathologic and computer viruses. Information can be spread by
word -of-mouth or it can be enhanced by the network effects of the
internet. Viral promotions might b e in the form of video clips, eBooks,
images, text messages, or brandable software.munotes.in
Page 86
865.Social Media Marketing
Social media marketing is a term that describes the act of using
social networks, online communities, blogs, wikis, and other collaborative
internet forms of media for marketing, sales, public relations, and
customer service. Common social media marketing tools include Twitter,
blogs, LinkedIn, Facebook, Flickr, and YouTube.
6.Article Marketing
Article marketing is advertising in which businesses write short
articles related to their industry. These articles are made available for
publication and distribu tion in the marketplace. Each article contains a bio
box and by line that include references and contact information for the
author’s business. Well -written content articles released for free
distribution have the potential of increasing the business’ cred ibility
within its market as well as attracting new customers.
7.Affiliate Marketing
Affiliate marketing is an internet -based marketing practice in
which a business rewards one or more affiliates for each visitor or
customer brought about by the affiliat e’s marketing efforts.
8.GeoMarketing
Geo targeting (in internet marketing) and geo marketing are the
methods of determining the geolocation (the physical location) of a
website visitor with geolocation software and delivering customized
content to that visitor based on his or her location, such as country,
region/state, city, metro code/zip code, organization, Internet Protocol (IP)
address, ISP, or other criteria.
3.2.4. TRADITIONAL WEB PROMOTIONS:
Despite ongoing changes in the web, traditional onlin e
marketing is still an important part of a successful online strategy , and
should not be neglected. Classic banner advertising still draws the
attention of many potential customers. Even intelligent email marketing
offers opportunities if implemented prop erly. Offline marketing can also
be effectively linked to online marketing in order to significantly increase
traffic.
3.2.5. WEB COUNTERS:
Aweb counter orhit counter is a computer software program that
indicates the number of visitors, or hits, a parti cular webpage has received.
Once set up, these counters will be incremented by one every time the web
page is accessed in a web browser .
The number is usually displayed as an inline digital image or
inplain text .Image rendering of digits may use a variety of fonts and
styles; the classic example is the wheels of an odometer . The counter is
often accompanied by the date it was set up or last reset, without which it
becomes impossible to estimate within what time the number of pagemunotes.in
Page 87
87loads counted occurred. Some web counters were simply web bugs used
bywebmasters to track hits and included no visible on -page elements.
Counters were popular in the 1990s, but were later replaced by
other web traffic measures such as self -hosted scripts like Analog , and
later on by remote systems that used JavaScript , like Google Analytics .
These systems typically do not include on -page elements displaying the
count. Thus, seeing a web counter on a modern web page is one example
ofretrocomputing on the Internet.
3.2.6 WEB ADVERTISEMENTS:
Web Advertisement is important not just because it helps you to
get found online, but also because it can change the way your business is
perceived by potential customers. For example, ranking high in search
engine results pages, along with respected industry authorities, instantly
boosts your business' credibility.
3.2.7. TYPES OF WEB ADVERTISEMENTS:
1. Display Advertising
Display advertising is a kind of online exhibit that typically
uses images and text. The most popular forms of these kinds of ads
are banner ads, landing pages (LP’s) & popups. Display ads are
found on websites and publisher web pages and redirect a user’s
attention to the brand’s product.
2. Search Engine Marketing & Optimization (SEM) & (SEO)
SEM and SEO promote content & increases visibility through
online searches. In SEM, instead of paying for the a d, advertisers
pay each time users to click on their ad to their website. In SEO,
they use various tactics like linking, targeting keywords and creating
high-level content that other sites will link to in order to drive
traffic.
3. Social Media Ads
Placin go n l i n ea d s ,p r o m o t e dp o s t sa n ds p o n s o r e ds t o r i e so n
social media are a popular way to reach a target demographic
without paying a hefty amount. Facebook and Twitter are the most
popular social media platforms for companies to reach potential new
customer sw i t hL i n k e d I nap o p u l a ra v e n u ef o rB 2 Bt r a f f i c .
4. Native Advertising
Some popular publishers have sponsored ads at the bottom of
their webpages. Some also have a “recommended reading” or “other
people liked” section for potential readers to click on. T his is native
advertising.munotes.in
Page 88
885. Pay Per Click (PPC) Ads
Pay per click (PPC) ads are advertisements where the
promoters pay every time a user clicks on an ad. That means, even if
the ad was seen by hundreds of personalities but only 1 person
clicked on the ad, the cost of the ad would be calculated on the one
click.
6. Remarketing
Remarketing is a kind of online advertising that uses online
cookies to track followers around the internet, in order to target them
again. These users are targeted once they lea ve the website by then
seeing subtle hints (ads), reminding them about their previous
interest.
7. Affiliate Marketing
Affiliate marketing promotes a brand’s product while earning
ac o m m i s s i o nf o re a c hs u c c e s s f u lt r a n s a c t i o n .T h i si sw i d e l yu s e db y
publis hers and bloggers who have massive followership and are
looking to gain passive income.
8. Video Ads
Video ads are rapidly gaining popularity, especially among
millennial and Gen Z consumers. YouTube is undoubtedly the No. 1
platform for online videos, and it uses a PPC method, i.e., brands
pay when someone engages with an ad.
3.2.8 SOCIAL MEDIA AND E -MARKETING:
Social media marketing , or SMM, is a form of internet
marketing that involves creating and sharing content on social media
networks in order to achieve your marketing and branding goals. S ocial
media marketing includes activities like posting text and image updates,
videos, and other content that drives audience engagement, as well as paid
social media advertising .
Although the terms e-marketing anddigital marketing are still
dominant in academia, social media marketing is becoming more popular
for both practitioners and researchers. Most social media platforms have
built-in data analytics tools, enabling compani es to track the progress,
success, and engagement of ad campaigns.
Social media marketing is a powerful way for businesses of all
sizes to reach prospects and customers. Your customers are already
interacting with brands through social media, and if you'r e not speaking
directly to your audience through social platforms like Facebook, Twitter,
Instagram, and Pinterest.munotes.in
Page 89
893.2.9 ADVANTAGES AND DISADVANTAGES OF SOCIAL
MEDIA MARKETING:
Advantages:
1. Increased Brand Awareness
Social media is one of the most cost -efficient digital marketing
methods used to syndicate content and increase your business' visibility.
Implementing a social media strategy will greatly increase your brand
recognition since you will be engaging with a b road audience of consumers.
Simply having people interact with content will increase brand awareness and
begin building reputation as a business by investing only a few hours per
week, over 91% of marketers claimed that their social marketing efforts
greatly increased their exposure.
2. More Inbound Traffic
Without marketing business on social media, inbound traffic is limited
to usual customers. The people familiar with brand are likely searching for the
same keywords business already rank for. Without u tilizing social media as
part of marketing strategy, business will have much more difficulty reaching
anyone outside of your loyal customer circle. Every social media profile added
to marketing mix is a gateway to company’s website, and every piece of
content posted is another opportunity to acquire a new customer.
3. Improved Search Engine Rankings
Although posting on social media might get business some site traffic,
more effort than that is required to see significant success. Search engine
optimization is very important for achieving higher page rankings and
obtaining traffic to business website. While social media doesn't directly
increase search engine rankings, So cial Media Examiner states that more than
58% of marketers who have been using social media for one year or longer
still see improved search engine rankings. Being able to rank in the top
positions for business keywords will revolutionize your traffic and continue to
generate positive results for your business
4. Higher Conversion Rates
With increased visibility, business gains more opportunities for
conversion. Every blog post, image, video, or comment may lead viewers to
company's website and increase tr affic. Social media marketing allows
business to give a positive impression through a humanization factor. When
brands are interactive by sharing content, commenting, and posting statuses on
social media, it personifies a brand. People prefer to do busines sw i t ho t h e r
people, rather than companies.
5. Improved Brand Loyalty
One of the main goals of almost all businesses is developing a loyal
customer base. Considering that customer satisfaction and brand loyalty
typically go hand in hand, it is important to regularly engage with consumers
and begin developing a bond with them. Social media is not just limited tomunotes.in
Page 90
90introducing your brand's products and promotional campaigns. Customers see
these platforms as a service channel where they can communicate direct ly
with the business. The millennial generation is known for being the most
brand loyal customers of all. Since these technology natives require
communication with their brands, businesses must implement social media
marketing to get the attention of their most influential consumers.
6. Cost -Effective
Social media marketing is possibly the most cost -efficient part of an
advertising strategy. Signing up and creating a profile is free for almost all
social networking platforms, and any paid promotions you de cide to invest in
are a relatively low cost compared to other marketing tactics. Being cost -
effective is such an advantage because businesses can see a greater return on
investment and retain a bigger budget for other marketing and business
expenses
7. Ga in Marketplace Insights
One of the most valuable advantages of social media is marketplace
insight. By monitoring the activity on companyprofiles,one can see customer'
interests and opinions that you might not otherwise be aware of if your
business didn't have a social media presence. Using social media as a
complementary research tool can help gain information that will aid you in
understanding your industry generating revenue.
8. More Brand Authority
Customer satisfaction and brand loyalty both play a part in making
your business more authoritative, but it all comes down to communication.
When consumers see company posting on social media, especially replying to
customers and posting original content, it makes company appear more
credible. Regularly int eracting with customers demonstrates that business
cares about customer satisfaction, and is available to answer any questions that
they might have.
9. Better Customer Satisfaction
Social media is a networking and communication platform. Creating a
voice for company through these platforms is important in humanizing
company. Customers appreciate knowing that when they post comments on
your pages, they will receive a personalized response rather than an automated
message.
Every customer interaction on yo ur business's social media accounts is
an opportunity to publicly demonstrate your compassion for the customers
Disadvantages:
1.Not Built for Businesses
This is the main disadvantage of social media marketing for
business. Many businesses, especially the new ones, which do not have
enough awareness or reputation are extremely not advised to focus onmunotes.in
Page 91
91social media marketing. Even thewell-reputed business does notinvest
much insocial media marketing ingeneral.
2. Negative Feedback can tarnish brand name
Being on social media means exposing yourself publicly to all
kinds of people who may or may not have the intention of coming across
or seeing your brand. With the internet being easily accessible more than
ever before, there are people who always aim to d amage one’s reputation.
If your business is unknown or just starting to gain momentum, the
chances are of getting an attack are more likely.
3. Heavily Rely on Ads
Social media ads announcement was a revolution. With its ability
to target spec ific audiences based on various parameters in -depth, it’s
what makes it such a powerful tool to generate leads online which is
disadvantage for small business most of the times also its quite an
expensive affair to indulge in social media marketing
4. Low ROI
ROI from social media marketing is probably one of the lowest in
online marketing strategies. Companies have to put both time, effort and
money to really make things work. Also, there is a constant need to keep
providing something new to the viewers (Prospects)
5. Time -Consuming
There are several free or low -costsocial media tools available, but
it calls for huge investment of time. Also free of cost media does not
provide you the expected reach which a sponsored page guarantee.
6. Need To Stay Engaged And Active
Social media is constantl y changing and if you’re not up -to-date,
you’re going to fall behind the others. People on social media are always
looking for new and fresh things. As a marketer, that’s your job to provide
them. This is the very reason why businesses, influencers loose f ollowers
and likes start reducing on their respective pages.
7. Difficult To Measure
Measuring your marketing effort on social media is just more
difficult and complicated than it sounds. This particular con of social
media marketing is what many business owners will have to face. The
quantum of likes and followers make it difficult to determines whether it
will be converted into prospects. Hence, it can not to completely assumed
as success index.
8. Security and Privacy Policy Issues
One of the biggest n egatives of social media marketing is the
security and privacy -related issues. Business information and details come
into public domain, while there are many anti -social elements vying at the
preys for easy money for coning businesses as well as customers. Take amunotes.in
Page 92
92look at the latest Facebook databreach news , millions and millions of data
have been leaked and with this, one is risking business i n the hands of
unreliable platforms.
9. Limited Only To Social Media Platforms
When one does social media marketing, it is essential to using
social media platforms like Facebook, LinkedIn, Instagram or Twitter to
market and build brand awareness. But thi s is only limited to social media.
Unlike other marketing channels like SEO orSEM , where one can expand
marketing effort to various places, thus being more flexible, social media
marketing only stays on social media.
3.3 E -COMMERCE CUSTOMER STRATEGIES
3.3.1 E -COMMERCE PURCHASE BEHAVIOUR:
1.Problem Recognition
The customer must have a reason to believe that what they want,
where they want to be or how they perceive themselves or a situation is
different from where they actually are. The desire is different from the
reality –this presents a problem for the custo mer. However, for the
marketer, this creates an opportunity. By taking the time to “ create a
problem ” for the customer, whether they recognize that i t exists already or
not, one is starting the buying process. To do this, one should start with
content marketing. Share facts and testimonials of what product or service
can provide. Ask questions to pull the potential customer into the buying
process. Doi ng this helps a potential customer realize that they have a
need that should be solved.
2. Information Searchmunotes.in
Page 93
93Once a problem is recognized, the customer search process begins.
They know there is an issue and they’re looking for a solution. If it’s a
newmakeup foundation, they look for foundation; if it’s a new refrigerator
with all the newest technology thrown in, they start looking at refrigerators
–it’s fairly straight forward. As a marketer, the best way to market to this
need is to establish brand or the brand of your clients as an industry leader
or expert in a specific field. Methods to consider include becoming
aGoogle Trusted Store or by advertising pa rtnerships and sponsors
prominently on all web materials and collaterals.
