Open courseE-Commerce

E-COMMERCE
V SEMESTER
(UG-CCSS – SDE)
OPEN COURSE
(For candidates with Programmes

other than BBA and B Com)
(2011 Admission)
UNIVERSITY OF CALICUT
SCHOOL OF DISTANCE EDUCATION
Calicut university P.O, Malappuram Kerala, India 673 635.
School of Distance Education
UNIVERSITY OF CALICUT
SCHOOL OF DISTANCE EDUCATION
STUDY MATERIAL
Open Course
(For candidates with Programmes other than BBA and B Com)
V Semester
E-COMMERCE
Prepared by: Baijumon. P,

Assistant Professor,
Govt College, Malappuram
Scrutinized by: Dr. K. Venugopalan,

Associate Professor,
Department of Commerce,
Govt. College, Madappally.
Layout: Computer Section, SDE
©
Reserved
E-Commerce Page 2
CONTENTS Page
No.
MODULE I INTRODUCTION TO E-COMMERCE 4
MODULE II BUSINESS MODELS OF E-COMMERCE 15
MODULE III MARKETING STRATEGIES AND E-COMMERCE 31
MODULE IV ELECTRONIC PAYMENT SYSTEM 44
MODULE V LEGAL AND ETHICAL ISSUES IN E-COMMERCE 55
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MODULE 1
INTRODUCTION TO E-COMMERCE
E-Commerce is a latest technology related with commerce and

computer. Commerce is the exchange or transformation or buying and selling of
entities (goods or commodities) on a very large scale involving transportation from
one place to another. [Webster ]E- Commerce is the process of doing business
online. Or we can say that E-commerce is to conduct business by using the IT
(Information technology, i.e., computer technology and electronic communication)
it is the buying and selling of items or goods or services on the Web using
electronic communication and digital information processing technology.EDI or
Electronic Data Interchange is an early form of e-commerce. Its high cost, use of
proprietary standards etc. hampered the spread of e-commerce.
E-commerce is the process of doing business electronic. It changes the

entire business scenario due to the powerful innovation of Internet, which is
spreading fast through the world. The power of Internet as a global access was
felt with the introduction of the World Wide Web (WWW) in 1994. This global
network makes global relations with the companies made easier. It is predicted
that, in the near future the digital economy will overtake the traditional economy
of all developed countries.
E-commerce is a composite of technologies process and business strategies

that foster the instant exchange of information within between organization. E-
commerce strengthens relationship with buyers make it easier to attract new
customer, improves customer responsiveness and open new markets on a global
scale. E-commerce is the application of various communication technologies to
provide the automated exchange of business information with internal and
external customer, suppliers and financial institutions
E-commerce V/s Traditional Commerce

E-commerce is an extension of traditional commerce, which is concerned
with the activities of business, industry and trade including the exchange of
goods, services, information and money. It has the same essential ingredients of
ordinary commerce. The major difference between e-commerce and commerce is
that with e-commerce, these exchanges of goods and services are carried out over
the web instead t of the traditional physical act of going to a trader for goods and
services. Now that a large number of people have access to the internet and it is a
good platform for the development of e-commerce. Successful E-commerce
strategies allow organizations distinct advantages in terms of both cost and
revenues- the fundamentals of all business. This is because cost can be cut
immensely as retail outlets are not required. Most of the cost associated with
traditional high capital business is eliminated and or transformed into profit in
the Internet environment.
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DIFFERENCE BETWEEN E-COMMERCE AND TRADITIONAL COMMERCE
BASIS E-COMMERCE TRADITIONAL SYSTEM
1 Reduce Doesn’t involve data at The buyer and seller create

Data Error multi points. purchase order on their system
and send it to their trading
Data goes directly from one partner. The receiver/seller then
computer to another re-enter the same information on
Computer without the computer, which will create
involving human being data error
2. Reduce cost Initial cost of E-commerce Time is directly ;linked to saving

is very high as compared to the money. There is repetition of
paper process but over a same work at every level and it
long period of time, it is involves a lot of wastage of time
very effective and if the error is arisen that will
lead to more wastage of money.
3. Reduce E-commerce data in the It requires re-entry of data at

Paper work electronic form make it each level and requires lot of
easy to share it across the time. So the peak time is wasted
organization in re-entering and printing of the
reports
4. Reduce E-commerce reduces the When the buyer order in a paper

Processing processing cycle time of format, the data is re-entered in
cycle time complete cycles as the data to the Sellers’s computer and
is entered the system, it is then only processing can take
simultaneously Processed place which is a time consuming
process.
5. Reduce No need to maintain large Need to maintain a large number

labor number of employees, of employees because one-third of
instead there arises the labor force is employed to fulfill
need to manage them more orders from customers.
efficiently
E-Business and E-commerce

Internationally both the terms can be interchanged and having the same
concepts, that is , doing business online. However, EB is the term which is
derived from e-commerce. However there is little difference between these two
concepts. Electronic commerce is a business to business [B2B] initiative aimed at
communicating business transaction documents on a real time or near real time
basis between known trading partners such as suppliers, customers etc. E-
commerce might be considered as the use of the Internet as a company’s primary
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or exclusive portal to its customers. Amazon or e-bay conducts all of their

business online and their products and services are exclusively those which can
be sold online.
On the other side e-business refers to companies for which internet is one of
several channels to customers and perhaps not even the primary one. Banks are
a classic example, as are companies, which have internet storefronts. But all
such entities have other primary channels to distribute their products. The main
distinctions between E-commerce and E-Business are
E-Commerce E-Business
Open system [statistics] Closed System
Not secured Secured
Deals more with technology Deals with processes needed to

facilitate e-commerce
Does not involve the use of EDI Used EDI
Always operate on Internet Always operates on intranet
Involves all types of commerce Involves explicitly business

transaction transactions
Used for small and bulky transaction Used for bulky transaction
Focused on Business to consumer Focused more on business to

activities business activities
e-commerce is an extension of a e-business is an online business only

traditional business model
History of E-commerce
Most people don’t realize that e-commerce and its underlying technology
have been around for about forty years. The term e-commerce was originally
conceived top describe the process of conducting business transactions
electronically using technology from the Electronic Data Interchange [EDI] and
Electronic Funds Transfer [EFT].EDI is widely viewed as the beginning of E-
commerce. Large organizations have been investing in development of EDI since
sixties. It has not gained reasonable acceptance until eighties. EDI is a set of
standards developed in the 1960’s to exchange business information and do
electronic transactions. At first there were several different EDI formats that
business could use, so companies still might not be able to interact with each
other. Electronic Data interchange [EDI] allowed different companies to perform
electronic dealings with one another.
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The internet was conceived in 1969, when the Advanced Research Projects
Agency [a Department of Defense Organization] funded research of computer
networking. The Internet could end up like EDI without the emergence of World
Wide Web in 1990s.The web became a popular mainstream medium (perceived as
the fourth mainstream medium in addition to print, radio and TC) in a speed,
which had never seen before. The web users and contents were increasing
at an accelerated rate. Besides the availability of technical infrastructures, the
popularity of the web is largely attributed to the low cost access and simplicity of
HTML authoring, which are the obstacles of EDI Development. The Internet and
the Web have overcome the technical difficulty of EDI, but it has not solved the
problem of slow development of E-commerce standards/.
XML, as a Meta Markup Language, provides a development tool for defining

format of data interchange in a wide variety of business communities. Web
services offer a flexible and effective architecture for the implementation. There is
no doubt that XML and the web services will shape the course of E-commerce in
the years to come.
The next important phase in the History of E-commerce was the
development of Mosaic Web browser in 1992.The Web Browser was soon given
the form of a browser which could be downloaded and was named as Netscape.
The next important milestone in e-commerce was the development of
Napster. Napster was an online application used to share music files for free.
Many consumers used the site and were dictating what they wanted from the
Industry. Napster allowed people to download music from the Internet for free.
The development and adaptation of DSL and Red hat Linux respectively,
again benefited the process of online business transaction. The year 2000, saw a
major merge between AOL and Time Warner which marked another important
step towards the development of E-commerce.
The World wide popularity of Internet has resulted in the stable
development and overwhelming acceptance of E-Commerce. E-Commerce
provides with a rich online transaction experience. Business to Business is the
largest E-Commerce in the present time. Peer to Peer and Consumer to
Consumer are two important types of E-Commerce.
Electronic Data Interchange [EDI]
It enables the firms to exchange business information faster, more cheaply

and accurately than possible using paper based documents. The whole point of
EDI is to enable your company to communicate with other applications that are
always on the distal end of some long distance link and always “black boxes”
from the viewpoint of your own network and applications.EDI is the electronic
exchange of business documents in a standard, computer processable,
universally accepted format between trading partners. It is a standard for the
electronic exchange of business documents, such as invoices and purchase
orders. Edi consists of standardized electronic message formats for common
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business documents such as purchase order, request for quotation, bills of

lading, invoice and similar documents. These electronic documents enables in
one company to talk to computers in another company without producing paper
documents. To set up EDI, a company must have computerized accounting
records and establish trading partners who agree to exchange EDI transactions.
Use of electronic data interchange thus eliminates the human effort required to
read, sort and physically transport such documents. It requires the co-operation
of trading partners. It also requires various mechanisms, which guarantee that
the data, which leaves the boundaries of one corporation, arrives at the gates of
the other without changing in any particular.
Benefits of EDI
 Lower Processing cost

