Unit -1
E-Commerce
Learning objectives
After reading this unit. you will
1. Understand what are e- commerce and e- business.
2. Know the trend and advancements in e-commerce.
3. Know what are the characteristics and business models of e-
commerce
Structure
1.1 Introduction
1.2 e-business, e-commerce, types of application
1.3 Evolution and trend
1.4 Drivers of E-commerce
1.5 Characteristics
1.6 Business models, technology
1.7 Government Regulation
1.8 Let us sum up
1.9 Key Terms
1.10 Self – Assessment Questions
1.11 Further Readings
1.12 Model Questions
1.1 Introduction
Information is power. Management information system organises
wide variety of information need of business. It provides inputs for the
business to stay competitive. The computer collects , organises,
interprets, and communicates vast amount of information with great
speed. Electronics Data Interchange (EDI) facilitates the speedy,
secured and accelerated transfer of documents across the globe. A
paperless working system is in place. With computer of businessman
linked to customers, and suppliers electronically, trade and commerce
will undergo revolutionary changes.
1.2.1 E- Business
IBM defines e-business as “a secure, flexible and integrated
approach to deliver differentiated business value by
Odisha State open University Page 1
,combining the systems and processes that run core business
operations with the simplicity and reach made possible by
internet technology.” E-business combines the traditional
information system with world wide web and connect critical
business systems directly to critical business constituencies –
customer, employees and suppliers via Intranets, Extranets
and the Web.
E-business can be divided into three areas. They are: (a)
within the organization, (b) business-to-business (B2B)
dealings and (c) business-to-customers (B2B) transactions.
(a)Within the Organisation
E-business within the organization use the Intranet. The
Intranet uses Internet standards for electronic
communication. People on the intranet are able to see
organisation-specific web sites.. The Intranet web sites
allow the employees to obtain information and place
orders online. connect over the Internet via virtual private
networks (VPN) to the Intranet using encryption lines and
strong authentication for identification purposes.
(b) Business-to-Business (B2B) Dealings
The second area is the business-to-business (B2B)
dealings. Business-to-business (B2B) dealings take place
over the Extranet. “The Extranet consists of two Intranets
connected via the Internet, whereby two organization are
allowed to see confidential data of the another.”
Maintaining the private networks is too expensive to the
business concerns. Cost of usage of business-to-business
solutions through the Internet has come down
substantially. Use of virtual private networks (VPNs)
keeps the costs low, at the same time, keeping the business
transactions private.
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, (c)Business-to-Customer (B2C) Transactions
The third area of e-business is business-to-customer
transactions. This is selling the goods and services through
the intranet to the customers spread all over the world.
Business concerns establish virtual shops and offer goods
and services to whoever visits their web sites. “This is
known as E-commerce
Electronic business is a super-set of business cases. E-
commerce is one of the aspects of e-business. Some other
important aspects of e-business, which are successfully
carried through the Internet are e-auctioning, e-banking, e-
directories, e-franchising, e-learning, e-mailing, e-
marketing, e-operational resources management, e-supply
e-trading etc.
1.2.2 E-commerce
Electronic Commerce (E-commerce) is “exchange of business
information using electronic formats, including Electronic Mail (e-
mail), Electronic Bulletin Boards (EBBs) and Electronic Funds
Transfer (EFT). E-commerce Technologies are designed to replace
traditional paper-based work flow with faster, more efficient and
reliable communications between computer.” According to WTO, E-
commerce is production, distribution, marketing. Sale or delivery of
goods by electronics means.
Transaction can be divided into 3 stages – (i) advertising stage. (ii)
Ordering and payment stage (iii) Delivery stage. All these are
connected under e-commerce.
As per the Microsoft Computer Dictionary Electronic Commerce is a
“commercial activity that takes place by means of connected
computer. Electronic commerce can be between a user and a vendor
through and online information service, the internet, or between
vendor and customer computers through electronic data interchange
(EDI).” E-commerce has the following phases:-
Electronic Data Interchange (EDI), the business-to-business
exchange of data.
Gathering and use of demographic data through Web contracts.
Odisha State open University Page 3
, E-tailing or “virtual storefronts” on Web sites with online
catalogues, sometimes gathered into a “virtual mail.”
E-mail and fax and their use for reaching prospective and
established customers .
Business-to-business buying and selling.
The security of business transactions.
EDI :
EDI facilitates the transfer of business documents stored in
structured formats-through mutually agreed messaging protocols-from
one computer application to another. It is computer-to-computer
communication using a standard data format to exchange business
information electronically between independent organizations. It
eliminates paper work and leads to increased response.
EDI can be used to send an invoice or an order from one company
to another. The “sending computer,” located at a customer’s premises,
uses telecommunication technology center. After the order is received,
data are manipulated to match the order entry files, in the “order
database” of the supplier. The information is then transferred into the
database and appropriate error messages, and/or exception reports are
generated. The “sending computer” stores the order and follows up on
it. The “Receiving computer” automatically, and the shipping
department. Paper based information suffers from the following
problems.
(i) Labour Cost : Manual processing is required for data keying,
document storage and retrieval, document matching, etc.
(ii) Errors: The same information is required to be keyed in a
number of times. Hence, the paper based information system
is labour intensive and error prone.
(iii) Inventory : Uncertainty exists in the delays and
uncertainties, as a lot of paper is required to record a variety
of information.
(iv) Uncertainty : a) Delay in transportation and keying b) the
sender does not know whether the matter despatched will
reach the party intended to or not. C) Uncertainty regarding
bank payment.