3.Evaluation of Alternatives
Customers want to be sure as they’ve done thorough research prior
to making a purchase. Because of this, even though they may be sure of
what they want , they’ll still want to compare other options to ensure their
decision is the right one. Marketing to this couldn’t be easier. Keep them
on site for the evaluation of alternatives stage. Leading insurance provider
Policy Bazaar allows customers to compare rates with other insurance
providers all under their own website –even if the competition can offer a
cheaper price. This not only simplifies the process, it establishes a trusting
customer relationship, especially during the evaluation of alternatives
stage.
4.Purchase Decision
The purchase decision falls near the middle of the six stages of the
consumer buying process. At this point, the cus tomer has explored
multiple options, they understand pricing and payment options and they
are deciding whether to move forward with the purchase or not. This
means it’s time to step up the game in the marketing process by providing
a sense of security whil e reminding customers of why they wanted to
make the purchase in the first time. At this stage, giving as much
information relating to the need that was created in step one along with
why the brand, is the best provider to fulfil this need is essential.
5. Purchase
A need has been created, research has been completed and the
customer has decided to make a purchase. All the stages that lead to a
conversion have been finished. However, this doesn’t mean it’ s a sure
thing. A consumer could still be lost. Marketing is just as important during
this stage as during the previous. If the purchase process is too difficult,
customers, and therefore revenue, can be easily lost.
6.Post-Purchase Evaluation
Just beca use a purchase has been made, the process has not ended.
In fact, revenues and customer loyalty can be easily lost. After a purchase
is made, it’s inevitable that the customer must decide whether they are
satisfied with the decision that was made or not. T hey evaluate. If a
customer feels as though an incorrect decision was made, a return could
take place. This can be mitigated by identifying the source of dissonance,
and offering an exchange that is simple and straightforward. However,munotes.in
Page 94
94even if the customer is satisfied with his or her decision to make the
purchase, whether a future purchase is made from your brand is still in
question. Because of this, sending follow -up surveys and emails that thank
the customer for making a purchase are critical.
3.3.2. C USTOMER SUPPORT ACTIVITIES:
Support Method Ways
Attitude Exercises Good and bad customer service
experiences
Stepping into the shoes of your
customers
Experience your service as a customer
Evaluate competitor customer service
“Attitude Anchors” to maintain
positivity
Customer service focus within staff
induction
Skills Exercises Communication skills training exercises
Dealing with difficult situations and
complaint handling
Customer service focus within staff
induction
Knowledge Exercises Defining your customer service
framework
Setting customer service standards
Develop product knowledge
Suggestions for improving customer
service
Interna l customer service improvements
Customer service focus within staff
induction
3.3.3 PLANNING PROCESS FOR E -COMMER CE:
1. Research and Strategy:
The core focus of any e-Commerce website design should be
clear communications between the web development company and the
client. It is very important that the designers and developers have a
clear understanding of the company, the product and the industry as a
whole. Discuss your target audience and b rainstorm possible keywords
that potential customers might use to find your company or your
product. Taking this all -important first step will ensure onedoesn’t
blindly waste marketing money trying to reach or convert the wrongmunotes.in
Page 95
95type of customer. Using this strategy virtually guarantees that one’s
efforts to focus in on the right types of customers are well -rewarded,
saving time and money.
2. Planning
This involves setting down all the requirements for the new e -
Commerce site as well as its participants This is the time to ask crucial
questions regarding how much (or how little) knowledge someone must
have about product or service to make a purc hase. Are they simply
aware of it or are they searching specific item numbers and names?
Knowing this information will help pinpoint exactly how customers are
finding online store, as well as how long they’re staying and which
pages they’re visiting. It ca no f t e nm a k et h ed i f f e r e n c eb e t w e e na
broad, general information search that yields no results and a specific
product name or price comparison that turns into a sale.
3. Information Architecture
Following best practices in information architecture is key to
overall user satisfaction and a higher conversion rate. Understanding
how customers browse site is key to giving them what they’re looking
for without a lot of hassle or wasted time. The sooner your e -
Commerce website can resolve their needs, the more likely they will be
to make a purcha se and come back again.
4. Design
This will be the visual representation of site. Often created as a
Photoshop template, pieces can be moved around and adjusted during
the design phase to create a professional, customer -oriented style that
best captures y our brand and focus. Having a professionally designed
website is paramount to the all -important “first impression” a potential
customer gets of site and its credibility. If the site does not project a
style that is attractive and pleasing, the customer may mistakenly infer
that the products sold will not live up to their expectations
5. Construction
This is the fixation behind any solid, reliable e-Commerce
website, including client and server -side applications (front end and
back -end programming), quality assurance testing, integration of third -
party tools and other solutions that will make e -Commerce website
scalable as it continues to grow. Ens uring that third party tools,
backend applications and other components work seamlessly
together contribute to the overall user experi ence and repeat purchases.
3.3.4. ADVANTAGES OF E -COMMERCE:
1. Faster buying process
Customers can spend less time shopping for what they want. They
can easily browse through many items at a time and buy what they like.
When online, customers can find i tems that are available in physical storesmunotes.in
Page 96
96far away from them or not found in their locality. This is where
ecommerce comes to the rescue for many shoppers. They go online,
search for an item, get a fast response and can buy it just as quickly.
2. Store and product listing creation
A product listing is what the customer sees when they search for an
item. This is one advantage in ecommerce meant for the seller. This online
business plus point is that you can personalise your product listing after
creating them. Creating a listing takes very little time, all you require is
your product name or codes like EAN, UPC, ISBN or ASIN. Sellers can
add many images, a description, product category, price, shipping fee and
delivery date. So, in just one step y ou can tell the customer many things
about the item. Creating your listing shows the buyers what you have.
3. Cost reduction
One of the biggest advantages of ecommerce to business that keep
sellers interested in online selling is cost reduction. Many sellers have to
pay lots to maintain their physical store. They may need to pay extra
upfront costs like rent, repairs, store desi gn, inventory etc. In many cases,
even after investing in services, stock, maintenance and workforce, sellers
don’t receive desired profits and ROI.
4. Affordable advertising and marketing
Sellers don’t have to spend a lot of money to promote their items.
The world of ecommerce has several affordable, quick ways to market
online. Ecommerce marketplaces are visual channels –and sellers can
really show off their product. For example, Amazon sellers can
useAdvertising tools to add videos, info graphics, good quality resolution
images.
5.Flexibility for customers
An important advantage of ecommerce to business is that sellers
can provide flexibility to customers. One highlight is that the product and
services are ready 24x7. The result is that seller can offer his item any
place, any time.
6. Product and price com parison
In ecommerce, sellers can compare the products using tools or on
their own. This gives them a good idea of product alternatives available,
the standard rates, if a product need is unfulfilled .Comparison is faster
online and covers many products .It helps to save time when making this
comparison, as all details are available on the shopping site. In a physical
store, sellers may not be able get access to so many details –they only
have better knowledge about their own inventory.
7. No reach limitat ions
A seller with a physical store may only be able to reach a certain
number of buyers. They can deliver to the customers’ homes but there canmunotes.in
Page 97
97be distance limitations. Several e -commerce marketplaces have their own
logistics and delivery system.
8. Faster response to buyer/market demands
Every interaction is faster when you begin selling online.
Ecommerce marketplaces offer you a streamlined logistics or delivery
system. What this means is that the buyers order gets delivered efficiently.
Product returns management is one more plus point that can be handled
quickly –you either refund the payments or give a replacement.
9. Several payment modes
Buyers like personalisation –the same goes for paying for their
orders. Ecommerce marketplaces permit m ultiple payment modes that
include UPI, cash on delivery, card on delivery, net banking, EMIs on
credit or debit card and pay -later credit facility.
3.3.5. DISADVANTAGES OF E -COMMERCE:
1. Security
The biggest drawback of e -commerce is the issue of security.
People fear to provide personal and financial information, even though
several improvements have been made in relation to data encryption.
Certain websites do not have capabilities to conduct aut hentic transactions.
Fear of providing credit card information and risk of identity limit the
growth of e -commerce.
2. Lack of privacy
Many websites do not have high encryption for secure online
transaction or to protect online identity. Some websites ill egally collect
statistics on consumers without their permission. Lack of privacy
discourages people to use internet for conducting commercial transactions,
3. Tax issue
Sales tax is another bigger issue when the buyer and seller are
situated in different locations. Computation of sales tax poses problems
when the buyer and seller are in different states. Another factor is that
physical stores will lose business if web purchases are free from tax.
4. Fear
People fear to operate in a paperless and faceless electronic world.
Some of the business organizations do not have physical existence, People
do not know with whom they are conducting commercial transactions.
This aspect makes people to opt physical stores for purchases.
5. Product suitability
People hav e to rely on electronic images to purchase products.
Sometimes, when the products are delivered, the product may not match
with electronic images. Finally, it may not suit the needs of the buyers.
The lack of ‘touch and feel’ prevent people from online sho pping.munotes.in
Page 98
986. Cultural obstacles
E-commerce attracts customers from all over the world. Habits and
culture of the people differ from nation to nation. They also pose linguistic
problems. Thus, differences in culture create obstacles to both the business
and th e consumers.
7. High Labour cost
Highly talented and technically qualified workforce are required to
develop and manage the websites of the organization. Since internet
provides a lot of job opportunities, business organizations have to incur a
lot of expenses to retain a talented pool of employees,
8. Legal issues
The cyber laws that govern the e -commerce transactions are not
very cl ear and vary from country to country. These legal issues prevent
people from entering into electronic contracts.
9. Technical limitations
Some protocol is not standardized around the world. Certain
software used by vendor to show electronic images may not be a common
one. It may not be possible to browse through a particular page due to lack
of standardized software. Insufficient telecommunication bandwidth may
also pose technical problems.
9. Huge technological cost
It is difficult to merge electronic business with traditional business .
Technological infrastructure may be expensive and huge cost has to be
incurred to keep pace with ever changing technology. It is necessary to
allocate more funds for technological advancement to remain competitive
in the electronic world.
3.3.6. JUSTIFY AN INTERNET BUSINESS:
Business involves flow of material as well as flow of information.
Internet evolved as a network to connect businesses and share information.
Apparently, Now Internet controls flow of materials also. Examples are E -
commerce ventures , Uber, Social Networks.
Virtual world act as a parallel to real world, and business activities
such as advertisement, payments, invoices, orders etc. are very well done
in virtual world now.
Internet have created platform to create business. This platform
allows businesses to share information, this not only improves efficiency
but also effectiveness of the businesses.
Business Enterprises can utilize resources in a better way if
business ele ments are connected with each other.munotes.in
Page 99
99Example: Amazon connects: Warehouse, Sellers, Buyer, Logistics
company
Internet business, by its explosive growth, has escalated the
economic growth. It is dominating various areas like logistics, Clod
kitchen, travel etc. In fact, it has completely changed the economy by
helping to bring in gig culture.
Internet business also serves as an easy platform for mid -sized to
small -sized businesses to launch their products. It gives an easy entrance
to new participants into the business.
Doing a business online helps to acquire and retain customers
easily through catchy promotional activities, which is otherwise an
expensive affair. New technology can take you places. Streamlining of
businesses have become easy. Big data, da ta analytics are taking over.
These huge pool of customer data can used to be in constant touch with
them. This helps in building a good customer relationship.
Unlike Brick and mortar model, online business have the ability to
function 24 x 7. This is a w in-win situation for both buyer and seller.
Buyer at his own convenience can shop or order goods/services, whereas
seller will also not lose out his customer base due to timings. In short it
allows you to do business from anywhere , anytime.
All thanks to internet, small companies like Netflix, have become a
global player. According to AMR Research more than 1,3$ trillion of
goods and services will flow through the B2B marketplaces. This has
given tremendous scope to many start -ups which have, in no time, not
made unbelievable profits but also achieve the coveted status of ‘Unicorn’.
3.4 ELECTRONIC PAYMENT SYSTEM
3.4.1. E -PAYMENT SYSTEM
Meaning and Definition
Ane-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 .The electronic payment system has grown
increasingly over the last decades due to the growing spread of internet -
based banking an d shopping. As the world advances more with technology
development, we can see the rise of electronic payment systems and
payment processing devices. As this increase, improve, and provide ever
more secure online payment transactions the percentage of chec k and cash
transactions will decrease.munotes.in
Page 100
1003.4.2. CHARACTERISTIC OF E -PAYMENT SYSTEM:
Security
Since payments involve actual money, payment systems will be a
prime target for criminals. Since Internet services are provided today on
networks that are relat ively open, the infrastructure supporting electronic
commerce must be usable and resistant to attack in an environment where
eavesdropping and modification of messages is easy.
Reliability
As more commerce is conducted over the Internet, the smooth
runni ng of the economy will come to depend on the availability of the
payment infrastructure, making it a target of attack for vandals. Whether
the result of an attack by vandals or simply poor design, an interruption in
the availability of the infrastructure w ould be catastrophic. For this reason,
the infrastructure must be highly available and should avoid presenting a
single point of failure.
Scalability
As commercial use of the Internet grows, the demands placed on
payment servers will grow too. The paymen t infrastructure as a whole
must be able to handle the addition of users and merchants without
suffering a noticeable loss of performance. The existence of central
servers through which all transactions must be processed will limit the
scale of the system. The payment infrastructure must support multiple
servers, distributed across the network.