 Improves the overall quality of data
 Helps to manage information system effectively and efficiently
 Helps to reduce inventory level
 Transfer of information from computer to computer is automatic and data
is entered only at the source
 Customer relations can be improved
 Business relations with trading partners can be improved
Working of EDI
1. Preparation of electronic documents
The first step in the sequence of EDI is the collection of information and
data. The way to collect the required information should be same as the way to
do it in the traditional system. However, instead of printing out the data on paper
in tradition, the system has to build an electronic file or database to store those
data. In the case of companies who already use computer to issue their
documents like purchase orders, they may already have some sort of databases
which store those information, then they fan start with the next step described
below.
2. Outbound translation
The next step is to translate the electronic file or database in to a standard

format according to the specification of the corresponding document. The
resulting data file should contain a series of structured transactions related to
the purchase order for example. If more than one company is involved in the
particular transaction, individual files should be produced for each of them.
3. Communication
Then the computer should connect and transmit those data files to the pre
arranged Value Added Network [VAN} automatically. The VAN should then
process each file and route the appropriate electronic mailboxes according to the
destination set in the file.
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4. Inbound translation
The designated company should be able to retrieve the file from their
electronic mailboxes in a constant period, and then reverse the process by
translating the file from the standard format into the specific format required by
the company’s application software.
5. Processing the electronic documents

The internal application system of the designated company can process the
received documents now. All the resulted documents corresponding to the
received transaction should use the same processes or steps to transmit back to
the transaction initiator; the whole cycle of the electronic data interchange can
they be completed.
Importance, features and benefits of E-commerce:
Importance of E-commerce
Through, E-commerce, operating efficiency of the business firm will definitely

improve and which in turn strengthen the value and service given to customers
and provide a competitive edge over competitors. These improvements may
result in more effective performance. The direct benefit accrue to an organization
on practicing e-commerce are better quality, greater customer satisfaction, better
decision making, low cost, high speed and real time interaction. More specifically
e-commerce enables executing of information relating to the transaction between
two or more using interconnected networks.
From the business perspective with less time spent during each
transaction, more transaction can be achieved on the same day. As for the
consumer, they will save up more time during their transaction. Because of this,
E-commerce steps in and replaced the traditional commerce method where a
single transaction can cost both parties a lot of valuable time.
E-commerce is the most cost effective compared to traditional commerce

method. This is due to the fact where through e-commerce, the cost for the
middleperson to sell their products can be saved and diverted top another aspect
of their business. For e-commerce, the total overheads needed to run the
business is significantly much less compared to the traditional commerce
method. The reason due to that is where most of the cost can be reduced in E-
commerce.
To both the consumers and business, connectivity plays an important part

as it is the key factor determining the whole business. From the business point of
view, E-commerce provides better connectivity for its potential customer as their
respective website can be accessed virtually from anywhere through the Internet.
This way, more potential customers can get in touch with the company’s
business and thus, eliminating the limits of geographical location. From the
customer’s standpoint, E-commerce is much more convenient as they can browse
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through a whole directories of catalogues without any hassle, compare prices

between products, buying from another country and on top of that, they can do it
while at home or at work, without any necessity to move a single inch from their
chair. Besides that for both consumers and business, E-commerce proves to be
more convenient as online trading has less red tape compared to traditional
commerce method. Ecommerce itself gives a boost to the global market. In short,
if without any major obstacles, E-commerce will certainly continue to mature in
the global; market and eventually, it will become an essential business plan for a
company in order to survive and stay competitive in the ever changing market.
E-commerce business have numerous advantages over off line retail
locations and catalog operators consumers browsing online stores can easily
search to find exactly what they are looking for while shopping and can easily
comparison shop with just a few clicks of the mouse. Even the smallest online
retail sites can sell products and turn a profit with a very simple online presence.
Web tracking technology allows e-commerce sites to closely track customer
preferences and deliver highly individualized marketing to their entire customer
base. Some of the benefits of e-commerce are
 Expanded geographical reach
 Expanded customer base
 Increase visibility through Search engine Marketing
 Provide customers valuable information about your business
 Available 24/7/365 – Never close
 Build customer Loyalty
 Reduction of Marketing and Advertising costs
 Collection of customer Data
Impacts, Challenges and Limitations of E-commerce

Impacts of E-commerce
The introduction of e-commerce has impacted on the traditional means of

online exchanges. It is creating a new market place and opportunities for the
reorganization of economic processes, in a more efficient way. The open structure
of the Internet and the low cost of using it permit the interconnection of new and
existing information and communication technologies. It offers businesses and
consumers an innovative and powerful information system and another form of
communication. This changes the way they search and consumer products, with
these products increasingly customized, distributed and exchanged differently.
The advent of e-commerce has seen a dramatic impact on the traditional ways of
doing business. It has brought producers and consumers closer together and
eradicated many of the costs previously encountered. It is evident that the supply
industry will benefit from e-commerce which includes those producing
computers, networking equipment and the software necessary. It is also evident
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that a negative impact will be targeted at direct substitutes, such as retail travel
agencies, retailers of software and “bricks and mortar: music stores. However,
these impacts will be small compared to the developments imaginable.
Challenges of E-commerce
As far as e-commerce is concerned it is still in an infancy stage in India.
The environment exist today is not much suitable for the fast growth of e-
commerce. There are various problems and challenges, which should be resolved
immediately to achieve a fast growth in this area.
One of the important challenges faced by this sector is the lack of adequate
infrastructure for IT technology and Internet. The penetration of personal
computers in India is as low as 3.5 per thousand of population compared to over
6 per thousand in China and 500 per thousand in USA.
Another important reason for not developing e-commerce is the high tariff
rate charged by Internet Service Providers [ISPs] Speed and connectivity is also
poor.
Another problem faced is that e-commerce sites are one of the favorite
targets of hackers. If you think that your site is not relevant enough to catch
their attention, you are wrong, and this way of thinking will help you to prepare
to face related risks. And the most serious drawback is the absence of effective
cyber law at the moment. E-commerce is governed by the UNCITRAI model code,
but this is not binding on any country. It is expected that all WTO member
countries will soon enact laws to govern e-commerce. Towards this end, India has
passed her Information Technology Act in May 2000.However, this Act simply
considers the commercial and criminal side of law and fails to consider other
multidimensional aspects of e-commerce,
Another cause for the slow growth of e-commerce is the privacy and
security issues. Measures like digital signatures, Digital certificates, and fire
walls can be adopted to secure safety and protection over the message passed on
internet. Payment related problems also continue to block the e-commerce
activities. Electronic cash, credit cards etc. are some of the popular payment
method used for e-commerce transactions. But unfortunately penetration of e-
cash and credit cards not only low, but Indian consumers are suspicious about
the threat of fraud played by unscrupulous hackers. In order to minimize this
problem experts suggest the use of digital certificate along with credit card to
secure their payment activities.
Limitations of E-commerce
Electronic commerce is also characterized by some technological and

inherent limitations which have restricted the number of people using this
revolutionary system. One important disadvantage of e-commerce is that the
Internet has still not touched the lives of a great number of people, either due to
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lack of knowledge or trust. A large number of people do not use the Internet for
any kind of financial transaction.
Another limitation of e-commerce is that it is not suitable for perishable
commodities like food items. People prefer to ship in the conventional way than to
use e-commerce for purchasing food products. So e-commerce is not suitable for
such business sectors. The time period required for delivering physical products
can also be quite significant in case of e-commerce. A lot of phone calls and e-
mails may be required till you get your desired products. However returning a
product and getting a refund can be more troublesome and time consuming than
purchasing, in case if you are not satisfied with a particular product. Some of the
other limitations are:-
 Credit card security is a serious issue if vulnerable
 Costs involved with bandwidth and other computer and server costs
 Extensive database and technical knowledge and experience required
 Customer apprehension about online Credit Card orders
 Constantly changing technology may leave slow business behind
 Some customers need instant gratification, and shipment times interrupt
that
 Search utilities far surpasses the speed used to find products through
catalogs
 Encourages competition between small and large online retailers
Supply Chain Management and E-Commerce
A SUPPLY CHAIN is a network of supplier, manufacturing, assembly,

distribution and logistics facilities that perform the functions of procurement of
materials, transformation of these materials into intermediate and finished
products, and the distribution of these products to customers. Supply chains
arise in both manufacturing and service organizations.
It is a network of facilities and distribution options that performs the
functions of procurement of materials, transformation of these materials into
intermediate and finished products, and the distribution of these finished
products to customers. Supply Chain Management [SCM] is a systems approach
to managing the entire flow of information, materials, and services from raw
materials suppliers through factories and warehouses to the end customer. SCM
is different from Supply Management which emphasizes only the buyer supplier
relationship.
Supply chain Management is utilized to facilitate the coordination with

outside business entities, or in the scope of extended enterprise. SCM usually
refers to the redesign of supply chain processes in order to achieve streamlining
of supply chain collaboration. It is generally performed only by large corporations
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with large suppliers. A Supply chain is a collection of interdependent steps that,

when followed, accomplish certain objective such as meeting customer
requirements. It is the combination of art and science that goes into improving
the way your company finds the raw components it needs to make a product or
service manufacture the product or service and delivers it to customers.
Supply chain networks have gained prominence in the last decade.
Important reasons for their growing importance include: global dispersion and
distribution facilities; demand for customized products for local markets;
competitive pressures; and rapid advances in information technologies in the
form of EDI, internet technologies, electronic commerce etc.
The term supply chain management was first used in the early 1980s to
refer to the notion that manufacturing firms should think of their own internal
operations as an integrated whole, rather than as separate departments such as
purchasing, stores, production, finished good warehouse, distribution and so on.
It was quickly extended to cover relationships with suppliers and with immediate
customers the idea being that working more closely and co-operatively with these
e counterparts would enable a kind of integration and co-ordination that would
lead to reduced inventory, better quality and delivery performance and reduced
cost for everyone involved. The following parties are generally involved in a supply
chain:
Suppliers – organizations that provide foods or services to a purchasing

organization.
Manufacturers- are the companies engaged in the original production and
assembly of products, equipments or services.
Distributors – arte the external entities that sell for suppliers or
manufacturers directly and often collect all payments from customers and
maintain an inventory of the suppliers or manufacturers products.
The following are five basic components for supply chain management:
1. Plan – This is the strategic portion of supply chain management. You need a
strategy for managing all the resources that go toward meeting customer demand
for your product or service. A big piece of planning is developing a set of metrics
to monitor the supply chain so that it is efficient, costs less and delivers high
quality and value to customers.
2. Source- Choose the suppliers that will deliver the goods and services you need
to create your product or service. Develop a set of pricing, delivery and payment
3. Make- This is the manufacturing step. Schedule the activities necessary for
production, testing, packaging and preparation for delivery. As the most metric
intensive portion of the supply chain, measure quality levels, production output
and worker productivity.
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4. Deliver- This is the part that many insiders refer to as logistics. Co-ordinate
the receipt of orders from customers, develop a network of warehouses, pick
carriers to get products to customers and set up an invoicing system to receive
payments
5. Return- The problem part of the supply chain. Create a network for receiving
defective and excess products back from customers and supporting customers
who have problems with delivered products.
Types of Supply Chain Management Systems