Odisha State open University Page 4
E-Commerce
Learning objectives
After reading this unit. you will
1. Understand what are e- commerce and e- business.
2. Know the trend and advancements in e-commerce.
3. Know what are the characteristics and business models of e-
commerce
Structure
1.1 Introduction
1.2 e-business, e-commerce, types of application
1.3 Evolution and trend
1.4 Drivers of E-commerce
1.5 Characteristics
1.6 Business models, technology
1.7 Government Regulation
1.8 Let us sum up
1.9 Key Terms
1.10 Self – Assessment Questions
1.11 Further Readings
1.12 Model Questions
1.1 Introduction
Information is power. Management information system organises
wide variety of information need of business. It provides inputs for the
business to stay competitive. The computer collects , organises,
interprets, and communicates vast amount of information with great
speed. Electronics Data Interchange (EDI) facilitates the speedy,
secured and accelerated transfer of documents across the globe. A
paperless working system is in place. With computer of businessman
linked to customers, and suppliers electronically, trade and commerce
will undergo revolutionary changes.
1.2.1 E- Business
IBM defines e-business as “a secure, flexible and integrated
approach to deliver differentiated business value by
Odisha State open University Page 1
,combining the systems and processes that run core business
operations with the simplicity and reach made possible by
internet technology.” E-business combines the traditional
information system with world wide web and connect critical
business systems directly to critical business constituencies –
customer, employees and suppliers via Intranets, Extranets
and the Web.
E-business can be divided into three areas. They are: (a)
within the organization, (b) business-to-business (B2B)
dealings and (c) business-to-customers (B2B) transactions.
(a)Within the Organisation
E-business within the organization use the Intranet. The
Intranet uses Internet standards for electronic
communication. People on the intranet are able to see
organisation-specific web sites.. The Intranet web sites
allow the employees to obtain information and place
orders online. connect over the Internet via virtual private
networks (VPN) to the Intranet using encryption lines and
strong authentication for identification purposes.
(b) Business-to-Business (B2B) Dealings
The second area is the business-to-business (B2B)
dealings. Business-to-business (B2B) dealings take place
over the Extranet. “The Extranet consists of two Intranets
connected via the Internet, whereby two organization are
allowed to see confidential data of the another.”
Maintaining the private networks is too expensive to the
business concerns. Cost of usage of business-to-business
solutions through the Internet has come down
substantially. Use of virtual private networks (VPNs)
keeps the costs low, at the same time, keeping the business
transactions private.
Odisha State open University Page 2
, (c)Business-to-Customer (B2C) Transactions
The third area of e-business is business-to-customer
transactions. This is selling the goods and services through
the intranet to the customers spread all over the world.
Business concerns establish virtual shops and offer goods
and services to whoever visits their web sites. “This is
known as E-commerce
Electronic business is a super-set of business cases. E-
commerce is one of the aspects of e-business. Some other
important aspects of e-business, which are successfully
carried through the Internet are e-auctioning, e-banking, e-
directories, e-franchising, e-learning, e-mailing, e-
marketing, e-operational resources management, e-supply
e-trading etc.
1.2.2 E-commerce
Electronic Commerce (E-commerce) is “exchange of business
information using electronic formats, including Electronic Mail (e-
mail), Electronic Bulletin Boards (EBBs) and Electronic Funds
Transfer (EFT). E-commerce Technologies are designed to replace
traditional paper-based work flow with faster, more efficient and
reliable communications between computer.” According to WTO, E-
commerce is production, distribution, marketing. Sale or delivery of
goods by electronics means.
Transaction can be divided into 3 stages – (i) advertising stage. (ii)
Ordering and payment stage (iii) Delivery stage. All these are
connected under e-commerce.
As per the Microsoft Computer Dictionary Electronic Commerce is a
“commercial activity that takes place by means of connected
computer. Electronic commerce can be between a user and a vendor
through and online information service, the internet, or between
vendor and customer computers through electronic data interchange
(EDI).” E-commerce has the following phases:-
Electronic Data Interchange (EDI), the business-to-business
exchange of data.
Gathering and use of demographic data through Web contracts.
Odisha State open University Page 3
, E-tailing or “virtual storefronts” on Web sites with online
catalogues, sometimes gathered into a “virtual mail.”
E-mail and fax and their use for reaching prospective and
established customers .
Business-to-business buying and selling.
The security of business transactions.
EDI :
EDI facilitates the transfer of business documents stored in
structured formats-through mutually agreed messaging protocols-from
one computer application to another. It is computer-to-computer
communication using a standard data format to exchange business
information electronically between independent organizations. It
eliminates paper work and leads to increased response.
EDI can be used to send an invoice or an order from one company
to another. The “sending computer,” located at a customer’s premises,
uses telecommunication technology center. After the order is received,
data are manipulated to match the order entry files, in the “order
database” of the supplier. The information is then transferred into the
database and appropriate error messages, and/or exception reports are
generated. The “sending computer” stores the order and follows up on
it. The “Receiving computer” automatically, and the shipping
department. Paper based information suffers from the following
problems.
(i) Labour Cost : Manual processing is required for data keying,
document storage and retrieval, document matching, etc.
(ii) Errors: The same information is required to be keyed in a
number of times. Hence, the paper based information system
is labour intensive and error prone.
(iii) Inventory : Uncertainty exists in the delays and
uncertainties, as a lot of paper is required to record a variety
of information.
(iv) Uncertainty : a) Delay in transportation and keying b) the
sender does not know whether the matter despatched will
reach the party intended to or not. C) Uncertainty regarding
bank payment.
Odisha State open University Page 4