Anonymity
For some transactions, the identity of the parties to the transaction
should be protected; it should not be possible to monitor an individual's
spending patterns, nor determine one's source of income. An individual is
traceable in traditional payment systems such as checks and credit cards.
Where anonymity is important, the cost of tracking a transaction should
outweigh the value of the information that ca n be obtained by doing so.
Acceptability
The usefulness of a payment mechani sms is dependent upon what
one can buy with it. Thus, a payment instrument must be accepted widely.
Where payment mechanisms are supported by multiple servers, users of
one server must be able to transact business with users of other servers.
Customer bas e
The acceptability of a payment mechanism is affected by the size
of the customer base, i.e. the number of users able to make payments using
the mechanism. Merchants want to sell products, and without a large
enough base of customers using a payment mech anism, it is often not
worth the extra effort for a merchant to accept the mechanism.munotes.in
Page 101
101Flexibility
Alternative forms of payment are needed, depending on the
guarantees needed by the parties to a transaction, the timing of the
payment itself, requirements for auditability, performance requirements,
and the amount of the payment. The payment infrastructure should support
several payment methods including instruments analogous to credit cards,
personal checks, cashier's checks, and even anonymous electronic cash.
These instruments should be integrated into a common framework.
Convertibility
Users of the Internet will select financial instruments that best suit
their needs for a given transaction. It is likely that several forms of
payment will emerge, provi ding different tradeoffs with respect to the
characteristics just described. In such an environment it is important that
funds represented by one mechanism be easily convertible into funds
represented by others.
Efficiency
Royalties for access to informa tion may generate frequent
payments for small amounts. Applications must be able to make these
"micropayments" without noticeable performance degradation. The cost
per transaction of using the infrastructure must be small enough that it is
insignificant ev en for transaction amounts on the order of pennies.
Ease of integration
Applications must be modified to use the payment infrastructure in
order to make a payment service available to users. Ideally, a common
API should be used so that the integration is not specific to one kind of
payment instrument. Support for payment should be integrated into
request -response protocols on which applications are built so that a basic
level of service is available to higher level applications without significant
modific ation.
Ease of use
Users should not be constantly interrupted to provide payment
information and most payments should occur automatically. However,
users should be able to limit their losses. Payments beyond a certain
threshold should require approval. U sers should be able to monitor their
spending without going out of their way to do so.
3.4.3. METHODS OF E -PAYMENT:
1. Credit Payment System
a. 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.
b.E-wallet —A form of prepaid account that stores user’s financial data,
like debit and credit card information to make an online transactio n easier.munotes.in
Page 102
102c. Smart card —A plastic card with a microprocessor that can be loaded
with funds to make transactions; also known as a chip card.
2. Cash Payment System
a.Direct deb it
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.
b. E-check
A digital version of an old paper check. It’s an electronic tra nsfer
of money from a bank account, usually checking account, without the use
of the paper check.
c. E-cash
It is a form of an electronic payment system, where a certain
amount of money is stored on a client’s device and made accessible for
online transa ctions.
d. 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.
3.4.4. SECURE ELECTRONIC TRANSACTION OR SET:
Secure Electronic Transaction or SET is a system which ensures
security and integrity of electronic transactions done using credit cards in
as c e n a r i o .S E Ti sn o ts o m es y s t e mt h a te n a b l e sp a y m e n tb u ti ti sa
security protocol applied on those payments. It uses different encr yption
and hashing techniques to secure payments over internet done through
credit cards. SET protocol was supported in development by major
organizations like Visa, Mastercard, Microsoft which provided its Secure
Transaction Technology (STT) and NetScape which provided technology
of Secure Socket Layer (SSL).
3.4.5. SET PROTOCOL FOR CREDIT CARD PAYMENT:
Requirements inSET :
SET protocol has some requirements to meet, some of the
important requirements are :
It has to provide mutual authentication i.e., customer (or cardholder)
authentication by confirming if the customer is intended user or not
and merchant authentication.
It has to keep the PI (Payment Information) and OI (Order
Information) confidential by appropriate encryptions.
It has to be resistiv e against message modifications i.e., no changes
should be allowed in the content being transmitted.munotes.in
Page 103
103SET also needs to provide interoperability and make use of best
security mechanisms.
Participants inSET :
In the general scenario of online transaction, SET includes similar
participants:
1.Cardholder –customer
2.Issuer –customer financial institution
3.Merchant
4.Acquirer –Merchant financial
5.Certificate authority –Authority which follows certain
standards and issues certificates (like X.509V3) to all other
participants.
SET functionalities :
1.Provide Authentication
Merchant Authentication –To prevent theft, SET allows customers
to check previous relationships between merchant and financial
institution. Standard X.509V3 certificates are used for this
verification.
Customer /Cardholder Authentication –SET checks if use of
credit card is done by an authorized user or not using X.509V3
certificates.
2.Provide Message Confidentiality : Confidentiality refers to
preventing unintended people from reading the m essage being
transferred. SET implements confidentiality by using encryption
techniques. Traditionally DES is used for encryption purpose.
3.Provide Message Integrity : SET doesn’t allow message
modification with the help of signatures. Messages are protected
against unauthorized modification using RSA digital signatures with
SHA -1 and some using HMAC with SHA -1,
4.Dual Signature:
The dual signature is a concept introduced with SET, which aims at
connecting two information pieces meant for two different receiver s:
Order Information (OI) formerchant Payment Information (PI)for
bank
3.4.6. PREPAID E -PAYMENT SERVICES
Prepaid payment instruments are method st h a tf a c i l i t a t ep u r c h a s eo f
goods and services against the value stored on such instruments. The
value stored on such instruments represents the value paid for by the
holder, by cash, by debit to a bank account, or by credit card.munotes.in
Page 104
104The prepaid payment i nstruments that can be issued in the country
are classified under following categories :
Closed System Payment Instruments:
These are payment instruments issued by a person for facilitating
the purchase of goods and services from him/her/them/ it.
Semi -Closed System Payment Instruments:
These payment instruments are redeemable at a group of clearly
identified merchants that contract specifically with the issuer to accept the
payment instrument. These instruments do not permit cash withdrawal or
redemption by the holder.
Semi -open System Payment Instruments:
These are payment instruments that can be used to purchase goods
and services at any card -accepting merchant locations (Point of sale
terminals). These instruments do not permit cash withdrawal or
redempti on by the holder.
Open System Payment Instruments:
These payment instruments can be used for purchase of goods and
services and also permit cash withdrawal at ATMs, Merchant Local
Locations, and automated business correspondents.
Mobile Prepaid Instruments:
These are prepaid talk time instruments issued by mobile service
providers. This talk time value can also be used to purchase 'value added
service' from the mobile service provider or third -party service providers.
The commonly used Prepaid E -Payment Services are:
a.Prepaid Cards:
Prepaid cards are widespread among minors and customers with no
bank accounts. The most popular prepaid cards are Mint, Ticket surf, Pays
afe card, and Telco Card. Age rather than income affects the adopt ion of
prepaid cards. Prepaid cards come in various stored values for customers
to choose from. Online gaming companies usually offer prepaid cards as
their preferred payment method in order to load it with virtual currency for
in-game transactions
b.Smart C ards:
Smart cards is another method of prepaid payment system. Its is
familiar to passengers travelling through Metros. Many a times it is also
used at resorts, amusement parks. This smart card or token has
microprocessor embedded in it. A cus tomer possessing a smart card/token
denotes that he/she has already made the payment.munotes.in
Page 105
1053.4.7. POST E -PAYMENT SERVICES:
Postpaid is defined as a scheme in which the customers are billed
at the end of the month for the services availed by them. Normally, the
customer is charged as per his contract with the service provider, which
specifies the limit for browsing, texting, calling minutes, shopping etc. If
the usage is less than or equal to the limit specified, the user is charged at
af l a tr a t e . Any usage over and above is subject to extra charges. It can
also be said that the user can enjoy unlimited credit.
The commonly used Post Paid methods are:
a. Credit Cards :
Today, credit cards are the most common way to pay on the
web. Visa, MasterCard, Deliver, and American Express are the major
credit card networks. There is a wide range of local credit cards used
globally. When integrating a payment gateway merchant get to choose
what types of credit cards to offer. Credit card processing fees usually
look like a fixed percentage out of a transaction. An average credit card
fee ranges from 1.5% to 3.5% per transaction.
b. Mobile Payments
Mobile payments are widespread in countries with a low credit
card and banking penetration. For example, some areas of Asia, Africa,
and Latin America. Mobile payments allow customers to purchase on e -
commerce websites quickly and hassle -free. They are com monly used on
browser games, donation portals, and social media networks (aka dating
sites, where customers can pay with SMS.
c, Bank Transfers
Banks transfer is a reliable and secure payment method. It assures
customers that their funds are safely used a s each transaction has to be
authenticated and verified first by the customer’s internet banking.
d. E-wallets
An e-wallet acts as a web treasury that stores a customer’s personal
data and funds. The money can later be used to purchase from online
stores and websites. Getting an e -wallet is fast and easy, with customers
demanded just to submit their information once for purchases. One of the
most popular e -wallets is Paytm. Many banks have started providing
wallets.
e. Remittance system transfer
Businesses with a high average ticket amount benefit from offering
swift and SEPA as payment methods. They are the types of remittance
systems, wire transfers. SWIFT is a global remittance system that is
available inside the US. It processes dollars. SEPA, on the contrary,
functions inside the European Union and supports euro only.munotes.in
Page 106
1063.4.8. TYPES OF PAYMENT SYSTEM:
1.Credit Card
The most popular form of payment for e -commerce transactions is
through credit ca rds. It is simple to use; the customer has to just enter their
credit card number and date of expiry in the appropriate area on the
seller’s web page. To improve the security system, increased security
measures, such as the use of a card verification numbe r (CVN), have been
introduced to on -line credit card payments. The CVN system helps detect
fraud by comparing the CVN number with the cardholder's information
2.Debit Card
Debit cards are the second largest e -commerce payment medium in
India. Customers who want to spend online within their financial limits
prefer to pay with their Debit cards. With the debit card, the customer can
only pay for purchased goods with the money that is already there in
his/her bank account as opposed to the credit card where the amounts that
the buyer spends are billed to him/her and payments are made at the end of
the billing period.
3.Smart Card
It is a plastic card embedded with a microprocessor that has the
customer’s personal information stored in it and can be loaded with fu nds
to make online transactions and instant payment of bills. The money that
is loaded in the smart card reduces as per the usage by the customer and
has to be reloaded from his/her bank account.
4.E-Wallet
E-Wallet is a prepaid account that allows the customer to store
multiple credit cards, debit card and bank account numbers in a secure
environment. This eliminates the need to key in account information every
time while making payments. Once the customer h as registered and
created E -Wallet profile, he/she can make payments faster.
5.Net banking
This is another popular way of making e -commerce payments. It is
a simple way of paying for online purchases directly from the customer’ s
bank. It uses a similar method to the debit card of paying money that is
already there in the customer’s bank. Net banking does not require the
user to have a card for payment purposes but the user needs to register
with his/her bank for the net banking facility. While completing the
purchase the customer just needs to put in their net banking id and pin.
6.Mobile Payment
One of the latest ways of making online payments are through
mobile phones. Instead of using a credit card or cash, all the customer has
to do is send a payment request to his/her service provider via text
message; the customer’s mobile account or credit card is charged for the
purchase. To set up the mobile payment system, the customer just has tomunotes.in
Page 107
107download a software from his/her service provider’s website and then link
the credit card or mobile billing information to the software.
7.Crypto currency:
In the last decade, crypto currency has gained a lot of importance.
Many businesses are allowing an option of payment by Crypto currency.
Foreg. Tesla is contemplating to accept Bitcoins as payment option.
8.Electronic Cheque:
The electronic Cheque or e -cheque, is based on the idea that
electronic documents can be substituted for paper and public key
cryptographic signatures can be substituted f or handwritten signatures.
The e -cheques is designed to fit into current cheque practices and system
with minimum impact on payers, payees, banks and the financial system.
3.5 OPERATIONAL, CREDIT AND LEGAL RISKS OF E -
PAYMENT SYSTEM
3.5.1. CONCERNS FOR E -COMMERCE GROWTH:
1. Finding the right products to sell
Shopping cart platforms like Shopify have eliminated many
barriers of entry. Anyone can launch an online store within days and start
selling all sorts of products. Amazon is taking over the eCommerce world
with their massive online product catalogue. Their marketplace and
fulfilment services have enabled sellers from all over the world to easily
reach paying customers. All of this has made it very difficult for retailers
to source unique products unless you they decide to manufacture your
own.
2. Attracting the perfect customer
Online shoppers don’t shop the same way as they used to back in
the day. They use Amazon to search for products (not just Google). They
ask for recommendations on Social Media. They use their smart phones to
read product reviews while in -store and pay for pu rchases using all sorts
of payment methods. Retailers must figure out where their audience is and
how to attract them efficiently without killing their marketing budget.
3. Generating targeted traffic
Digital marketing channels are evolving. Retailers can no longer
rely one type of channel to drive traffic to their online store. They must
effectively leverage SEO, PPC, email, social, display ads, retargetin g,
mobile, shopping engines and affiliates to help drive qualified traffic to
their online store. They must be visible where their audience is paying
attention.