1. Public B2B Exchanges
In this type of supply chain Management system, companies get more

options to select the suppliers that fit in their business needs, and they also have
more power in negotiating the prices and terms of services. The cost of
participation in a public exchange is significantly lower than implementing our
own SCM systems
2. Private Supply Chain Management systems’
It is developed for specific industry and particular company.SCM systems

are often tightly integrated a limited few suppliers and trading partners. The
purpose of SCM is more of collaboration than price negotiation. The disadvantage
of private supply chain software, compared with public B2B exchanges is the cost
of implementation.
The main objectives of supply chain management are
To reduce inventory costs

To increase sales
To improve the co-ordination and the collaboration with suppliers,
manufacturers and distributors.
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MODULE II
BUSINESS MODELS OF E-COMMERCE
E-Commerce is a much wider subject than selling online. It is of the view

that e-commerce covers any form of transaction where technology has played a
part. There are also many different types of e-commerce, with differing
relationships existing with each. Some of the important models of e-commerce
are as follows:-
1. Business to Business [B2B]
B2B (business – to- business) is the major and valuable model of e-

commerce.B2B (business – to- business) e-commerce is conducted between two
separate businesses and has been in effect for many years. E-commerce plays an
important role in enhancing and transforming relationships between and among
business. B2B (business – to- business)is also known as e-biz, is the exchange of
products, services, or information between businesses rather than between
businesses and consumers. Although early interest centered on the growth of
retailing on the Internet (sometimes called e-tailing), forecasts are that B2B
revenue will far exceed business to consumers [B2C] revenue in the near future.
B2B (business – to- business )is a kind of e-commerce, which refers to a company
selling or buying from other companies. One company communicates with other
companies through electronic Medias. Some of these transactions include
sending and receiving orders, invoice and shopping orders. It was an attractive
alternative to the current process of printing, mailing various business
documents.
Some B2B applications are the following:-

1. Supplier Management
Electronic applications in this area helps to speed up business

partnerships through the reduction of purchase order processing costs and cycle
times, and by maximizing the number of purchase order processing with fewer
people.
2. Inventory Management
Electronic applications make the order-ship bill cycle shorter. Businesses

can easily keep track of their documents to make sure that they were received.
Such a system improves auditing capabilities, and helps reduce inventory levels,
improve inventory turns, and eliminate out- of- stock occurrences.
3. Distribution Management
Electronic based applications make the transmission of shipping
documents much easier and faster. Shipping documents include bill of lading,
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purchase orders, advance ship notices, and manifest claims. E-commerce also
enables more efficient resource management by certifying that documents
contain more accurate data.
4. Channel Management
E-commerce allows for speedier distribution of information regarding
changes in operational conditions to trading partners. Technical, product and
pricing information can be posted with much ease on electronic bulletin boards.
5. Payment Management
An electronic payment system allows for a more efficient payment

management system by minimizing clerical errors, increasing the speed of
computing invoices, and reducing transaction fees and costs.
Many organizations are implementing electronic commerce in numerous
ways and receiving tangible benefits but as electronic commerce matures and
develops, these ways are likely to change based on the accelerating adoption rate.
There are three specific implementation models of B2B E-commerce:-
 Transaction based- a single company establishes a common transactional

method for conducting business with its major customers or key suppliers.
This offering is common across all business units within the company and
includes common tools, techniques, and infrastructure.
 Process based- Two companies establish a common business process to
conduct business efficiently between the two firms. The two firms establish
and share this common practice jointly, both within their firm and outside
their organization with this predetermined trading partner.
 Strategic relationship based – Two or more companies establishing a
strategic relationship partnership based on all major interactions between
the organizations. This includes transactions, processes, and any other
collaboration between the organizations. From a technology perspective
this includes linking the CRM, ERP and SCM systems of the two
organizations. This way each organization can actually monitor sales
activity, production schedules, inventory management, and technical
service exchanges.
2. Business – to Consumer [B2C]
Business – to Consumer [B2C] e-commerce consists of the sale of products

or services from a business to the general public. Products can be anything from
clothing to flowers and the products can also be intangible products such as
online banking, stock trading, and airline reservations. Sellers that use B2C
business model can increase their benefits by eliminating the middlemen. This is
called disintermediation because businesses sell products directly to consumers
without using traditional retail channels. Business – to Consumer [B2C] is
basically a concept of online marketing and distributing of products and services
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over the internet. It is a natural progression for many retailers or marketer who
sells directly to the consumer. The general idea is, if you could reach more
customers, service them better, make more sales while spending less to do it that
would the formula of success for implementing a B2C e-commerce infrastructure.
A business firm can also establish relations with customers through
electronic medias. For this, the company has to design a web site and place it on
the internet. On the web site, the company can publish all details about the
product and services and that benefits customers to place orders for these goods
from the web site.
To maintain customers always with company’s web site, the company must
update the information on the web regularly. Consumers always demand greater
convenience and lower prices. Electronic commerce provides consumers with
convenient shopping methods.
Business – to Consumer [B2C] e-commerce provides many benefits to the
business. Some of them are:-
 Lower Marketing costs

 Lower order processing cost
 Better customer service
 Lower customer support cost
 Wider markets
3. Business – to –Government [B2G] e-commerce

B2G refers to the supply of goods and services for online government
procurement. This is a huge market which mainly covers everything from office
supplies to military equipment.B2G websites offer lower costs and greater choice
to the administration, and make government tendered offers more accessible to
companies.B2G is a derivative of B2B marketing and often referred to as a
market definition of public sector marketing which encompasses marketing
products and services to various government levels including-federal, state and
local- through integrated marketing communications techniques using as
strategic public relations, branding, , advertising, and web based
communications.
A website offering Business – to –Government services could provide

businesses with the following.
 A single place to locate applications and tax forms for one or more levels of
government (city, state or local)
 To provide the ability to send in filled out forms and payments
 To update corporate information
 To request answers to specific questions
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Business – to –Government decreases the cost of transactions with

reference to licenses, selling publication of government documents, tax returns
and general dealings with businesses and the public. It has increased
information flow.
4. Business- to- employee [B2E]
Business- to- employee [B2E] uses an intrabusiness network which allows

companies to provide products and/ or services to their employees. It is the use
of intranet technologies to handle activities that take place within a business. An
intranet is an internal network that used Internet technologies.
Business- to- employee [B2E] is different from other type since it is not a
revenue form of business. Otherwise, it increases profits by reducing expenses
within a company. Instead of having to look everything up manually they can
collaborate with each other and exchange data and other information.
Many companies have found that B2E technologies have dramatically

reduced the administrative burdens with the human resources department.
Admittedly, maintaining employee information has little to do with commerce,
but this term has grown to encapsulate this activity into the B2E definition.
Examples of B2E applications include
1. Online insurance policy management

2. Corporate announcement dissemination
3. Online supply requests
4. Special employee offers
5. Employee benefits reporting
6. 401(k) Management
E-Commerce Strategy
Companies with an E-business strategy are more open. The entire

organization focuses on the market and has greater visibility, more efficient
collaboration and stronger relationships. Opening up a business, however,
requires an extended ERP Solution which integrates the front office with the
back-office system. Customer Relationship Management [CRM] and Supply Chain
Collaboration [SCC] compliment back-office relationship. SCC streamlines the
flow of information and self service capabilities through automation and
interaction. Such solution allows customers, partners and employees to access
system functions and information via the Internet. They use the critical business
and financial information in your ERP solution to promote profitable new ways to
work with customers and vendors.
The various elements required to implement a successful e-commerce

strategy are:-
E-Commerce Page 18
 Make sure to have a Market –

 Use a clicks and mortar strategy if possible- it combines offline resources,
such as store brands, channels with an online e-commerce presence
 Integrate the shopping experience Integrate information, personal details
and purchase history
 Plan about the content, pricing, stock management, fulfillment, support,
payment, returns, support and security.
 Develop an easy-to use purchase process
 Consider localization issues
 Consider customer relationship management and personalization
 Use the right software
 Always employ the right team in place
 Use enough marketing campaign
Influencing factors of successful E-commerce
The crucial factors to be considered while launching an E-commerce web

site are
1. Website
Website must be easy to navigate since the surfer should not have to
search for the product or details he or she is looking for. The website should
project its products in as provocative way so the surfer wants to see more.
Place testimonials or photos of the product can also help to create a positive
image.
2. Merchant Account
All major credit cards have to be accepted for an e-commerce transaction.
So there arises a need for a merchant account
3. Shopping cart and Secure server
The online shopping cart allows the customers to choose and place their
chosen products in the cart just as one would do in shopping mall. This cart
will, at the end of the shopping, total the products and give the total cost of
the products chosen.
4. Payment gateway
This is the link from the credit card to the credit card processor. This
gateway helps information to pass from the website to the authorization centre
where the credit card is verified and then charged, after that the reply will
come back into the website that the processing has been successful. A
payment gateway will always check for details in credit card information and
reject any discrepancy in the information.
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MANAGING E-BUSINESS INFRASTRUCTURE
The Internet
Internet is the world’s largest computer network. The internet is a network

or more precisely “Inter-network” of hundreds of connecting networks made
up of different types of computers all over the world that can share messages
and information with one another. Internet is a global network of computers.
The Internet has revolutionized the computer and communications world like
nothing before. Anybody can access the Internet and can use the resources
available on the Internet.
The Internet is a worldwide, publicly accessible series of interconnected

computer networks that transmit data by packet switching using the standard
Internet Protocol (IP)It is a “network of networks” that consists of millions of
smaller domestic, academic, business, and government networks, which
together carry various information and services, such as electronic mail,
online chat, file transfer, and the interlinked web pages and other resources of
the World Wide Web [WWW]
The different purposes of Internet are as follows:-