4. Capturing quality leads
Online retailers are spending a significant amount of
money driving traffic to their online store .With conversion rates rangingmunotes.in
Page 108
108between 1% to 3%, they must put a lot of effort in generating leads in
order to get the most out o f their marketing efforts. The money is in the
list. Building an email subscribers list is key for long term success. Not
only will help you communicate your message, but it will also allow you
to prospect better using tools such as Facebook Custom Audie nces. Not all
leads are created equally. Retailers must craft the right message for the
right audience in order to convert them into leads with hopes of turning
them into customers.
5. Nurturing the ideal prospects
A small percentage of your email list w ill actually convert into
paying customers. Nonetheless, retailers must always deliver value with
their email marketing efforts. Online retailers put a lot of focus on
communicating product offering as well as promotions, but prospects need
more than that .Value and entertainment goes a long way but that requires
more work.
6. Converting shoppers into paying customers
Driving quality traffic and nurturing leads is key if you want to
close the sale. At a certain point, you need to convert those leads in order
to pay for your marketing campaigns. Retailers must constantly optimize
their efforts in converting both email leads as well as website visitors into
customers. Conversion optimization is a continuous process.
7. Retaining customers
Retaining the old customers is more expensive than attracting the
new ones. Retailers must implement tactics to help them get the most out
of their customer base in increase customer lifetime value.
8.Achieving profitable long -term growth
Increasing sales is one way to grow the business but in the end,
what matters most is profitability. Online retailers must always find ways
to cut invent ory costs, improve marketing efficiency, reduce overhead,
reduce shipping costs and control order returns.
9. Choosing the right technology & partners
Some online retailers may face growth challenges because their
technology is limiting them or they’ve hi red the wrong partners/agencies
to help them manage their projects. Retailers wanting to achieve growth
must be built on a good technology foundation. They must choose the
right shopping cart solution ,inventory management software ,email
software , CRM systems, analytics and so much more.
10. Attracting and hiring the right people to make it all happen
Attracting the right talent is key in order to achieve desirable
online growth. Also, having the right leader plays an even bigger role.
Retailers should be out there getting their name out within the online
community by attending e -commerce conferences , speaking at events andmunotes.in
Page 109
109networking. Employees want to work for companies that care about them
and their future.
3.5.2. RISKS INVOLVED -
1.Online Security risk
There isawhole range ofsecurity threats outthere tobeware of,
including malware, phishing attacks, hacking andspam mail.
To defend against these threats, make sure that you update your platform’s
operating system regularly, and use a strong SSL
2.System Reliability Risk
TheInternet service provider (ISP) server could crash, your online
payment system could show errors andtheecommerce plug-incould have
bugs.
Except keeping all operating systems and APIs updated, these are
just some things that may happen outside of our control.
3.Privacy Issues Risk
Customers’ personal data could becompromised and used for
spamming, identity theft andunsolicited marketing.
In addition to the online security measures previously mentioned, make
sure to require customers to use strong passwords.
4.Customer Disputes
Acustomer might nothave received their order, their credit card
was charged twice, ortheproduct their received didn’t fittheonline
description.
Whether the customer is right or not, it’s important to always
have great customer service and to rectify all possible mistakes that were
made.
5.Credit Card Fraud
Someone could use astolen credit card tomake anonline
purchase, orahacker could usestolen credit data from other customers in
your system.
No matter how good your online security measures are, always
watch out for any suspicious transactions.
6.Intellectual Property Issues
Your website images, product descriptions, logos, videos, music,
aswell asyour products, could becopied byothers, orviolate someone
else’s intellectual property.munotes.in
Page 110
1107.SEO
Google orother platforms could doacomplete makeover oftheir
algorithm atanytime, andmake your website traffic drop significantly
overnight.
8.Taxation
You might notbeincluding theappropriate sales taxinyour sales,
oryouarenotpaying fairshipping and/or import taxes depending onyour
shipping destination.
9.Return ofGoods andWarranty
Common headaches when dealing with product returns: Increase in
supply chain costs andnotbeing able toresell theitems attheir original
price.
10.Warehousing andLogistics Risk
You could runoutofstocks while orders arecoming in,aproduct
shipment might bedelayed, oraparcel could bedelivered tothewrong
recipient.
These are risks that come with the territory when running an
ecommerce business.
The most important thing you can do is to always keep these in
mind, and to build a strategy on how to deal with them once they happen.
11. Cyber Risk:
(a)Cyber Attacks
(b)Hacking (Phishing, IP Spoofing,)
3.5.3. PRINCIPLES FOR E -PAYMENT
1. Integrity and authorization
A payment system with integrity allows no money to be taken
from a user without explicit authorization by that user. It may also
disallow the receipt of payment without explicit consent, to prevent
occurrenc es of things like unsolicited bribery. Authorization constitutes
the most important relationship in a payment system. Payment can be
authorized in three ways: via out band authorization, passwords, and
signature.
2.Out-band authorization:
In this approach, the verifying party (typically a bank) notifies the
authorizing party (the payer) of a transaction. The authorizing party is
required to approve or deny the payment using a secure, out -band channel
(such as via surface mail or the phone) . This is the current approach for
credit cards involving mail orders and telephone orders: Anyone who
knows a user's credit card data can initiate transactions, and the legitimate
user must check the statement and actively complain about unauthorizedmunotes.in
Page 111
111transactions. If the user does not complain within a certain time (usually
90 days), the transaction is considered "approved" by default.
3.Password authorization :
A transaction protected by a password requires that every
message from the auth orizing party include a cryptographic check value.
The check value is computed using a secret known only to the authorizing
and verifying parties. This secret can be a personal identification number,
a password, or any form of shared secret. In addition, s hared secrets that
are short -like a six -digit PIN -are inherently susceptible to various kinds
of attacks. They cannot by themselves provide a high degree of security.
They should only be used to control access to a physical token like a smart
card (or a wallet) that performs the actual authorization using secure
cryptographic mechanisms, such as digital signatures.
4.Signature authorization :
In this type of transaction, the verifying party requires a digital
signature of the authorizing party . Digital signatures provide non
repudiation origin: Only the owner of the secrete signing key can sign
messages.
5.Confidentiality :
Some parties involved may wish confidentiality of transactions .
Confidentiality in this context means the rest riction of the knowledge
about various pieces of information related to a transaction: the identity of
payer/payee, purchase content, amount and so on. Where anonymity and
un-traceability are desired, the requirement may be to limit this knowledge
to certa in subsets of the participants only.
6.Availability and reliability:
All parties require the ability to make or receive payment
whenever necessary. Payment transactions must be atomic. They occur
entirely or not at all, but not hanging. No payer would accept a loss of
money due to network or system crash. Availability and reliability
presume that the underlying networking services an all software and
hardware components are sufficiently dependable.
3.6 SUMMARY
The module discusses the emergence of E -Commerce. It also
throws light on the pros and cons of this buzzing business mode. In
continuation to this, the module also discusses E -marketing and its types.
There are various ways of E -Marketing which are categor ically
mentioned. The E -Payment system, which happens to be the most
sensitive area of E -Commerce, has a standard principles and specific
protocol which is included in this module.munotes.in
Page 112
1123.7 EXERCISE
Questions for Exercise:
A.Select appropriate option and fill in the blanks:
1.Communicating the prospects about the various features of a
product/service online using internet tools is called ---
(E-Marketing /E-Commerce/ E -Payment )
2.----in e-Commerce research is gaining tremendous importance in
todays time. (Google/ Data factoring/ Data analytics )
3.----promote content & increases visibility through online searches.
(Seamless Electronic Mechanism/ Search Engine Optimization /
Secured Electronic Marketing)
4.Marketing communication done on platforms like Facebook, Twitter,
Instagram is called ----
(Social Marketing/ Social Media Marketing / Societal Marketing)
5.----ads are advertisements where the promoters pay every time a user
clicks on an ad.
(Pay Per Cancellation/ Pay Per Click /P a yP e rC a l l )
6.----is a kind of online advertising that uses online cookies to track
followers around the internet, in order to target them again.
(Demarketing/ Remarketing /P r e m a r k e t i n g )
7.An----system is a way of making transactions or paying for goods
and services through an electronic medium, without the use of checks
or cash.
(E-Marketing/ E -Media Planning/ E -Payment)
8.Social Media helps a marketer to gain ----
(Market insights / Market Competition/ Ma rket Disruptors )
B.State whether the following statement is TRUE or FALSE:
1.Confidentiality is not maintained in E -Payment System -FALSE
2.Social Media Marketing calls for high level of creativity and need for
constant engagement -TRUE
3.Tesla has declared that it will accept Bitcoin as a payment option -
TRUE
4.E-Kart is logistics Unit, an extension of Amazon -FALSE
5.E-payment is a prime target for online criminals -TRUE
6.Problem recognition is the first step in Online Purchase Buying
Process -TRUEmunotes.in
Page 113
1137.Measuring online Marketing efforts is difficult -TRUE
8.Customer Satisfaction does not lead to brand loyalty -FALSE
9.Word -of-mouth has to be be the most powerful marketing tool. TRUE
10.Digital signatures do not provide non repudiation origin. TRUE
C. Answer the following questions
1.Define e -Marketing and its Scope
Or
Explain the areas where E -Marketing can be brought into use.
2.What are the different techniques used in E -Marketing
3.Write a note on Web Counters
4.Elaborate the different types of Web Adver tisements used
5.Discuss the advantages and Disadvantages of Social Media Marketing
6.Discuss the E -Buying Process in detail
7.Explain the planning process for E -Commerce
8.Discuss the advantages and Disadvantages of E -Commerce
9.What are the characteristics of an E -Payment System?
10.Explain the SET protocol for Credit Card Payment
11.What are the growing concerns for E -Commerce?
12.Explain the risks involved in E -Commerce
13.State the Standard setting/ Industry Principles for E -Payment Syst em
munotes.in
Page 114
1144
LEGAL AND REGULATORY
ENVIRONMENT AND SECURITY ISSUES
OF E -COMMERCE
Unit Structure:
4.0 Objective
4.1 Introduction
4.2 Introduction to Cyber Laws
4.3Taxation Issues in E-Commerce
4.4 Security Issues in E -Commerce
4.5 Security tools in E-Commerce
4.6 Summary
4.7 Exercise
4.0. OBJECTIVES
After studying this unit the student will be able to -
Understand the concept Legal and Regulatory Environment
Knowledge about Cyber Laws and protection
Know about the protection to Cyber Consumers
Know about the Risk Management of E -Commerce Security
Understand about various tools of security in E -Commerce
4.1INTRODUCTION
E-commerce is considered a game -changer for the Indian economy
and the future of “Digital India”. R -commerce can be regarded as one of
the greatest development of this century. The increasing scope of E -
commerce has already revolutionized the way business es are being done
nowadays. The shift from the conventional method of doing business
physically to the modern method of doing it virtually online has
tremendously given rapid growth to many sectors. With this growth, it is
equally important to establish tr ust and confidence amongst consumers
concerning fair dealing. Two points need to be addressed:
(i)Is the current legal framework concerning e -commerce adapted to
create confidence,
(ii)Are the existing rules providing the predictability that business
activity needs?munotes.in
Page 115
115The legal & regulatory framework provides a lot of protection by
making the service providers to compulsory adhere to, on online
platforms.
4.2INTRODUCTION TOCYBER LAWS
4.2.1 CYBER LAWS
Information Technology getting advanced day by day has taken
computers to play an important role in today’s business but unfortunately,
it has also given rise to crimes using computers.
It is very important hence to enforce laws that can educate in the
cyber sector to keep up with this criminal element. It is important to
educate people on cyber laws and security practices to use the platform.
Cyber Crime; -
Cybercrime is criminal activity that uses a computer, a computer
network, or a networked device. While most cybercrimes are carried out to
generate profit for the cybercriminals, some cybercrimes are carried out
against computers or devices directly to damage or disabl e them, while
others use computers or networks to spread illegal information, images, or
other materials.
According to the latest govt data, India has recorded a massive
increase of 63.5% in cybercrime cases in 2019. The National Crime
Record Bureau's (NC RB)data stated that 44,546 cases of cybercrimes
were registered in 2019 as compared to 28,248 in 2018.
With the increasing usage of the internet and the increasing
cybercrime, it is important to take measures to control it. The existing laws
of India, even with the most compassionate and liberal interpretation could
not be interpreted in the light of emergency that could include all aspects
relating to different activities in cyberspace.munotes.in
Page 116
116Cyber Laws: -
Cyberla w is a term used to describe the legal issues related to the
use of communications technology, particularly "cyberspace", i.e. the
Internet. It is a distinct field of law. It is an intersection of many legal
fields, including intellectual property, privacy , freedom of expression, and
jurisdiction.
Cyberlaw is any lawthat applies to the internet and internet -related
technologies. Cyberlaw provides legal protections to people using the
internet.
4.2.2 CYBER LAWS IN INDIA
In India, Cyber Laws are included under Information Technology
Act, 2000, which came into force on October 17, 2000. The main purpose
of the Act is to provide legal recognition to e -commerce and to facilitate
the filing of electronic records with the Gover nment.
With an increase in the dependency on the use of technology, the
need for cyber law was necessary. Much like every coin has two sides,
therefore, the dependency on technology has its pros and cons.
The major areas of cyber law include:
a. Fraud
b. Copyright
c. Defamation
d. Harassment and Stalking
e. Freedom of Speech
f. Trade Secrets
g. Contracts and Employment Law
Case Studies of Cyber Crime: -
a) Bazee.com case
In December 2004 the Chief Executive Officer of Bazee.com was
arrested because he was selling a compact disk (CD) with offensive
material on the website, and even CD was also conjointly sold -out in the
market of Delhi. The Delhi police and therefore the Mu mbai Police got
into action and later the CEO was free on bail.
b) Parliament Attack Case
The Bureau of Police Research and Developme nt, Hyderabad had
handled this case. A laptop was recovered from the terrorist who attacked
the Parliament. The laptop which was detained from the two terrorists,
was under siege, was sent to the Computer Forensics Division of BPRD.
The laptop contained se veral proofs that affirmed the two terrorist’s
motives, mainly the sticker of the Ministry of Home that they had created
on the laptop and affixed on their ambassador car to achieve entry into
Parliament House and the fake ID card that one of the two terro rists wasmunotes.in
Page 117
117carrying with a Government of India emblem and seal. The emblems (of
the 3 lions) were carefully scanned and additionally, the seal was also
craftly created together with a residential address of Jammu and Kashmir.
However careful detection prove d that it was all forged and made on the
laptop.
Many such cases of Cyber Crimes are there, which indicates the
loopholes in the Law.
4.2.3 LIMITATION OF CYBER LAWS: -
With Indians using the internet for all their needs, ranging from
shopping to bank ing, studying to storing data, and cybercrimes
increasing , there are some limitations or challenges that need to be dealt
with. These limitations are: -
1.Lack ofuniformity indevices used forinternet access :-
With varying income groups in India, not e veryone can afford
expensive phones. In the US, Apple has over 44% market share. However,
in India, the iPhones with their higher security norms are used by less than
1% of mobile users. The widening gap between the security offered by the
high-end iPhone and lower cost mobiles makes it almost impossible for
legal and technical standards to be set for data protection by the regulators.
2.Lack ofnational level architecture forCybersecurity :-Critical
infrastructure is owned by the private sector, and the armed forces have
their firefighting agencies. However, there is no national security
architecture that unifies the efforts of all these agencies to be able to assess
the nature of any threat and tackle them effectively.
3.Lack ofseparation :-Unlike co untries or states, in cyberspace there are
no boundaries, thus making the armed forces, digital assets of ONGC,
banking functions, etc. vulnerable to cyber attacks from anywhere. This
could result in security breaches at a national level, causing loss of m oney,
property, or lives. To respond to possible threats to the country’s most
precious resources, there is a need for a technically equipped multi -agency
organization that can base its decisions on policy inputs and a sound
strategy.
4.Lack ofawareness :-In absence of a national regulatory policy in place
for cybersecurity there is a lack of awareness at both the company level as
well as individual level. Protection from the cyber attacks is possible only
if there is a guided and supervised legal framew ork.
Efforts must be made for improvement. With strengthened cybersecurity
defenses in India’s future, Indian businesses will become more
competitive on a global level and create a safer digital Indiamunotes.in
Page 118
1184.2.4 HACKING: -
One of the Cyber Crimes that is very common is “Hacking”. It
refers to the activity of identifying weaknesses in a computer system or a
network to exploit the security to gain access to personal data or business
data. An example of computer hacking can be :-“using a password
cracking algorithm to gain access to a computer system.
AHacker is a person who finds and exploits the weakness in
computer systems and/or networks to gain access. Hackers are usually
skilled computer programmers with knowledge of c omputer security.
4.2.5 TYPES OF HACKERS: -
1.Ethical Hacker / White ha t:-A security hacker who gains access to
systems intending to fix the identified weaknesses. They may also perform
penetration testing and vulnerability assessment.
2.Cracker / Bla ck hat: -A hacker who gains unauthorized access to
computer systems for personal gain. The intent is usually to steal corporate
data, violate privacy rights, transfer funds from bank accounts, etc.
3.Grey hat: -A hacker who is in between ethical and b lack hat hackers.
He/she breaks into computer systems without authority intending to
identify weaknesses and reveal them to the system owner.
4.Script kiddies: -A non -skilled person who gains access to computer
systems using already made tools.
5.Hackt ivist: -A hacker who uses hacking to send social, religious, and
political, etc. messages. This is usually done by hijacking websites and
leaving a message on the hijacked website.
Laws on hacking in India: -
Section 43 and section 66 of the IT Act cover the civil and
criminal offenses of data theft or hacking respectively. ... Section 66B
covers punishment for receiving stolen computer resources or information.
The punishment includes imprisonment for one year or a fine of rupees
one lakh or both
4.2.6 W EB VANDALS :
Web or Digital vandals can be defined as defacing the digital
assets of a company or individual to cause nuisance or permanent damage.
In Weg /digital vandalism r ather than physically damaging
technology, digital vandals hack the technology to create issues within the
technology itself. Digital vandalism can target a single computer or an
entire company, creating simple pranks within websites or altering massesmunotes.in
Page 119
119of data and information. Destroying cyberspace is a digital vandal’s ma in
aim, with many vandals spending hours writing software responsible for
the cyberattacks around the world. The implications for the rise of digital
vandalism are therefore huge and have continued to grow with the
advancement of technology in recent years .
Case Study
A high profile digital vandalism prank occurred in 2015 when
Google allowed its users to participate in map creation on its Map Maker.
Digital vandals seized the opportunity to create an illustration of an
Android mascot urinating on Apple’s logo for the public to see. Even
though Google removed the map as soon as it was flagged to them, the
vandalism resulted in Google disabling the map editing capability until
digital moderation was adapted and improved. The Map Maker is now
enabled again, b ut editing is slower due to the new moderation systems in
place. Digital vandals are constantly looking for potential technology to
hack, with high profile companies as exceptionally desirable targets.
4.2.7 TYPES OF DIGITAL VANADALS: -
1. Damaging System Elements: -
Cyber vandalism may hit a business in the form of an element of a
system being damaged in order to interrupt its normal utilization.
Cybercriminals may do this by developing and sending malicious software
that disables anything from a computer' s hard drive to a server that stores
information to specific programs or applications.
2. Damaging Computer Hardware
Under this vandalism occurs when a disk drive is removed in an
attempt to disable a computer system. This could happen internally by
some employee or externally from a thief attempting to steal company
data or intellectual property. The loss of important information in this way
can cause financial loss or loss of reputation.
3. Defacing Websites
Website defacement can be another form of di gital vandalism that
a company may have to contend with. Individuals often deface websites to
make a political statement or simply to draw attention or cause chaos.
Anytime a cybercriminal makes changes to a website or its appearance, it
is considered defa cing a website.
4.2.8 E -MAIL ABUSE: -
E-Mail abuse refers to the unsolicited sending of spam , third party
advertisements, derogatory language, slander, and threats via electronic
mail.
Unsolicited emails such as phishing attacks and unwanted spam
are an increasing problem. These email accounts belong to people who
have a habit of marking emails as spam. In email marketing, they're
known as “complainers.”munotes.in
Page 120
120According to a stu dy by Mail Chimp , which analyzed hundreds of
millions of email campaigns, companies that have between 26 and 50
employees have the lowest abuse rates: 0.007 percent. Some 53 percent of
the world’s email traffic is spam.
According to the statistical dat a, in 2019, people are
getting about 126 emails a day . On top of that, over 53% of the world’s
email traffic overall is spam.
4.2.9 TYPES OF EMAIL -ABUSE: -
1. Ads
This is one of the most common types of spam. Most of the time
the emails are being flooded by these unwanted and unrealistic messages.
Like unsolicited commercial email messages sent in bulk, often using a
purchased (or stolen) mailing list that includes your address, misle ading
messages from people, counterfeit messages etc.
2. Chain Letters
Another type of Email abuse is chain letters, which tell exciting
and thrilling stories and persuade you to pass the message along under
penalty of having something very bad happen to you. Like –“Pass it to 10
more members, or something bad will happen”, or “passing it to 10 more
will bring good luck to you.
3. Email Spoofing
This spam is related to phishing scams. They happen when
spammers or phishers try to fool you by impersonatin g someone you know
or a company you have a relationship with. This is one of the most
dangerous types of spam. Like -anemail from a well -known shopping
website, asking the recipient to provide sensitive data such as a password
or credit card number., or a link that installs malware on the recipient's
device if clicked.
4. Hoaxes
This type of spam, includes offers and miracle promises, such as,
for example, "get rich in less than a month" or "gain the body of your
dream by eating more and working out l ess".
5. Money Scams
Money spam also involves asking for money for hungry children in
Africa or for families who have suffered losses as a result of a natural
disaster.
This email abuse, however, can be controlled by installing an email
security system o r using anti fraud protection that protects the company
domain.munotes.in
Page 121
121Under Cyber law, The Can Spam Act , 2003., has been formulated
to control Email abuse. This lawis an Actto govern inter -state commerce
by imposing limitations and penalties on the transmissi onofunsolicited
commercial electronic mail through the internet.
4.2.10 SOFTWARE PIRACY
Software piracy is a term used to describe the act of illegally using,
copying or distributing software without ownership or legal rights. The
majority of software today is purchased as a single -user license, meaning
that only one computer may have that software installed on it at one time
Copying software to multiple computers or sharing it without multiple
licenses is considered illegal software piracy.
4.2.11 TYP ES OF SOFTWARE PIRACY
1. Counterfeiting
This type of piracy is the illegal duplication, distribution, and/or sale
of copyrighted material with the intent of imitating the copyrighted
product.
2. Internet Piracy
This occurs when software is downlo aded from the Internet. The
same purchasing rules apply to online software purchases as for those
bought in compact disc format.
3. End User Piracy
This occurs when an individual reproduces copies of software
without authorization. Like Using one licens ed copy to install a program
on multiple computers, or copying discs for installation or distribution
4.Client -Server Overuse
This type of piracy occurs when too many users on a network are
using a central copy of a program at the same time. If there a re more users
than allowed by the license, then its "overuse."
5. Hard -Disk Loading
This occurs when a business sells new computers with illegal
copies of software loaded onto the hard disks to make the purchase of the
machines more attractive.
In 2018, the Business Software Alliance estimated that 37% of all
software installed on personal computers was unlicensed, which translated
to $46.3 billion in lost revenue . Bit Torrent, the most popular file sharing
website, accounted for 22% of global upload bandwidth in 2018,
according to Sandvine. That shows how much people are int erested in
pirating content.munotes.in
Page 122
122Ways to avoid Software Piracy: -
1) Copyrights, patents, and end user agreements
2) Software product keys
3) Obfuscation
4) Tamper -proof software
5) Software watermarking
CASE STUDY
The Defendants (accused) were engaged in the busines s of
assembly and sale of computers since 1996 and were selling computers
loaded with pirated versions of Microsoft software. Microsoft placed a
trap order with the Defendants through a Microsoft employee, and the
Defendants sold to this employee a compute r preloaded with Microsoft's
pirated software, viz., visual studio 6.0, MS Windows 98 and MS Office
2000. Thereafter, Microsoft filed a suit against the Defendants inter alia
for an order of permanent injunction and damages on the ground that the
Defendant s did not have any license or permission from Microsoft to copy
or sell its software.
JUDGEMENT
The Delhi High Court awarded damages of approximately Rs.
2,000,000 (US$46500) to Microsoft Corporation (“Microsoft”) in a
software piracy case, which is one of the highest damages award in such
cases in India. In addition to awarding the damages, the cou rt granted a
permanent injunction against one, Mr.Yogesh Popat and others (the
“Defendants”), from carrying out any infringement/passing off activities
of Microsoft products, copyrights or trademarks. The court also passed an
order against the Defendants t o deliver all pirated copies of Microsoft’s
software, including the equipment used to make infringing copies of the
software, as well as other infringing materials in the Defendants’
possession.
4.2.12 SOFTWARE PATENTS
Apatent is the granting of a pro perty right by a sovereign
authority to an inventor. This grant provides the inventor exclusive rights
to the patented process, design, or invention for a designated period in
exchange for a comprehensive disclosure of the invention. They are a form
of inc orporeal right.
Software Patent law in India
The Indian Patent Law does not contain any specific provision
regarding the protection of computer software. There are no guidelines or
office procedures followed by the Indian patent office regar ding computer
software, however a claim to a manner of manufacture, which results in a
tangible product, which requires the application of an algorithm or a
particular computer program, may be patentable. India has recently
prepared itself for providing pa tent registrations on software.munotes.in
Page 123
1234.3 TAXATION ISSUES IN E -COMMERCE
INTRODUCTION
With the computer and its technology being very much in use in
the business and industry sectors, there is tremendous development the
way businesses are being carried today.
E-commerce started in US and China at first. In 1990 the online
retail busines s in US accounted for $15 billion and grew to $389 by 2016.
India's e -commerce market was worth about $3.9 billion in 2009, it went
up to $12.6 billion in 2013. In 2013, the e -retail segment was worth
US$2.3 billion. About 70% of India's e -commerce market is travel related.
According to Google India, there were 35 million online shoppers in India
in 2014 and is expected to cross 100 million mark by end of year 2016. By
2020, India was expected to generate $100 billion online retail revenue out
of which $35 billion will be through fashion e -commerce.
It is expected that this will grow 4 times in coming years.