1. Sending and receiving E-mails ( It is an instantaneous way of sending and
receiving messages, called electronic mail0 round the world at minimal
price
2. Finding information on any topic or can be used as an educational tool.
3. Helps in participating in discussion on wide range of topics
4. Used to send data in the form of files from one computer to other with the
facility called FTP [File Transfer Protocol]
5. It is used for research purpose.
6. Internet provides a great learning experience
Intranets and Extranets
Intranets
An intranet is an internal, secured business environment, which uses

HTML and TCIP protocols like the Internet, but operates on a LAN [Local Area
Network]. If the LAN Provides access to the Internet, the Intranet resides
behind a firewall, with no gateway to, or from the Internet. If a gateway exists,
it is not an intranet, but an extranet.
An intranet is a private computer network that uses Internet protocols and

network connectivity to insecurely share part of organizations information or
operations with its employees. Growth of Internal networks based on Internet
technologies known as the Intranet is out spacing the growth of the global
internet itself. An Intranet is a company- specific network that uses software
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programs based on the Internet TCP/IP Protocol and common Internet user
interfaces such as the web browser. Intranet is the application of Internet
technologies within an organization private LAN or WAN Network.
The Intranet environment is completely owned by the enterprise and is

generally not accessible from the Internet at large. An Intranet incorporates a
working, interactive custom environment to serve the business model, with
familiar internet-like functionality and navigation. An intranet can be as basic
or comprehensive as need dictates.
Some of the advantages of Intranet are
 Ease of use
 Publishing ease
 Low cost
 Low maintenance
 Easy software distribution
Extranet
Extranet is a business to business intranet that allows limited controlled,

secure access between a company’s internet and authorized users from
remote locations. The information stored on the web of one organization can
be shared by other organizations if they are in good terms.
Extranet is also a private network of an organization. However, it allows

trusted external partners or clients such as suppliers, customers and
business partners to access the network. An intranet extended to trusted
external parties becomes an extranet. An external party would have limited
access to the network compared to an internal employee of the organization.
An extranet can be viewed as part of a company’s Intranet that is extended
to users outside the company .An extranet can be understood as a private
intranet mapped onto the Internet or some other transmission system not
accessible to the general public, but is managed by more than one company’s
administrator.
Extranet is an extension of an intranet which makes the later accessible to
outside companies or individuals with or without an intranet. Parts of an intranet
are made available to customers to business partners for specific applications.
The links between an intranet and its business partners are achieved through
TCP/IP, the standard internet protocol. Extranets provide the privacy and
security of an intranet while retaining the global reach of the internet. Business
to business E-commerce is growing on Extranets. Companies gain competitive
advantage through speedier transactions and access newer markets, as also by
simplified and faster distribution of information, products and services.
E-Commerce Page 21
Companies can use an extranet to:
 Exchange large volumes of data using Electronic Data Interchange [EDI]

 Share product catalogs exclusively with wholesalers or those “in the trade”
 Collaborate with other companies on joint development efforts
 Jointly develop and use training programs with other companies
 Provide or access services provided by one company to a group of other
companies, such as on line banking application managed by one company
on behalf of affiliated banks.
 Share news of common interest exclusively with partner companies
World Wide Web
WWW or World Wide Web is used for people around the world and it would
easily link to other pieces of information, so that only the most important data
would quickly found by a user.
WWW is a global web in which millions of users are communicating with
each other with the help of computers. It is a wide-area hypermedia information
retrieval initiative aiming to give universal access to a large universe of
documents. It is an Internet based computer network that allows users on one
computer to access information stored on another through the world wide
network.
Working of the WWW

The WWW works on a Client-server approach. Whenever the user wants to
retrieve a webpage, the www works as follows:
1. A user enters the URL of the webpage in the address bar of the web
browser.
2. The web browser requests the Domain Name Server for the IP address
corresponding to www.yahoo.com
3. After receiving the IP address, the browser sends the request for the
webpage to the Internet using HTTP protocol which specific the way the
browser and Web Server communicates. The Internet Routers send the
request to the intended web server
4. Then the web server receives the request using HTTP protocol. It then
examines the hard disk or memory and if the requested file is found it
returns it back to the web browser and closes the Http connection.
5. The Web browser then interprets the file and displays the contents of the
webpage in the browser window.
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Voice over IP [VoIP]
Voice over Internet Protocol [VoIP] is simply the transmission of voice traffic
over IP based networks. The internet Protocol (IP) was originally designed for data
networking. The success of IP in becoming a world standard for data networking
has led to its adaption to voice networking. Thus, Voice over Internet Protocol
(VoIP) is a technology that allows to make voice calls using a broadband Internet
connection instead of a regular phone line.
VoIP is one of the new technologies that have the capability to dramatically
change the telecommunications scene of tomorrow. VoIP is a technology that
helps people to use the Internet as a transmission medium for telephone calls. By
using VoIP, callers can avoid long distance phone charges and save expensive
telephone infrastructure costs.
VoIP services convert our voice into a digital signal that travels over the Internet.
If we are calling a regular phone number, the signal is converted to a regular
telephone signal before it reaches the destination. VoIP can allow us to make a
call directly from a computer, a special VoIP phone, or a traditional phone
connected to a special adapter. In addition, wireless “hot spots” in locations such
as airports, parks, and cafes allows connecting to the Internet and may enable to
use VoIP service wirelessly
VoIP Telephones
There are three methods of connecting to VoIP network

1. Using a “normal” telephone with a VoIP adapter
It is through the use of a device called an ATA {Analog Telephone

Adaptor}.The ATA allows us to connect a standard phone to computer or Internet
connection for use with VoIP. The ATA is an analog-to-digital converter. It takes
the analog signal from traditional phone and converts it into digital data for
transmission over the INTERNET.
2. Using a VoIP telephone
These specialized phones look like normal phones with a handset, cradle
and buttons. But instead of having standard RJ-11 phone connectors, IP phones
have an RJ-45 Ethernet connector. IP phones connect directly to our router and
have all the hardware and software necessary right onboard to handle IP call. Wi-
Fi phones helps to subscribe callers to make VoIP calls from any wi-fi hot spot.
3. Using a computer with speakers and a microphone
This is certainly the easiest way to use VoIP. We need not even have toi pay
for long distance calls. All that is required is software, microphone, speakers, a
soundcard and an Internet connection. A broadband [high speed internet]
connection is required for VoIP technology. This can be through a cable modem,
or high speed services such as DSL or a local area network. A computer, a
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adaptor, or a specialized phone is required./ Some VoIP services only work over
your computer or a special VoIP phone, while other services allows to use a
traditional phone connected to a VoIP adaptor.
Benefits of VoIP
 Low cost
 Eliminating phone lines
 Increased functionality and Reliability
 Eliminating Long Distance Charges
 Number portability
 Computer Telephony Integration [CTI]
The Internet Standards

At the technical and developmental level, the Internet is made possible
through creation, testing and implementation of Internet Standards. These
standards are developed by the Internet Engineering Steering Group, with
appeal to the Internet Architecture Board, and promulgated by the Internet
Society as international standards. The RFC Editor is responsible for
preparing and organizing the standards in their final form. The standards
may be found at numerous sites distributed throughout the world, such as
the Internet Engineering Task Force.
An Internet Standard [STD] is a normative specification of a technology or

methodology applicable to the Internet. Internet Standards are created and
published by the Internet Engineering Task Force [IETF].An internet Standard
is a special Request for Comments [RFC] or set of RFCs. The definitive list of
Internet Standards is maintained in Internet Standards document STD
1: Internet Official Protocol Standards.
INTERNET PROTOCOLS
A communication protocol allows different kinds of computers using different

operating systems to communicate with one another. It is highly essential
because Internet is not made up of computer system. Instead there are great
diversities found in the computers used on the internet. The user connected
on any network on the Internet can communicate with others or software
located on any other network connected to the internet using common set of
protocols. An internet protocol is a set of standards or rules for exchanging
information between computer systems in a network. The most commonly
used protocols are:-
1. Transmission control Protocol/Internet Protocol [TCP/IP]

It is actually a collection of protocols that govern the way data travel
from one computer to another across networks. A user connected on any
network on the Internet can communicate with people or software located
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on any other network connected to the internet using this common set of
protocols. On the internet, the protocol that permits two internet
connected computers to establish a reliable connection is called TCP/IP.
2. File Transfer Protocol [FTP]