4.3.1 TAXATION ISSUES
Taxation ofe-commerce is an important issue for countries,
businesses and consumers who want to be a party of e-commerce .T h e
issues such as taxloss and taxevasion are crucial.
As per Indian taxation structure the basis of taxinIndia has been
resident based taxation while in other countries the taxation basis has
been source basis. However with e-commerce transactio ns the need for a
physical presence virtually ceases, which further creates problems in the
enforcement of taxlaws.
With globalization and E -commerce business growing rapidly, the
world has become one single market and the territory barriers no more is
applicable. In such a scenario and increasing cyber crimes, having a
common taxation regime is all the more important.
With compliance burden and potential increase of costs, many of
the e -commerce players consider unilateral measures taken by Indi aa sa
deterrent to an effective business model.
Some of the fundamental tax -related issues raised by the evolution
of cross -border e -commerce transactions may be summarised as follows:
a need to develop new norms and tenets of interpretation to determine
the nature and character of income from cross -border e -commerce
transactions
a need to create a new definition and meaning of the permanent
establishmentmunotes.in
Page 124
124a need to change the basis of taxation -for example, residence -based
taxation principles of tax neutrality be adhered to.
Unless these issues are addressed, an erosion of the tax base may
result, especially for developing and underdeveloped countries.
In absence of boundaries and physical nature of transactions in
goods and services, there are many issues relating to the taxation of E -
Commerce which are : -
1. Tax Jurisdiction: -
As per traditional rules of determination of jurisdiction, the
courts in a country have jurisdiction over individuals and/or to the
transactions which occurs within the territorial boundaries of that country.
But in case of E commerce there is no such jurisdiction that is applicable.
The identification of the cou ntries that have tax jurisdiction is one of the
major issues.E -commerce enables a distant person to initiate multiple
transactions with customers in different countries without getting in touch
with them. Since the supplier has no existence at all in the jurisdiction of
the customer, establishing place of supply would not be an easy task. Even
the development of WAP (Wireless Application Protocol) integrates
mobile telephony with the Internet, making the place of origin of business
invisible is a real c hallenge .
2. Permanent Establishment: -
Due to the intangible nature of transactions in E -Commerce, it is
difficult to determine permanent establishment. Determining permanent
establishment of the geographic location and ownership of web servers
furthe r complicate the matter. To tax E -Commerce transacted on the
websites hosted on its web server in another country web servers,
hosting companies is required to have a “permanent establishment” status
(a rule of Websites comprises of databases and software do not
constitute “real property” and therefore not considered to have
permanent e For an Internet -based business to be accountable for taxes,
possession of ownership or lease of the web server is an essential criterion.
However, the possibility of a quick transfer of website and its database to
a poses a challenge for governments to easily track and collect taxes from
businesses having operations all over the world.
3. Tax Collection: -
Web-based businesses which have an outstanding reach to the
universe of customers at low cost, provide an opportunity for small
companies to flourish with minimal start -up capital. But the to track tax
collection with these companies becomes really impo ssible
4. Confidentiality: -
The revenue legislation of most nations covers confidentiality
provisions preventing their tax administration from revealing
information regarding a taxpayer's tax affairs to another revenue
authority. Th erefore, secrecy laws act as a further barrier to cooperationmunotes.in
Page 125
125and integration within tax authorities across the world. Even where
secrecy provisions do not apply, fear of unwanted economic consequences
such as capital .
4.3.2 CONSUMER PROTECTION ACT 1986 AND CYBER
CONSUMER
TheConsumer Protection Act 1986 was passed by the Indian
Parliament to protect consumer rights and to redress consumer complaints
and resolve consumer disputes. It protects the consumers from unfair
trading or unfair trade practices.
TheConsumer Protection Act was passed in 1986 and it came into
force fromI July, 1987. The main objectives of the Actare to provide
better and all round protection toconsumers and effective safeguards
against different types of exploitation such a s defective goods, deficient
services and unfair trade practices.
Features Of CPA 1986
i) Uniformity: -This Act applies to all kinds of goods, services and unfair
trade practices unless there is specific exemption made by the central
government. All the s ector whether they are private, public or cooperative
is covered under this Act.
ii) 3-Tier Redressal: -This Act gives consumers three tiers redressal
system. There is redressal forums at centre, state and District levels for
providing justice to the victi m consumer. Three tiers are: -
National commission : -Section 20 to 27A of the Act talks about the
composition of the commission, applications of the complaint,
procedures, appeal etc. The complaint must exceed amount of one
core. The goods if found defect ive after testing are asked for
replacement or compensation for that defects.
State commission ( Section 16 -19A) : -State commission is formed by
each stat e which consist of two members and president. The complaint
should be at least amount of 20 lakh and not exceed more than one
core. If the goods are found defective after testing then assured party
are asked for replacement and compensation.
District Foru m ( Section 9 -15) : -This forum is set up by the state at
District level which consists of two members and a president. Among
these members one should be woman and is appointed by the state
government. The complain should not be entertained if amount excee d
twenty lakh.
iii) Umbrella Of Legislation: -This Act is an umbrella of legislation
covering goods and services but excluding all the transactions undertaken
by the person not coming under the ambit of section 2(1)(d).munotes.in
Page 126
1264.3.3 PROBLEMS FACED BY CONSUMERS IN E -COMMERCE: -
1. Quality issues
The biggest problem while buying things online is that you have
no guarantee of a product's quality. With the volume of goods e -commerce
companies handle these days, it can be quite difficult for them to conduct
quality check s on each and every one of the products they're selling.
2. Delivery and logistics
Delivery of product in shopping online is a big chaakange. While
all e-commerce sites have order tracking systems for their customers, they
aren’t always accurate. no way to fix a particular time slot for the delivery
to take place. This same issue exists while returning products. Another
problem is that the vast majority of the Indian population which lives in
rural areas and Tier -III cities is unable to shop online becau se all e
commerce sites do not provide deliveries there
3.Digital payment failures
E wallet is now used by majority of customer’s like Paytm, G -Pay
credit/debit card, net banking, the failure of digital payments is always
lthere while making online trans actions. A faltering internet connection or
a technical glitch often results in the payable amount being debited from a
customer's account without being credited to the selling party.
4. Additional charges
Many a times customer ends up paying addition al charges in the
name of delivery charges or shippment charges. These hidden charges are
normally informed at the payment gateway.
5. Unclear return and guarantee policies
Many e -commerce sites does not provide return policy or any
guarantee with respec t to quality of goods. As a result consumers on these
platform often faces issues pertaining to return or quality of goods
6.Lack of security
Cyber security, or more precisely the lack of it, is a major problem
on the internet today. E -commerce sites re cord important customer data
like name, phone number, address, and bank details, that can easily be
misused if proper care is not taken.
CASE STUDY
Case of Rediff. com India Ltd. v/s UrmilMunjal6, wherein the
consumer was dissatisfied with the goods delivered by the online shopping
website. While the consumer wanted to return the product and claim
refund, he did not find a Return Policy, which provided details of the
address to which the products were to be returned. Since the online portal
was facilitator between the sellers and buyers as mentioned in the terms
and conditions, it was the duty of the facilitator to inform the consumer as
to how the goods are to be returned to the seller. The Court held the online
portal liable on the grounds of ‘Deficiency in Service’ for not providing
sufficient information.munotes.in
Page 127
1274.3.4 ELECTRONIC RECORDS
Electronic records refer to any combination of text, graphics, data,
audio, pictorial, or other information represen tation in digital form that is
created, modified, maintained, archived, retrieved, or distributed by a
computer system.
Examples of electronic records include: e -mail messages, word -
processed documents, electronic spreadsheets, digital images and
databas es.
As per the IT ACT 2000 " electronic record " means data, record or
data generated, image or sound stored, received or sent in
anelectronic form or micro film or computer generated micro fiche.
Importance Of Electronic Record As Evidence
1. AnEasy Access to All the Files and Information
2. Creates Standard Approach and Better Access Control.
3. Enhance Security and Data Back up.
4. Ensures Improved Compliance
5. Integration With Other Systems Increases Efficiency
6. Protects business from Security Related Issues
7. Cost Effective
4.4 SECURITY ISSUES IN E -COMMERCE
Risk Management Approach To E -Commerce
The growth of E Commerce in recent times has grown three folds
and so is the risk. The security issues are also increasing with same rate,
and it is important to take ne cessary measures that can safeguard the users
interest. Risk in on line transaction is unavoidable.
Managing risk is very important in E Commerce. It plays a critical role
to protect the organization and its ability to perform their business and not
just its IT assets. Risk management is the process of identifying risk,
assessing risk, and taking steps to reduce riskto an acceptable level.
Following ar e the most important procedures for managing risk in e -
commerce transactions.
1. Understand the risks and train staff
It is important in order to minimise the risk in E Commerce that
staff should know clearly what risks e -commerce business may have to
dealwith. Everyone in business structure needs to understand the types of
risks inherent in online payments. Establishing a procedure on avoiding
and solving risks, which is a must for all staff to follow.
2. Ensure information security
Information related t o customer databases, buying requests,
payment process.etc. is very important in E –Commerce. Hacking bymunotes.in
Page 128
128hackers is very common problem, so there is a need to ensure good
security all the time to avoid data being changed or stolen. There is a need
to set up a secure and efficient process for submitting authorization
requests over the internet, before starting accepting card payments online.
It is important for E -commerce companies to look for)DSS (Data Security
Standards).
3. Select the right acquiring ba nk and merchant services provider.
Bank and Merchant are key players along with the customer in E
Commerce. The right acquiring bank and merchant services provider will
provide effective risk management support if they have a complete
understanding of e -commerce fraud risk and liability associated with
online transactions.
4. Create and display effective policies
Website is the first place where interaction between buyer and
seller starts. Hence website must list all privacy, shipping, return and
refund policies very clearly on each page. Customers should not be forced
to search for them. This will also create satisfaction and convenience for
customers to visit web page more often.
5. Use collection efforts to minimize losses
It is important to have control over charge -backs and especially the
ones resulting from processing errors. A well -designed collection system
can help recover unwarranted chargeback losses
6.Secure theprocess ofrouting your authorizations.
In E –Comme rce it is important that authorizations are handled
carefully, it is important to ensure a system that all authorizations are
submitted in a secure and efficient manner, before it starts accepting card
payments over the internet. The routing of informatio n has to be through
secured mode.
7.Establish aprocess forhandling transaction post-authorizations.
In E-Commerce transactions it is important to deal separately
with approved and declined authorizat ions. A system has to be developed
for filtering it.
8.Build afraud screening process.
A strong and secure system has to be in place for fraud screening
and control. When adequately implemented, the screening of online card
transactions can help in mi nimizing fraud for high -risk transactions.
The Internet has driven a huge increase in the level of trade
conducted electronically, and had lead a growth in E -commerce. Lot of
transaction for buying and selling happens on a daily basis. But with this
grow th comes security issues in e -commerce . These security issues hasmunotes.in
Page 129
129become a great threat . Any e -commerce system must meet certain criteria
to guard against these potential threats.
E commerce security threats are causing havoc in online trading.
There is approximately 32.4% of threats that is experienced annually in
online trading.
4.4.1 SOURCES / TYPES OF SECURITY ISSUES IN E
COMMERCE: -
1. Financial frauds
Financial fraud has been a very common in on line trading. There
are various kinds of F inancial frauds prevalent in the e -commerce
industry, but we are going to discuss the two most common of them.
a. Credit Card Fraud
It happens when hacker steal the credit card data or any other
personal details , used by the customer on any of the site . It can be
identified as normally shipping and billing address varies. AVS -Address
Verification System can be used by the companies to detect and control
these frauds.
b. Fake Return & Refund Fraud
Some hackers engage in refund frauds, where they file fake requests for
returns. Sometimes even they perform unauthorized transactions and clear
the trail, causing businesses great loss.
6. Phishing
Phishing is a cyber attack that uses disguised email as a weapon.
The goal is to trick the email recipient into believing that the message
is something they want or need. a request from their bank, for instance,
or a note from someone in their company —and to click a link or
download an attachment.
7. Spamming
Spamming is when one person or company sends an unwanted
email to another person. Spam emails are the computer version of
unwanted "junk mail" that arrives in a mailbox, such as advertising
pamphlets and brochures.
8. DOS & DDoS Attacks
A Denial -of-Service ( DoS)attack is an attack meant to shut down
a machine or network, making it inaccessible to its intended users. DoS
attacks accomplish this by flooding the target with traffic, or sending it
information that triggers a crash.
Many e -commerce websites have incurred losses due to disruptions
in their website and overall sales because of Distributed Denial of services
(DdoS) attacks.munotes.in
Page 130
1309. Malware
Malware is intrusive software that is designed to damage and destroy
computers and computer systems. Malware is a common word used for
many “malicious software.” Examples of common malware includes
viruses, worms, Trojan viruses, spyware, adware, and ransom ware.
10.Exploitation Through Vulnerabilities
Attackers are on the lookout for certain vulnerabilities that might be
existing in an e -commerce store. Often an e -comme rce store is vulnerable to
SQL injection and Cross -site Scripting (XSS).
a. SQL Injection
It is a malicious technique where a hacker attacks your query
subm ission forms to access your database. They corrupt your database with
an infectious code, collect data, and later wipe the trail.
b. Cross -Site Scripting (XSS)
The attackers can plant a malicious JavaScript snippet on your e -
commerce store to target your online visitors and customers. Such codes can
access your customers’ cookies and compute.
11. Bots
Abotshort form of "robot" is an automated program that runs
over the Internet. Some botsrun automatically, while others only exec ute
commands when they receive specific input. There are many different
types of bots, like web crawlers, chat room bots, and malicious bots.
12.Brute Force
Under this type of security issues the hackers normally attack
admin panel of the user and try to crack password. They connect to the
website and try to obtain user passwords.
13. Man in The Middle
The users are more vulnerable to this type of security issues . A
hacker may listen in on the communication taking place between -commerce
store and a user.
14.E–Skimming
E-skimming involves infecting a website’s checkout pages with
malicious software. The intention is to steal the clients’ personal and
payment details.
4.4.2 SOLUTIONS TO SECURITY ISSUES IN E -COMMERCE: -
1. HTTPS and SSL certificates
HTTPs protocols not only keep users’ sensitive data secure but also
boost website rankings on Google search page. They do so by securing data
transfer between the servers and the users’ devices. Therefore, they prevent
any interception.munotes.in
Page 131
1312.Anti-malware and Anti -virus software
An Anti -Malware is a software program that detects, removes, and
prevents infectious software (malware) from infecting the computer and IT
systems.
Anti-Virus is a software that was meant to keep viruses at bay.
Altho ugh a lot of Anti -virus software evolved to prevent infection from
other malware as well.
3. Securing the Admin Panel and Server
Using complex passwords that are difficult to figure out, changing
them frequently is one of the practice that can keep a check on these
insecurity.
4. Securing Payment Gateway
Storing the credit card information of clients on database should be
totally avoided. A third party such as PayPal and Stripe can handle the
payment transactions away from website. This ensures better safety for
customers’ personal and financial data.
5. Deploying Firewall
Firewall are a part of a computer system that is designed to prevent
people from getting information without authority but still allows them to
receive information that is s ent to them. Deploying firewalls can keep away
fishy networks, and helps in regulating the traffic on website..
6. Additional security implementations
Always scan your websites and other online resources for malware
Back up your data. Most e -commerce st ores also use multi -layer security to
boost their data protection.
It is important that these security related issues need to be managed
carefully and efficiently in E commerce
4.4.3 PROTECTING E -COMMERCE ASSETS AND
INTELLECTUAL PROPERTY
Market dynamics are changing, businesses are growing and customers
need more technology support to optimize their marketing channels,
effectiveness and improve their business outcomes. Setting online
capabilities and analyzing business needs is must in E commerc e.T h e r ea r e
many E Commerce assets that need to be take care on online platforms.
E-Commerce Assets: -
Anything that provides or attaches value to the business is called as
assets. Adigital asset is a digital entity owned by an individual or
company. Th ey are tangible in nature, like files, documents, recordings,
videos, or basically anything that can be stored digitally on a computer,
hard drive, databases, or on the cloud.munotes.in
Page 132
132These assets need to be protected by E Commerce companies
against the su ppliers, programme developer or hackers. The valuable assets
in E-commerce includes: -
1. Domain
Domain name is the address of website that people type in the
browser, URL bar to visit website. An E Commerce companies have to
most of the time get it from Domain registrar on rent and need to renew it
again and again. If it is not renewed it automatically gets expired. In that
case it is available to be purchased by others. If proper security is not
handled there are chances of some important details to be misused. It is
important to know how to manage domain, because some records need to
be changed within the domain for security reasons.
Securing thisasset
Keep a record of domain registrar with and contact details.
Make sure that the domain is actually registered
Check domain records to make sure listing as the Billing Contact and
preferable the Admin Contact.
Set the domain to automatically renew before the expiry date and
make sure the payment details on file w ith the Domain Registrar are
kept up to date.
2.Website hosting
E-commerce or website hosting is a business in which a company
provides other companies whatever they need to sell their products and
services on the World Wide Web -including a Web server to serve a
company's pages, the Web site design.
Without hosting, a website won’t appear on the internet. An e -
commerce company need to outsource it to hosting company. A FTP login
or panel is provided . This login will enable you to access the pa rt of the
server that your website is using and allows you to manage things like
your Word Press installation, databases, domain names, email accounts
and backups
Securing thisasset
Keep a record of who is hosting website and their contact details.
Keep contact and payment details up to date with hosting company.
having Panel and/or FTP access from hosting company.
Consider if website is getting good traffic and/or is key to your
business success then moving from shared hosting to a VPS or
Dedicated Server.munotes.in
Page 133
1333. Website (CMS) Access
Website assess add on the ability to easily make changes to
website through a user -friendly interface without having to rely on a
developer to code changes, is one of the great benefits of Word Press and
other Content Ma nagement Systems (CMS).To make changes, one need to
be able to login to the ‘backend’ of your website usually through some
kind of Admin access.
The two security risks relating to CMS Access are:
Weak (easy to guess) passwords
Unknown or many users with Administrator access meaning they can
make changes to and delete the content on your site.
Securing thisasset
Review passwords and keep a strong one –10-12 characters,
combination of upper and lower case, numbers and symbols.
Consider using a passwo rd manager to manage passwords.
Review the users with access to website and the access levels they
have and remove/revoke access to anyone who doesn’t need it.
3. E Mail hosting accounts
Email hosting is a service in which email messages and
associated files are all stored on a server. The server hosting email can be
the same server that's hosting website content, a server managed by
another host, or two different servers managed by the
same hosting company.
It is important to review two thi ngs:-
Who is hosting Emails
Who has an E mail account associated with business.
Securing thisasset
Keep a record of your email hosting provider.
Consider moving to a Hosted Email Service.
Review email address associated with your business and remove
unused emails
4. Advertising, Analytics & Social Media Accounts
In E Commerce business advertising , analytics and having social
media accounts is very common. It is therefore important that only those
business information should be made available that a bus iness wants
people to have access to.
Securing thisasset
Review who has access to business Google Ads & Google Analytics
accounts .munotes.in
Page 134
134Review Facebook Ads Manager and Facebook page roles and remove
anyone who no longer need to have access.
Review all Social Media accounts and remove access to anyone who
no longer need to have access
5. Customer Database
In E Commerce customer database is a very important thongs to
be managed. This is most important and valuable assets that a E commerce
business ne ed to manage.
Securing thisasset
Review all users with access to CRM, Email Marketing software
and/or Customer Database and remove anyone who no longer want to
have access.
Periodically export your database and save it to a local computer
and/or cloud s torage.
4.4.4 INTELLECTUAL PROPERTY IN E –COMMERCE
Intellectual Property (IP) is a legal term that has been associated
with industrial property with copyrights and other rights in the similar
field.
TheIntellectual Property Law safeguards the business interests
and entities of a company or an individual against unfair competition. E-
Commerce based businesses consider itas their most valuable asset and
often own Patent portfolios and trademarks to enhance the value of their
online businesses.
Types of Intellectual Property : -
1.Copyright
In this digital era, copyrights play a significant role in safeguarding
the creative content and information available on the websites. With rapid
digitalization, the copyright owners seek the protection to pr event any
unauthorized copying or distribution of work presented online.
Example: -Encryption and Watermarking can be effectively used to
safeguard the IP rights of online businesses.
2.Trademarks
In the online world and E -Commerce, Trademarks have
consi derable importance to build a brand image by growing or selling the
businesses A registered trademarks also makes it easier to take legal action
and proceedings against brands that infringe on your business assets
online.munotes.in
Page 135
1353. Patents
Patents offer a considerable amount of incentives to the
researchers and innovators in the arena of E -Commerce and online
businesses. Patents help in licensing, contracting to outsource, and
building strategic relationships involved in E -Commerce.
4.4.5E L E M E N T SO FEC O M M E R C EP R O T E C T E DU N D E R
INTELLECTUAL PROPERTY ACT
1. E-Commerce systems, search engines or other technical Internet tools
2. Software includes the text -based HTML code
3. Website design is protected under copyright.
4. Content in the fo rm of written material, photographs, graphics,
5. Databases can be protected by copyright or by sui generis database
laws.
6. Business Names, Logos, Product names, domain names and other signs
7.Graphic Symbols, displays, graphic user interfaces
CaseS t u d i e s
1. The Coca -Cola Company v. Bisleri International Pvt. Ltd. and Ors
This case isbetter known astheMAAZA Warcase .Coca Cola is
the largest brand of soft drinks operating in 200 countries whereas
Defendant (BIsleri)No1 earlier known as Acqua Minerals Pvt. Ltd. used to
be a part of the Parle Group of Industries. The owners of Bisleri had sold
the trademarks, formulation rights, know -how, intellectual property rights,
and goodwill etc. of their product MAAZA amongst others to the coca
cola by a master agreement.
In March 2008, when the Coca cola filed for registration of
MAAZA trademark in Turkey, the defendant sent a legal notice
repudiating the Licensing Agreement thereby ceasing the Coca cola from
manufacturing MAAZA and using it s trademarks etc. directly or
indirectly. In consequence, the Coca cola claimed permanent injunction
and damages for infringement of trademark and passing off. The coca cola
also alleged that the defendant had unauthorisedly permitted the
manufacture of ce rtain ingredients of the beverage bases of MAAZA to be
manufactured by a third party in India.
The court held that it is a well -settled position of law that exporting
products from a country is to be considered as a sale within the country
wheref rom the goods are exported and it amounts to infringement of the
trademark.
The Court granted an interim injunction against the defendant from
using the mark in India as well as in the export market to prevent themunotes.in
Page 136
136plaintiff from irreparable loss an d injury and quashed the appeal by the
defendant.
2. Yahoo! Inc.v/sAkash Arora
The Yahoo s a global internet media who is the owner of the
trademark ‘Yahoo!’ and the domain name ‘Yahoo.Com’ , whic h are very
well-known and rendering services under its domain name. While the
application of the plaintiff for registration of the trademark was pending in
India, the defendant Akash Arora started providing similar services under
the name ‘Yahoo India’ .
The present case is brought out by Yahoo for passing off the
services and goods of the defendants as that of the Yahoo’s by using a
name which is identical to or deceptively similar to the plaintiff’s
trademark ‘Yahoo! ‘ and prayed for a permanent inju nction to prevent the
defendant from continuing to use the name.
The Court addressed the issue and came to the conclusion that
Yahoo Inc had a good reputation in the market and that the name adopted
by the defendant were deceptive and misleading causi ng damage to the
reputation of the plaintiff and undue gain for the defendants. In
consequence, the court granted an injunction in favour of Yahoo.
4.5 SECURITY TOOLS IN E COMMERCE
E commerce or online business is expanding day by day. Growing
at an e xponential rate, the market value of the e-commerce industry
inIndia was approximately 50 billion U.S dollars in 2018. This number is
estimated to reach 200 billion U.S. dollars by 2027.
Online businesses experienced 32.4% of l cyber attacks in 2018. A
serious business should, therefore, employ rock -solid E -commerce security
protocols and measures to safeguard the business.
4.5.1 SECURITY TOOLS
E commerce is the security is the protection from unauthorized
access, use , alteration or destruction. It is important to build secure system.
Dimensions of security in E commerce are -
Integrity -The ability to ensure that information being displayed on website
or transmitted on internet has not been altered by any authorized party.
Non repudiation -The ability to ensure that E commerce participants do not
deny their online action.munotes.in
Page 137
137Authenticity: -The ability to identify the identity of a person wi th whom the
business is dealt
Confidentiality -The ability to ensure that the messages or data is available
to be viewed only to those who are authorized to view them.
Privacy –The ability to control the use of information about oneself.
Availability -the ability to ensure that an E commerce site continues to
function.
Tools -
Firewalls –Software and Hardware.
Public Key infrastructure.
Encryption software.
Digital certificates.
Digital Signatures.
Biometrics –retinal scan, fingerprints, voice et c.
Locks and bars –network operations centre
1.Firewalls
Firewalls allow you to protect entire network from the outside
world with a single physical device. A software firewall is installed on an
individual computer and it protects that single device. If multiple
computers need protection, the software must be installed on each device.
3. Public Key Infrastructure
Apublic key infrastructure (PKI) is a system for the creation,
storage, and distribution of digital certificates which are used to verify that
a particular public key belongs to a certain entity.
4. Encryption Software
Encryption software issoftware that uses cryptography to prevent
unauthorized access to digital informa tion. Cryptography is used to protect
digital information on computers as well as the digital information that is
sent to other computers over the Internet.
4. Digital Certificate
ADigital Certificate is an electronic "password" that allows a
person, o rganization to exchange data securely over the Internet using the
public key infrastructure . Digital Certificate is also known as a public
keycertificate or identity certificate .munotes.in
Page 138
1385. Digital Signature
Adigital signature is a mathematical technique used to validate the
authenticity and integrity of a message, software or digital document. It’s
thedigital equivalent of a handwritten signature or stamped seal, but it
offers far more inherent security.
6. Biometrics Security
Biometrics scanners are hardware used to capture the biometric for
verification of identity. These scans match against the saved database to
approve or deny access to the system. In other words, biometric security
means your body becomes the “key” to unloc k your access.
7. Locks and Bars
A network operations centre NOC is a centralized location where a
company and their staff can provide supervision 24 hours a day to help
monitor and manage a company's services, databases, external services,
firewalls, and n etwork. A NOC is the basis of a company's nervous
system.