FTP is the protocol or set of rules, which enables files to be transferred
from one computer to another computer.FTP works on the client/server
principle. A client program enables the user to interact with a server in order
to access information and services on the server computer. Files that can be
transferred are stored on server computers. A client can access these files
only through a client application program. This program helps a client
computer to locate the required file to be transferred and starts the process of
transfer.
3. Hyper Text Transfer Protocol [HTTP]
HTTP is an internet standard or set of rules that allows the exchange of

information on the World Wide Web. Hyper text is a method of preparing and
publishing text, ideally suited to the computer, in which users can select
their own text. To prepare hyper text, the whole material should be divided
into small segments such as single pages of text. These small segments are
called nodes. Then hyper links are embedded in the text. When the user
clicks on a hyper link, the hyper text software displays a different node. The
process of navigating among the nodes linked in this way is called browsing.
A collection of nodes that are interconnected by hyper links is called a web. A
Hyper text is prepared using Hyper Text Markup Language [HTML].The html
codes are used to create links.
Http is also based on the client/server principle. It allows the client
computer to contact with server computer and make a request. The server
accepts the connection requested by the client and sends back a response.
An Http request identifies the information or text that the client is needed
and it tells the server to supply the text.
4. Telnet
Telnet is an Internet protocol or set of rules that enables internet users to

connect to another computer linked to the internet. This process is also
called as remote login. The user’s computer is referred to as the local
computer and the computer being connected to is referred to as remote or
host computer. Once access is established between local and host computer,
local computer can give commands do that they are executed in the host
computer.
5. Gopher
Gopher is a protocol linked to the internet to search , retrieve and display

documents from remote sites on the internet, It is a menu based program
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that helps the user to find files, programs, definitions and other topics that
the user specifies. Gopher protocol allows the user to free from the troubles of
specifying the details of host, directory and file names. Instead, the user can
browse through menus and press Enter when he finds some interesting topic.
Gopher is interacting with a large number of independently owned computers
around the world.
6. Wais
Wais stands for Wide Area Information Service. WAIS is a internet search
tool and describes as a protocol for computer to computer information
retrieval. It is a program that permits the user to search information
worldwide based on a service of key words. WAIS has the capability of
simultaneously searching in more than one database.
Audio and video standards
Audio-Video Standard, or AVS, is a compression codec for digital audio and

video. Chinese companies own 90% of AVS patents. The audio and video files
have an .avs extension as a container format. Development of AVS was
initiated by the government of the People’s Republic of China. Commercial
success of the AVS would not only reduce China’s electronics industry
recognition among the more established industries of the developed world,
where China is still seen as an outlet for mass production with limited
indigenous design capability.
In January 2005, The AVS workgroup submitted their draft report to the
Information Industry Department [IID]. On march 30, 2005,the first trail by
the IID approved the video portion of the draft standard for a public showing
time. The dominant audio/ video compression codec’s, MPEG and VCEG ,
enjoy widespread use in consumer digital devices, such as DVD players.
Their usage requires Chinese manufacturers to pay substantial royalty fees to
the mostly- foreign companies that hold patents on technology in those
standards.
AVS was expected to be approved for the Chinese high definition successor
to the Enhanced Versatile Disk, and when CBHD was released it shipped
with 30gb blue laser discs and video in the AVS format, which rapidly gained
market share- standing at 30% of the video in the AVS format, which rapidly
gained market share- standing at 30% of the video disc market after four
months.
Web Services and Service- oriented architecture [SOA]
Web services are typically application programming interfaces [API] or web

APIs that can be accessed over a network, such as Internet on a remote
system hosting the requested services. A web service is a service that
communicates with clients through a set of standard protocols and
technologies. These web services standards are implemented in platforms and
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products from all the major software vendors, making it possible for clients
and services to communicate in a consistent way across a wide spectrum of
platforms and operating environments. This universality has made web
services the most prevalent approach to implementing an SOA. Web service is
a software system designed to support interoperable machine to machine
interaction over a network. It has an interface described in a machine
processable format.
Service oriented Architecture [SOA]
Service oriented Architecture is an information technology approach in

which applications make use of services available in a network such as the
World wide web. Implementing service oriented architecture can involve
developing applications that use services, making applications available as
services so that other applications can use those services, or both.
SOA is an approach to connect various applications so that they can
communicate with each other. It is a way of sharing functions, typically
business functions, in a widespread and flexible way. It is an architectural
style which aims at to achieve loose coupling among interacting software
agents. A service is a unit of work done by a service provider to achieve
desired end results for a service consumer. Both provider and consumer are
roles played by software agents on behalf of their owners.
What distinguishes an SOA form other architectures is loose coupling.
Loose coupling means that the client of a service is essentially independent of
the service. The way a client communicates with the service doesn’t depend
on the implementation of the service. This means that the client does not
have to know very much about the service to use, it. Loose coupling enabling
services to be document oriented. A document oriented service accepts a
document as input, as opposed to something more granular like a numeric
value or java object. The client does not know or care what business function
in the service will process the document. It is up to the service to determine
what business function to apply based on the content of the document
An SOA can also include a service that provides a directory or registry of

services. The registry contains information about the service such as its
interface. A client can discover services by examining the registry. A registry
can also be coupled with a repository component that stores additional
information about each service
Rules of SOA
 The messages must be descriptive, rather than instructive, because the

service provider is responsible for solving the problem
 Service providers will be unable to understand your request if your messages

are not written in a format, structure, and vocabulary that is understood by
all the parties. The more restricted a message is, the easier it is to
E-Commerce Page 27
understand the message, although it comes at the expense of reduced

extensibility.
 Extensibility is vitally important. The world is an ever- changing place so is

any environment in which a software system lives. Those changes demand
corresponding changes in the software system, service consumers providers
and the messages they exchange. If messages are not extensible, consumers
and providers will be locked into one particular version of a service.
 SOA must have a mechanism that enables the consumer to discover a service
provider under the context of a service sought by the consumer. The
mechanism can be really flexible, and it doesn’t have to be a centralized
registry.
New access Devices
An access device is a network component used to gain access to network

resources from a remote location, and vice versa. Common access devices are
routers and modem pools. An access device aggregates multiple channels of
information including voice and data across a single shared access link to a
carrier or service provider PoP [Point of presence].The Access link may be a TI
line, a DSL connection, a cable network or a broadband access link to a
metro Ethernet connection.
An access Device is typically installed at the customer premises. Sometimes,

an access device is installed by the service provider if chosen by the
customer. This allows the service provider to control the features of the
access link and manage its operation during use. Some of the Internet access
devices include
 Cell phones
 Mobile Internet Devices [MIDs]
 Two- way Pagers
 Personal Digital Assistants
Future of the Internet Infrastructure
The future of any technology is difficult to forecast, and we do not

profess to know what the future holds for the Internet. The Internet has
revolutionized the access of information and communication in 1990’s.The
ongoing development in speed, bandwidth, and functionality will continue
to cause fundamental changes in the world for decades to come. Some of
the major trends shaping the future of the Internet are as follows:-
1. Globalism:-
The future of the Internet global distribution of information and
knowledge at lower and lower cost will continue to lift the world
community for generations to come. People will have access to any
information they wish, get smarter sooner, and be more aware of the world
E-Commerce Page 28
outside their local environment. A better informed humanity will make

better macro- level decisions, and an increasingly integrated world will
drive international relations towards a global focus.
2. Communities:-
This internet communication revolution results into a new uniting
community. The Internet will increasingly be used for communications
within communities as much as across countries. Local communities will
organize in virtual space and take increasing advantage of group
communication tools such as mailing lists, new groups, and web sites, and
towns and cities will become more organized and empowered at the
neighborhood level.
3. Virtual Reality
With the continued increase of computer capability every couple of

years, the ability of technology to process the complex environment that
humans live in – “ reality” – will continue to increase, and will be
increasingly integrated with the Internet.
Three dimensional graphics will become more sophisticated, and virtual
reality interfaces such as viewers and physical feedback systems will
become more realistic. The increasingly sophisticated virtual experiences
will continue to change how we understand the nature of re3ality,
experience, art and human relations.
4. Bandwidth
Large increases of bandwidth in the 10 Mbps range and up will

continue to be deployed to home users through cable, phone and wireless
networks. High resolution audio, video, and virtual reality will be
increasingly available online and on demand, and the cost of all kinds of
Internet connections will continue to drop.
5. Wireless
The future of Internet wireless communication is the endgame.

Wireless frequencies have two great advantages. (a) There are no
infrastructure start-up or maintenance costs other than the base stations
and (b) it frees users to become mobile, taking Internet use from one
dimension to three. Wireless Internet Networks will offer increasingly faster
services at vastly lower costs over wider distances, eventually pushing out
physical transmission systems.
6. Grids.:-
The future of the Internet grid movement is as inevitable as the

spread of the Internet seems now. The connection of thousands of
computers on the Internet together to solve problems, often called grid
E-Commerce Page 29
computing will continue to evolve and change many areas of human

Endeavour.
7. Integration
The integration with an increasing number of other technologies is as

natural as a musician’s experimentation with notes. The internet will
become increasingly integrated with phones, televisions, home appliances,
portable digital assistants, and a range of other small hardware devices,
providing an unprecedented, nearly uniform level of integrated data
communications. Users will be able to access, status, and control this
connected infrastructure from, anywhere on the Internet.
E-Commerce Page 30
MODULE III
MARKETING STRATEGIES AND E-COMMERCE
A website is very essential to conduct e-commerce. The success or failure of
e-commerce to a greater extend is determined by the setting up of a suitable
website and its promotion to attract customers from all over the world. A website
is similar to storefront. In e-commerce context, it can be called as virtual
storefront where cyber customers visit. A website is basically a series of pages
with links to other pages or other sites. The pages contain text, banners, graphics
and sometimes audio and video.
Web pages are accessed and transported with the hypertext Transfer
Protocol [HTTP], which may optionally employ encryption [HTTP Secure, HTTPS]
to provide security and privacy for the user of the web page content. The user’s
application, often a web browser, renders the page content according to its HTML
markup instructions onto a display terminal.
All publicly accessible websites collectively constitute the World Wide Web.
The pages of a website can usually be accessed from a simple Uniform Resource
Locater called the homepage. The URLs of the pages organize them into a
hierarchy, although hyper linking between them conveys the reader’s perceived
site structure and guides the readers’ navigation of the site.
Some website requires a subscription to access some or all of their content.