4.5.2 E -BUSINESS AND CLIENT SERVER NETWORK SECURITY
In today’s time E-business is used widely in organizations around
the world. To secure e -business data, organizations must implement
security that works seamlessly across applications and platforms such that
it is transparent to users and easy for organizations to manage.
It is important that security must provide privacy to ensure the
confidentiality of data, access control to authorize data access, integrity to
assure data originality, authentication to provide proof of identity, and
non-repudiation to prevent denial of service
Client Server Network Security
Aclient server network security is a dedicated computer that
contr olsClient server network resources and serves other computers on
thenetwork .T h e client receives the requested services from the
computer client server network .
Theclient -server model describes how a server provides resources
and services to one or mo re clients. Thses servers include web servers,
mail servers, and file servers. Each of these servers provide resources
toclient devices, such as desktop computers, laptops, tablets, and
smartphones.munotes.in
Page 139
139
Theclients to server network communicate with each other
through a centralized server If Client 1 wants to send data to Client 2, it
first sends a request to the server for permission. The server sends a signal
to client 1, from which communication can be ini tiated .
4.5.3 ADVANTAGES
1.Centralized backup is possible.
2. The use of dedicated servers improves overall system performance.
3. Security on these networks is good because all shared resource centres
are maintained.
4. The use of dedicated servers also increases the speed at which resources
are shared.
5. All the required data is cantered on one server, ie. It is therefore easy to
protect data and provide authority and authentication.
6. The server does not need to be physically present to the client. However
the data can be accessed efficiently.
7. In the client server model it is easy to change, upgrade or move nodes
because all nodes are independent and only request data from the server.
4.5.4 DISADVANTAGES
1. It requires a dedicated server with large memory and secondary storage.
It raises costs.
2. The cost of network operating systems that handle different customers
is also high.
3. It requires a dedicated network administrator.munotes.in
Page 140
1404.If all clients simultaneo usly request data from the server, it may be
overloaded. This can client server network congestion.
5.f the server fails for any reason, the client's requests are not fulfilled.
This can lead to client server network failure.
6. The cost of installation and maintenance of the client server model is
very high.
4.5.5 ELECTRONIC SIGNATURE
AnE-Signature orelectronic signature is a legal way to get consent
or approval on electronic documents or forms. It can replace a
handwritten signature in virtually any process.
Example -A scanned image of the person's inksignature , a mouse
squiggle on a screen or a hand -signature created on a tablet using your
finger or stylus, a signature at the bottom of your email, a typed name, a
biometric hand -signature signed on a specialized signing hardware device.
Electronic Signature v/s Digital Signature
Electronic Signature Digital Signature
1. This is not authorized and does
not require certification authorities1. This is authorized and regulated
by certification authorities.
2. Does not uses any coding 2.Have secure coding
3. Verify document 3. Secure Document
4.Easy to use but less authentic 4.Prefeeered more due to high level
of authenticity
5. Can Not be verified 5. Can be verified
6. Used for securing document 6. Shows intent consent
4.5.6 BENEFITS OF ELECTRONIC SIGNATURE -
1. Enhanced security. You can be confident that your documents
will make it to the right people with security controls including automatic
independent verification. Also known as Knowledge Based Authenticationmunotes.in
Page 141
141(KBA), this independent verification step is required for certain IRS forms
such as the 8878 and 8879 and keeps your clients’ documents secure.
2. Easy to use across industries and countries. No matter who your
clients are, or where they are located, users are accustomed to the
eSignature experience, and prefer the convenience of signing a document
right from their phone or tablet.
3. Workflow tracking. Easily track who has opened, signed, or
approved a document, and who is holding you up. You’ll have a complete
paper trail of who viewed the document and when, without the actual
paper!
4. Convenience for you. Collect signatures and approvals on
multiple documents at one time without printing a singl e page of paper.
5. Way better experience for your clients. Clients can sign quickly
from anywhere, on any device! In a time where clients want real -time
access to documents, connecting your eSignature solution to your client
portal software is a must.
6. Get paid faster. Ask for signature and payment details on the
same document to securely collect all the information you need to get your
clients up and running —including the payment to you!
7. Centralized document storage . When you pair eSignature with
Smart Vau lt, you’ll benefit from having a central document repository.
Gone are the days of searching file cabinets, piles on your desk, or even
different systems on your computer to find a document.
8. Paperless workflow. When you integrate your eSignature solution
with other tools you already use, like Smart Vault, there’s no need for
printing, scanning, or meeting in person. The signed document is initiated
and returned to the same location in Smart Vault –and you get notified
when all parties sign.
9. Increase coll aboration. Collect approvals and signatures from
multiple parties in whatever order you choose to increase collaboration
and keep projects moving.
10. Save money! All of these benefits add up to big cost savings for
your business, from reducing paper and prin ting costs, to reducing the
amount of time it takes to sign and collect payment from new clients.
4.5.7 ENCRYPTION
Encryption is a process that encodes a message or file so that it
can be only be read by certain people. Encryption uses an algorithm to
scramble, or encrypt , data and then uses a key for the receiving party to
unscramble, or decrypt, the information.munotes.in
Page 142
142Importance Of Encryption In E Commerce
1.Encryption Provides Security for Data at All Times
Data is most vulnerable when it is being moved from one location
to another. Encryption works by encoding the messages using algorithms
and thus providing security to the data. It is an ideal solution no matter
where data is stored or how it is used.
2.Encrypted Data Maintains Integrity
Hackers not only steal information, but can also alter data to
commit fraud. While it is possible for skilled individuals to alter encrypted
data, recipients of the data will be able to detect the corruption, which
allows for a quick response to the cyber -attack.
3.Encryption Protects Privacy
Encryption is used to protect sensitive data, including personal
information for individuals. This helps to ensure anonymity and privacy,
reducing opportunities for surveillance by both criminals and government
agencies. Encryption technology is so powerful that some governments are
attempting to put limits on the effectiveness of encryption —which does
not ensure privacy for companies or individuals.
4.Encryption is Part of Com pliance
Many industries have strict compliance requirements to help
protect those whose personal information is stored by organizations. They
use encryption to protect data, and businesses can use encryption to
achieve comprehensive security.
4.5.8 PRIVAT E AND PUBLIC KEY INFRASTRUCTURE
The Public and Private key pair comprise of two uniquely related
cryptographic keys.
Private Key is the secret key used to encrypt and decrypt messages
between communicators. It’s a form of symmetric encryption, i.e., the
same key is utilized for both encryption and decryption purposes.
The messenger encrypts the message using the public key, and the
receiver can access the message after decrypting it with their private key.
Security is ensured because only the person with the relevant private key
can decode the message.
4.5.9 DIFFERENCE BETWEEN PRIVATE AND PUBLIC KEY
INFRASTRUCTURE
The following are some of the important differences between
Private Key and Public Key.munotes.in
Page 143
143Sr.
No.KeyPrivate KeyPublic Key1AlgorithmPrivate Key is
used to both
encrypt and
decrypt the data
and is shared
between the
sender and
receiver of
encrypted data.The public key is only
used to encrypt data
and to decrypt the data,
the private key is used
and is shared.2PerformanceThe private key
mechanism is
faster.The public key
mechanism is slower.3SecretThe private key is
kept secret and
not public to
anyone apart
from the sender
and receiver.The public key is free
to use and the private
key is kept secret only.4TypeThe private key
mechanism is
called symmetric
being a single key
between two
parties.The public key
mechanism is called
asymmetric being two
keys for different
purposes.5SharingThe private key is
to be shared
between two
parties.The public key can be
used by any one but the
private key is to be
shared between two
parties only.6TargetsPerformance
testing checks the
reliability,
scalability, and
speed of the
system.Load testing checks the
sustainability of the
system.
4.5.10 BENEFITS OF KEY INFRASTRUCTURES: -
1.Confidentiality is ensured because the content that is secured with the
public key can only be decrypted with the private key. This ensures that
only the intended recipient can ever review the contentsmunotes.in
Page 144
1442.Integrity is ensured because part of the decr yption process requires
checking that the received message matches the sent message. This
ensures that the message has not been changed in between.
3.Authenticity is ensured because each message sent by Alice to Bob is
also signed by Alice’s private key . The only way to decrypt Alice’s
private key is with her public key, which Bob can access. By signing the
message with her private key, Alice ensures the authenticity of the
message and shows that it really did come from her.
4.6 SUMMARY
Cyber Laws: -A term used to describe the legal issues related to use
of communications technology
Cyber Laws In India: -The Information Technology Act,2000 (also
known as ITA -2000, or the IT Act) is an Actof the Indian Parliament
(No 21 of 2000) notified on 17 Octob er2000. It is the primary lawin
India dealing with cybercrime and electronic commerce.
Hacking: -Hacking is an attempt to exploit a computer system or a
private network inside a computer.
Web Vandals: -action involving deliberate destruction of or damage
to public or private property.
Piracy: -a term used to describe the act of illegally using, copying or
distributing software without ownership or legal rights
CPA (1986): -TheConsumer Protection Act ,1986 (CPA )i s
anActthat pr ovides for effective protection of interests
ofconsumers
Electronic Records: -Anelectronic recordkeeping system
(ERKS), also known as an electronic records management system
in some jurisdictions, is an information/ computer system with the
necessary records management capabilities designed to
electronically collect, organise, classify and control the creation,
storage, retrieval, distribution.
E-Signature: -a legal way to get consent or approval or consent
onelectronic documents or forms.
Private Key Infrastructure : -Private Key is used to both encrypt
and decrypt the data and is shared between the sender
Public Key Infrastructure: -The public key is only used to encrypt
data and to decrypt the data, the private key is used and is sharedmunotes.in
Page 145
1454.7 EXERCIS E
I. Fill In the Blanks: -
1.Information Technology has given rise to many ________ using
computers.
2._______ is a criminal activity that uses computer device.
3._______ refers to the legally handling of issues related to IT.
4.________refers to the activi ty of identifying weaknesses in a
computer system to gain access to personal data or business data.
5._______ is a person who gains access to computer systems
6. _____ as defacing the digital assets of a company or individual to
cause nuisance or permanent damage.
7._______ are spam’s, that include offers and miracle promises, such
as, "get rich in less than a month" .
8.TheConsumer protection Act was passed in _____by the Indian
Parliament to protect consumer rights .
9._________is a cyber attack that uses disgu ised email as a weapon.
10.A____ short form of "robot" is an automated program that runs
over the Internet.
11._______ is a legal term that has been associated with
industrial property, copyrights and other rights in the similar field.
12.______is an electronic "password" that allows a person, organizaion
to exchange data securely over the Internet .
13.______is a process that encodes a message or file so that it can be
only be read by certain people.
14._______ is used to both encrypt and decrypt the data and is share d
between the sender
15.The _____ is only used to encrypt data and to decrypt the data,
Ans:-
1-Crimes, 2 -Cyber Crimes 3 -Cyber Laws 4 -Hacking 5 -Script Kiddles
6-Web Vandals 7 -Hoaxes 8 -1986 9 -Phishing 10-Bot 11 -Intellectual
Property 12 –Digit al Certificate 13-Encryption 14 -Private Key
15-Public Key
II-True and False
1.In India Cyber Laws are included in IT Act 2000.
2.Act of Defamation & harassment atre not covered in Cyber Laws.
3.One of the most common crime in cyber world is Hacking.
4.E–Mail abuse refers to the unsolicited sending of spam.
5.TheConsumer Protection Act was passed in 1986 and it came into
force from I July, 1987.munotes.in
Page 146
1466.DOS & DDoS Attacks in E -commerce refers to the guideli nes to be
followed in E -Commerce.
7.E Commerce assets need to be protected by E Commerce companies
against the suppliers, programme developer or hackers.
8.Digital signature and Electronic signature are one and the same
thing.
Ans:-
1- True 2 -False 3 -True 4 -True 5 -True 6 -False 7 -True 8 -False
III-Match The Following
1. Hackers a) Trademarks, Patent, copyright
2. Web Vandals b) Security Tools
3. Email Abuse c) Credit Card Fraud
4. Software Piracy d) 3 Tier Redressal
5. CPA 1986 e) Counter felting
6. Financial Fraud f) Spoofing
7. Fire Walls g) Defacing Websites
8. Intellectual Property h) White Hat & black Hat
Ans:-
1-h, 2-g, 3-f, 4-e, 5-d, 6-c, 7-b, 8-a
REVIEW QUESTIONS
1.What is Cyber Laws? What are the major areas covered under this
Law?
2.What are the limitation of Cyber laws of India?
3.Explain Hacking. And types of Hacking?
4.What is Web Vandals?
5.What is software piracy and its types?
6.Explain Taxation Issues in E –Commerce?
7.How are Cyber Consumers protected under Consumer protection
Act ?
8.What is the Risk Management Approach adopted in E -Commerce?
9.Elaborate the various security Issues in E -Commerce.
10.Explain the solution available for various security Issues.
11.How can E -commerce be protected?
12.What are the ways of securing Intellectual Property Rights?munotes.in
Page 147
14713.Explain security tools used in Ecommerce for safety?
14.Explain the importance of Electronic Records as evidence.
15.Differentiate between Electronic Signature and Digital Signature.
16.What are the benefits of Electronic Signature?
17.What are the benefits of Encryption in E -Commerce?
18.Differentiate between Private & Public Key Infrastructure.
19.What are the benefits of Key Infrastructure in E -Commerce?
20.Explain Client Server Network security
munotes.in