Eg. Academic journal sites, gaming sites social networking sites etc. The World
Wide Web [WWW] was created in 1989 by CERN physicist Tim Berners Lee. On
30th April 1993, CERN announced that the World Wide Web would be free to use
for anyone.
Components of a Website
E-commerce providers must take every opportunity to convey their

professionalism in their website, products and services to their customer service
as each will play an important part in their success. The important components
of a website are as follows:-
1. Home page
This is the first page of a web site. The use reaches this page when they
specify the address of a web site. It contains links and these links help the user
to navigate the different parts of a site. It shows the name of the company and
other important details.
2. Web page
A web page is used to display some specific information regarding each

item or element described in the home page. The web pages can be accessed by
using links given in the home page.
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3. Domain name
It is highly essential to have a domain name for a web site. In order to

establish credibility, it is better to have our own domain name and professional
web hosting. Web sites hosted on free servers are not taken seriously and will
suffer a serious loss of business. Visitors may feel that the company don’t have
even its own domain and hence may not be a credible company. They will simply
take their business elsewhere.
4. Professional Logo
A professional looking logo is an integral part of a web site. It not only gives
a professional appearance to web site, but it will also enable our visitors to
recognize brand. The logo should be displayed in the top left corner of each page
of web site.
5. Theme based content
A web site should focus on a specific subject and provide a variety of

information that relates to the subject. Original content is always preferable.
6. E-mail capture
A web site should be able to capture email address of potential customers.

7. Privacy policy
We can create our own page on the web site called “Privacy” and let our
visitors know exactly how we will be using the information collected from them.
Such a page should contain warning to visitors regarding security and privacy of
information they provide.
8. Testimonials
To increase credibility, it is better to include customers testimonials which

include customer’s name, e-mail address and web address.
9. Money back guarantee

Providing the customers with a solid, no risk, money back guarantee will
increase credibility so that it completely removes our potential customer’s risk.
This will put their mind at ease by building their confidence with our company
and products.
10. Feed back
Potential customers will have many questions about our products and
services. It is better to use a feedback form for this purpose.
11. Copy rights
E-Commerce Page 32
It is always good to display the copyright information at the bottom of each

page.
12. Link
A link is a connector that makes it possible to go to another web page on

the site or the Internet or to go back to the home page. A link has a specific title
and directions for use.
13. Banner
A banner is a graphic display on a web page usually used for advertising.

The banner is usually linked to the advertiser’s web page.
Concept and Designing Website for E-commerce
Usability considerations should be of prime importance in the design of an

electronic commerce website. The human mind processes new information based
on observations and inferences and gradually he forms a conceptual or mental
model. The design of an e-commerce website incorporates activities, ideas,
terminology, and relationship that the user must handle when using the website.
A conceptual model is the basis for user expectations. When a new user enters
an e-commerce website, he quickly stars to build a conceptual model that relates
the website to what he already knows. A user will perceive a website as easy to
navigate and thus user friendly, if he can easily construct a conceptual model of
the website, If a website requires a complex conceptual mode, the user sees the
web site as confusing or difficult to use.
The challenge for the website designer is to come up with a design model
and a system image that are consistent with the user’s model of the website. The
purpose of a website is to support and enhance the goals of a business or
organization. It is not an end in itself. A website should be much more than just
an online brochure, and a well designed web site integrates the following key
concepts:-
1. Information Presentation
The information should be presented in such a manner that it should

promote a comfortable and effective interaction between the user and the site.
The web site developer has many ways to present information from simple text to
multimedia displays. Selection and use of text, graphics, video, and audio depend
on how well users will respond to the information.
The look and feel of an e-commerce web site should be based on user
requirements. Page layout and navigation should be as intuitive and easy as
possible. Audio and video used to attract users, or generated in response to user
input should enhance the buyers experience and not distract from it. Audio
sequence and video display segments should be limited to 20 to 30 seconds. The
user should be able to interact video, audio, animation or other multimedia
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display. Furthermore, the over use of images, audio video can increase the time
in which a page downloads, which has an negative impact on usability.
Color choices should be pleasing to the eye and should stimulate the user’s
interest. Negative contrast should be used for flashing patterns- ie, flash a darker
foreground on a brighter pattern.
2. Good navigation and usability

Good navigation and usability is another basic concept for a good website
design. It should always possible for the visitors to navigate from one part of the
website to the other easily.
3. Feedback
The interactive cycle between a user and a website is not complete until the
website responds to a command entered by the use. Website feedback often
consts of a change in the visual or verbal information presented to the user.
Completed orders should be acknowledged quickly. This may be done with a
acknowledgement or fulfillment page. The amount of time it takes to generate
and download this page, is a source of irritation for many e-commerce users.
Design criteria
A good website is a medium to present our business. In designing website,

the primary goal is to attract visitors through the presentation of information and
thsi
ereby distributes or sells products to them. Therefore, the important criteria that
is to be followed while designing a website includes the following:-
 The purpose of the site – should be to communicate the information about

the business which includes information such as location, hours, contact
information, products and services etc.
 Good domain name – domain names are the best if they are .com
(commercial) names for businesses. This allows the person to type in just
the main words or words and the site will come up
 Visibility – important website information should always fit within the
typical horizontal viewing area of the screen
 Good coolers and graphics – it is used to get the visitors attention quickly
and let links give them more detailed information. Good graphics should
also be used so as to make the site more attractive.
 Good texts- simple and straight forward style should be used while giving
details about our business. Reading text on complex background can make
our information very difficult to read and understand.
 Pictures or Images- it add attraction to the site. A good picture of business
place or logo can be shown in the site. Pictures or images of company’s
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products must be given in the site so that the customers who visit the site
can actually see ht products offered.
 Good Meta tags – are read by Search Engines and should include at a
minimum, the page title, and the name of the business, description of the
business, the location, and key words.
 Quick to load – the home page of the site should load quickly and be easy
to understand. Large pictures, moving graphics etc. will ion crease the load
time.
 Easy to navigate- it should be possible to navigate easily from one part of
the site to other or from one piece of information to other areas of
information.
 Current content – the information should always be current and updated.
Old information will make our website outdated. Information in the website
should be updated in a timely manner.
 Leads- It is also essential to generate leads, sales or customer list. This can
include simple forms for the customer to fill out giving their information or
shopping carts so that product can be sold without our intervention.
 Ability to bring people back – it is better to create a mailing list of
customers so that we can contact current customers and contacts from our
site with updated information inviting them back to visit.
 Post site Built Scenario-It is advisable to read the site by many in order to
avoid great mistakes and make sure that it is submitted to major search
engines. Then add our site address to our email signature. It is also
essential to add the URL of our advertising materials.
Corporate Web Site
A corporate website or corporate site is an informational website operated

by a business or other private enterprise such as a charity or nonprofit
foundation. They differ from electronic commerce sites in that they provide
information to the public about the company rather than transacting business or
providing other services. The phrase is a term of art referring to the purpose of
the site rather than its design or specific features, or the nature, market sector,
or business structure of the site operator.
Contents of a Corporate Web site
Corporate websites usually includes the following:
1. A home page
2. A navigation bar or other means for accessing various site sections
3. A unified look and feel incorporating the company logos, style sheets, and
graphic images
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4. An “about us “section with the following information

 A summary of company operations, history and mission statement
 A list of the company’s products and services
 A section with biographical information on founders, board members, and
important executives. Sometimes provides an overview of the company’s
overall workforce.
 A “news” section containing press releases and links to news articles about
the company
 A “investor” section describing key owners and investors of the company
 A list of key clients, suppliers, achievements, projects, partners or others.
5. Pages of special interest to specific groups. These may include
 An employment section where the company lists open positions and tells
job seekers how to apply
 Investor pages with the annual report, business plan, current stock price,
financial statements, overview of the company structure and other
regulatory filings
 Pages for employees, suppliers, customers, strategic partners, affiliates etc.
6. Contact information
7. A terms of use document and statement of intellectual property ownership and

policies as they apply to the site content
8. A privacy policy
Portal
A Web portal, also known as links page, presents information from diverse
sources in a unified way. Portals provide a way for enterprises to provide a
consistent look and feel with access control and procedures for multiple
applications and databases, which otherwise would have been different entities
altogether. A web portal is a web site that provides a gateway, or portal, to other
resources on the Internet. Portals are often the first page when we start up our
web browser like Netscape Navigator or Internet Explorer. The scope and
coverage of the portals are very wide and hence the term search engine is not
sufficient to describe the multi offerings provided by portals. Eg.Yahoo, MSN,
ALO , iGoogle etc.
Sites listed as portals contain the following features:-
 Search Engine/ Directory

 E-mail Accounts
 News
 Sports and Weather
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Types of Portals
1. Vertical Portal
These are web portals which focus only on one specific industry, domain or
vertical. Vertical portal simply provides tools, information, articles, research and
statistics on the specific industry or vertical. A Vertical information Portal [VIP]
is a specializes entry point to a specific market place and or industry niche.Eg.i-
village- meant for women and guru.com for independent professionals
2. Horizontal portal
They are general interest portals covering a wide range of topics and
features such as yahoo or Google. These are mega portals dealing in a wide
range of topics.
3. Enterprise Resource portals or corporate portals
It provides personalized access to an appropriate range of information

about a particular company. Big corporations may set up their own portals in
order to meet their various requirements ranging from planning to control of
various functions. Initially called Intranet portals - enterprise portals existing for
the benefit of the company own employees, this set of technologies has
developed to assist and provide access to a company’s business partners as well.
4. B2B portals
A portal that helps to establish relations and to conduct transactions

between carious organizations is termed as B2B portals. Large volume of
business is being undertaken through these channels, a company which
maintains a portal can earn profit if they participate in the ownership of the
website or charge a transaction fee for business done through the portal.
5. Application Centric Portals
These portals function as a one of tying together back end systems to

support user’s application driven business processes. Users could be viewing the
information as read only or able to create, modify, delete, expire information
based on rights and permissions – but they are essentially using the portal to
attach a number of applications into one view – so that rather than having to
open a number of different applications to drive their business processes they
are able to access them all from one point.
6. Content Centric Portals
These portals function as one of obtaining information from a wide variety

of sources and displaying that content to users in a way that is based upon
user’s role and segmented information needs. These are designed to improve the
access to and sharing of information stored within an organization.
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7. Knowledge Portals
These portals increase the effectiveness of knowledge workers by providing

easy access to information that is necessary or helpful to them in one or more
specific roles. Knowledge portals are not mere intranet portals since the former
are supposed to provide extra functionality such as collaboration services,
sophisticated information discovery services and knowledge map.
Search Engines
A search Engine is an Internet based interactive search device that enables

a user to search for information on the Internet. Web search Engines are
actually database that contain references to thousands of resources. A search
Engine is software that scours the Internet collecting data about every website
and every web page within a web page that it can. The database of most Internet
Search Engines contains web documents. A web search Engine provides an
interface between the user and database. A search Engine is interactive and it
asks a user to type a search string, which may be a word, a phrase, a date or
some relevant item associated with the information. The search begins the
searching operation with these key words and continues searching it comes
across a list of resources that matches the keyword. Many search engines
include instructions and tips to search the databases more effectively.
WORKING OF SEARCH ENGINE
Search Engines for the general web do not really search the World Wide
Web directly. Each one searches a database of the full text of web pages selected
from the billions of web pages out there residing on servers. When you click on
the links provided in a search Engine’s search results, you retrieve from the
server the current version of the page. Search Engines databases are selected
and built by computer robot programs called spiders .They crawl the web in
their hunt for pages to include. They find the pages for potential inclusion by
following the links in the pages they already have in their database. They cannot
think or type a URL or use judgment to decide to go look something up and see
what’s on the web about it.
If a web page is never linked to in any other page, search engine spiders
cannot find it. The only way a brand new page – one that no other page – one
that no other page has ever linked to – can get into a search engine is for its URL
to be sent by some human to search engine companies as a request that the new
page be included. All search Engine companies offer way to do this. After spiders
find pages, they pass them on to another computer program for “indexing”. This
program identifies the text, links and other content in the page and stores it in
the search engine’s databases files so that the database can be searched by
keyword and whatever more advanced approaches are offered, and the page will
be found if your search engine matches its content. Some types of pages and
links are excluded from most search engines by policy. Others are excluded
because search engine spiders cannot access them. Pages that are excluded are
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referred to as the “Invisible Web” – what you don’t see in search engine results.
The invisible web is estimated to be two to three or more times bigger than the
visible web.
When you enter the key word search engine examines its database and
gives a listing of sites that match the search criteria. The hundreds or thousands
of search engine results are referred to as Hits.
Some popular search Engines include:-
 Google
 Alta vista
 Yahoo
 MSN
 Ask.com
 Dogpile
 Metacrawler
 Lycos
 Hotbot
Internet Advertising
Internet advertising is a new advertising medium. Internet advertising or

online advertising is a form of promotion that uses the Internet and World Wide
Web for the expressed purpose of delivering marketing messages to attract
customers. It is a way for retailers to advertise their products and services
online. Ads can target people with particular hobbies or interests, or they can
even focus on customers in a specific country or state.
One major benefit of online advertising is the immediate publishing of

information and content that is not limited by geography or time. Another
benefit is the efficiency of advertiser’s investment. Online advertising allows for
the customization of advertisements, including content and posted websites.
Models of Internet Advertising

1. Banner Ads.
It appears as rectangular graphics near the top of the page. Banner Ads
have been used for many years and are the most popular form of advertising on
the web.
2. Floating Ads
These ads appear when we first go to a web page, and they “float” over the
page for five to 30 seconds. While they are on the screen, they create difficulty to
our view of the page and often block the mouse input as well.
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3. Interstitials
These are form of advertisement on the web that appears between web
pages that the user requests. These appear as pop-up windows displaying a
message.
4. Unicast Ads.
A unicast ad is basically a TV commercial that runs in the browser window.

It has enriched audio/ video content. The ads can last anywhere from 10 to 30
seconds
5. Takeover Ads
Viewers visiting the website will see a large ad when they first come, and
then the continuity is maintained by reiterating the same message throughout
the site in the form of banners, side bars or buttons.
6. Contextual Ads
This is a type of online advertising commonly used for content based
websites. With contextual advertising, targeted Ads appear based on the page’s
actual content
7. Rich Media Ads
This is another form of banner advertising. Banners that are animated,

contain audio or video, or just flash, blink or make weird sounds belong to this
type
8. Advertorials
Advertisements take the form of website copy. Similar to an infomercial in

the way it portraits goods or service and then proceeds to offer it to you.
9. E-zines
It resembles online magazines generally covering a topic of interest.
10. Newsletters
These are similar to E-zines , these give more industry related news and
company updates.
11. Press releases
It provides newsworthy information that can be picked up for newspapers,

magazines and industry related news sites.
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Benefits of Internet Advertising

 Rich content
 Less expensive
 Quick updating
 Provides Brand relevant information
 Easy collection of data
 Global accessibility
 Greater flexibility
 Better Customer Relation
 Persuasive Ad
 Facilitate Purchase Decision
Weakness of Internet Advertising

1. Not a substitute for traditional Advertising
Internet advertising is not a substitute for traditional advertising models

such as print advertising and TV advertising. Internet advertising will rapidly
lose its value and its impact.
2. Unsolicited in nature
Pushing a message at a potential customer when it has not been
requested and when the customer is the midst of something else on the net will
fail as a major revenue source for most internet sites.
3. Misdirection
It means sending customers to web locations other than the once for which
they are searching. Monetization of misdirection frequently takes the form of
charging companies for key words and threatening to divert their customers to a
competitor if they fail to pay adequately for key words that the customer is likely
to use in searches for the company’s products.
4. Emergence of contextual mobile ads.
A At present contextual ads delivered to mobile phones through SMS. This

has resulted in the reduction of popularity of Internet advertising.
5. Cluttered Appearance
Advertising that is disorganized and difficult to read, as well as presenting
too much information at one time, often turns viewers off.
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6. Not suitable for all products and services
Internet advertising is particularly suitable for products like music and

books which can be successfully advertised through social networking sites such
as face book and My space.
7. Less Dependable
Because of large number of SPAM and unsolicited emails that are sent out,
users can have difficulty to distinguish between genuine advertising and false
adverts and therefore the trustworthiness of advertisements is brought into
question.
Emergence of Internet as a competitive Advertising Media
Interviews with marketers reveal that few believe the Internet will change
their approach to advertising. Most see it as little more than a complement to
traditional marketing practices, and don’t expect it to reduce expenditure on
broadcast and print media or change the form, pricing, or delivery of
advertisements. It is probably a reaction to the early type of Internet and the
World Wide Web
Internet Advertising will account for a growing proportion of overall
advertising expenditure. Moreover, advertising – and marketing in general – will
adopt practices first developed or deployed on the Internet. As the technology
improves, the impact of internet advertising will increase and become easier to
measure, and the gap between the new precise, interactive marketing capability
and conventional “fizzy” passive media will widen. Over the next few years,
advertising agencies and consumer marketers will be under pressure to change
their whole approach to marketing communications.
Marketers will become more accountable for their results, and they will pay
more attention to building a total customer relationship. Offering consumers
value in return for information will become vital in eliciting their preferences.
Companies’ entire marketing organizations will be progressively redesigned to
reflect interactions with consumers on the Internet. For ad agencies, fees based
on results will become standard. The economics of Internet advertising are likely
to make current business models obsolete.
Classical advertising strategies such as positioning, brand essence, and

niche marketing are much more important when advertising on the Internet. The
strength and weakness of the medium should be considered for advertising on
the net. Internet advertising is always easier than the real world advertising.
Web banner displays and mass emailing cost almost nothing. Space for
advertising on the Internet can be bought very cheaply.
A company should take advantage of the fact that there are so many
opportunities to reach potential customers, and come up with a diverse
advertising strategy. They should maximize hits to websites offering to sell
E-Commerce Page 42
whatever product they market. They should place references to their product
wherever they can. Most of all, advertising on the Internet should incorporate a
wide range of different fields meant to appeal to different possible customers.
MOBILE COMMERCE
Mobile commerce or M- commerce refers to transactions that are carried
out with the help of an electronic device like cell phone. M-commerce is the
buying and selling of goods and services through wireless handheld devices such
as cellular phone and Personal Digital Assistants [PDAs]
Mobile commerce is any transaction, involving the transfer of ownership or
rights to use goods and services, which is initiated and/or completed by using
mobile access to computer – mediated networks with the help of an electronic
device.
Mobile commerce was born in 1997 when the first two mobile phone
enabled Coco Cola vending machines were installed in the Helsinki area in
Finland. They use SMS text messages to send the payment to vending machines.
Mobile commerce has two distinctive advantages of flexibility and ubiquity.

Through this, consumers can conduct business transactions without being fixed
at a computer terminal or being physically present at the shop. This provides a
secure and convenient channel to link the existing credit cards, debit cards or
bank accounts and carry out commerce transactions, including paying post paid
bills, recharging prepaid, paying Fixed Line and Broadband Bills, buying movie
or Air tickets, Paying Insurance premiums and much more
The combinations of more powerful mobile devices, much innovative mobile

operators and change in the mobile network infrastructure[ such as 3G and 4G
which are able to carry large amounts of data at a high speed as broadband
connections do for computer] is setting the stage for an huge change in a already
fast moving sector. The mobile phone of the future is a device that enables users
to communicate, connect, transact and innovate.
The products and services available through M-commerce includes:-
 Mobile ticketing
 Mobile vouchers, coupons and loyalty cards
 Content purchase and delivery
 Location based services
 Information services
 Mobile banking
 Mobile brokerage
 Auctions
 Mobile purchase
 Mobile marketing and advertising
E-Commerce Page 43
MODULE IV
ELECTRONIC PAYMENT SYSTEM
Electronic Payment system is a financial exchange that takes place online
between buyers and sellers. The content of this exchange is usually some form of
digital financial instrument {such as encrypted credit card numbers, electronic
cheques or digital cash) that is backed by a bank or an intermediary, or by a legal
tender. The various factors that have leaded the financial institutions to make
use of electronic payments are:-
1. Decreased technology cost

2. Reduced operational and processing cost
3. Increasing online commerce
The Internet Payment Processing System

The participants in an online electronic payment transaction include the
following:-
1. The Customer:-Customer in an e-commerce may be the holder of a payment
card such as credit card or debit card from an issuer
2. The issuer:-The issuer means a financial institution such as bank that

provides the customer with a payment card .The issuer is responsible for the card
holder’s debt payment.
3. The Merchant – The person or organizations that sells goods or services to the
cardholder via a website is the merchant. The merchant that accepts payment
cards must have an Internet Merchant account with the acquirer
4. The acquirer – is a financial institution that establishes an account with the

merchant and processes payment card authorizations and payments. The
acquirer provides authorization to the merchant that given card account is active
and that the proposed purchase doesn’t exceed the customer’s credit limit. The
acquirer also provides electronic transfer of payments to the merchant’s account,
and is then reimbursed by the issuer via the transfer of electronic funds over a
payment network.
5. The Processor – The Processor is a large data centre that processes credit card
transactions and settles funds to merchants, connected to the merchant on
behalf of an acquirer via a payment gateway.
Basic steps of an online payment
The basic steps of an online payment transaction include the following:-
E-Commerce Page 44
 The customer places an order online by selecting items from the

merchant’s Website and sending the merchant a list. The merchant often
replies with an order summary of the items, their price, a total, and an
order number
 The customer places an order along with their credit card information and
sends it to the business. The payment information is usually encrypted by
an SSL pipeline set up between the customer’s web browser and the
merchant’s web server SSL certificate.
 The merchant confirms the order and supplies the goods or services to the
customer. The business sends the consumer an invoice, their certificate
and their bank’s certificate.
 The business then generates an authorization request for customer’s credit
card and sends it to their bank
 The business’s bank then sends the authorization request to the acquirer
 The acquirer sends an acknowledgement back to the business’s bank after
receiving an acknowledgement from the customer’s Bank.
 Once the consumer’s bank authorizes payment, the business’s bank sends
an acknowledgement back to the business with an authorization number
Various Online Payment Systems
1. Electronic Tokens
An Electronic token is a digital analog of various forms of

payment backed by a bank or financial institution. There are two types of
tokens:-
1] Real Time (or Pre-paid tokens) – These are exchanged between buyer and
seller, their users pre-pay for tokens that serve as currency. Transactions are
settled with the exchange of these tokens. Eg. Digicash , Debit Cards, Electronic
Purse etc.
2] Post Paid Tokens – are used with fund transfer instructions between the buyer
and seller. Eg. Electronic Cheques, Credit card data etc.
2] Electronic or Digital Cash
This combines computerized convenience with security and privacy that

improve upon paper cash. Cash is still the dominant form of payment as : The
consumer still mistrusts the banks. The non cash transactions are inefficiently
cleared. The properties of Digital cash are :-
 Must have a monetary value

 It must be backed by cash [currency],bank authorized credit or a bank
certified cashier’s check
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 Digital cash is based on cryptographic systems called “Digital Signatures”

similar to the signatures used by banks on paper cheques to authenticate
a customer.
 Maintenance of sufficient money in the account is required to back any
purchase.
 Must be interoperable or exchangeable as payment for other digital cash,
paper cash, goods or services, lines of credit, bank notes or obligations,
electronic benefit transfers and the like.
3. Electronic Cheques
The electronic cheques are modeled on paper checks, except that they are
initiated electronically. They use digital signatures for signing and endorsing and
require the use of digital certificates to authenticate the payer, the payer’s bank
and bank account. They are delivered either by direct transmission using
telephone lines or by public networks such as the Internet. Integration of the
banking and the information technology industry has benefitted the consumers
in many aspects with respect to time, cost and operational efficiency
PREPAID AND POST PAID PAYMENT SYSTEMS

Electronic payment systems are broadly classified in to prepaid and post
paid payment systems:
A] Prepaid payment systems

It provides a service that is paid prior to usage. Here the customer is
allowed to spend only up to the amount that have pre-determined into the
account. This type of payment system is highly useful to those customers who
would like to control overspending. E.g. Prepaid debit cards or prepaid credit
cards. Prepaid payment system is taken by the customer by depositing money
with the credit given company. It can be deposited in the savings account or the
current account. Once the money is deposited, the card is used as a regular
credit card. It is very effective card as it doesn’t put in to debt. Once the money is
exhausted in the account, the credit card cannot be used. There is no interest
charges related to this card.
Benefits of the pre-paid payment system
1. It is accepted at the entire merchant establishment worldwide according to the

affiliation of the credit given company.
2. It can be used to withdraw cash from the ATMs
3. Reloadable anytime anywhere
4. It can be used to withdraw cash in any international currency

5. It is usually backed up by personal accident insurance cover
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6. Customer has the facility to get online and track spending , check balance,
change pin
Post paid Payment System
This system is like a credit card used to make incremental purchases

through the web site. As purchases are made, the accumulated debt on the post
paid credit instrument increase until a credit limit is reached, or until an
arrangement has made to settle the debt such as monthly payment.
Normally all credit cards are post paid cards. The customer gets the
eligibility of spending through the income statement and credit history produced
before the credit card company. The customer gets a credit limit and a credit
period by which the customer is supposed to pay back the money to the credit
card company.
Features of Post paid payment system
 Global acceptance – accepted by all the merchant establishments according

to the network set by the credit card company.
 Balance transfer option – It is possible to transfer outstanding funds from
one card to other cards with low interest rates.
 Revolver facility – Customer can pay only a small amount of the total
outstanding and revolve the rest for the payment o the next month.
 Cash advance facility – Customer can withdraw around 30% of the credit
limit at any ATM connected to the credit card company
 Teledraft – These facilities are available at the door steps of the customer
 Other services – Credit card can be used for railway tickets and airline
ticket purchase
 Convenience – as the customer is not required to carry cash for any
purchase
 Easy availability – holder can load prepaid credit cards at anytime they
need.
E-Cash or Electronic cash
E-Cash or Electronic Cash is a new concept to execute cash payment using

computers connected with network. E-cash is an electronic medium for making
payments. The primary function of e-cash is to facilitate transactions on the
Internet. Many of these transactions may be small in size and would not be cost
efficient through other payment medium such as credit cards.
Electronic money [also known as e-currency, e-money, electronic cash,

electronic currency, digital money, digital cash or digital currency] refers to
money or scrip which is exchanged only electronically. Typically, this involves the
E-Commerce Page 47
use of computer networks, the internet and digital stored value systems.
Electronic Fund Transfer and direct Deposit are all examples of electronic money.
E-cash is a system of purchasing cash credits in relatively small amounts,
storing the credits in our computer, and then spending them when making
electronic purchases over the Internet. The e-cash is the creation of electronic
money or tokens, usually by a bank, which buyers and sellers trade for goods
and services. It consists of a token, which may be authenticated independently of
the issuer. This is commonly achieved through the use of self-authenticating
tokens or tamper proof hardware. It includes credit cards, smart cards, debit
cards, electronic fund transfer etc.
An e-cash system must have the following properties:-
 Digital cash must have a monetary value. It must be backed by cash

 Digital cash must be exchangeable.
 It should be storable and retrievable
 It should not be easy to copy or tamper with while it is being exchanged
E-cash can be used for making or receiving payments between buyer and
seller. The bank’s server computer sends a secure e-cash packet to the customer
effect the network currency server of the bank is issuing a bank note with a serial
number for a specified amount. The bank uses its private key to digitally sign
such a bank note.
2. Electronic Cheque
E-cheques are a mode of electronic payments. Integration of the banking
and the information technology industry has benefitted the customers in many
aspects with respect to time, cost and operational efficiency. Cheque is the most
widely accepted negotiable instrument to settle transactions in the world. Paper
cheques provide consumers an important payments mechanism.
This technology was developed by a consortium of Silicon Valley IT
Researchers and merchant bankers and since then has been promoted by many
of the financial bodies. E-cheques work the same way as paper cheques and are a
legally binding promise to pay. Electronic cheques are gathered by banks and
cleared through existing banking channels, such as automated clearing houses.
The advantages of Electronic cheques are :-
 The online merchants could receive payments instantly
 Similar to traditional cheques and eliminates need for customer education
 Much faster
 Less chance for cheque bouncing
 Cost – effective manner
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3. Credit Cards
They are the convenient method of making online payment. Credit cards
work around the globe regardless of the location of country of the issuing bank.
They also handle multiple currencies through a series of clearing houses. The
credit card holders can purchase goods and services either offline or online
without making immediate payment. Payment to the merchant’s will be made by
the customer’s Bank. The credit card is a financial instrument which can be used
more than once to borrow money or buy products and services on credit. It also
contains a validity period and other important particulars.
To accept a credit card for payment, we have to open a merchant account
with our bank. A merchant account allows sellers to accept and process credit
card transactions. In these transactions, the card number and transaction
details are processed with no identification of the buyer. To implement the
payments over the internet, the web merchant needs some form of secure and
encrypted line using the Secure sockets Layer [SSL] that is standard on Netscape
and Microsoft browsers. The merchant server needs an encryption key for the
purpose.
4. Smart Card
A smart card is a plastic card about the size of a credit card, with an
embedded microchip that can be loaded with data, used for telephone calling,
electronic cash payments, and other applications and then periodically refreshed
for additional use. A smart card, chip card, or integrated circuit card [ICC] is any
pocket sized card with embedded integrated circuits which can process data. The
card connects to a reader with direct physical contact or with a remote
contactless radio frequency interface. Smart card technology conforms to
international standards and is available in a variety of form factors, including
plastic cards, fobs, subscriber identification modules [SIMs] used in GSM Mobile
phones and USB based tokens.
These cards can be used to purchase goods and services. Smart cards are
very useful to merchants and consumers to settle the transaction between them.
Smart card provides a lot of benefits to consumers. It helps to manage
expenditures more effectively, reduce the paper work and ability to access
multiple services and the Internet. A multiple application card can support
services like health care, travel and financial data access.
The benefits of smart cards for the consumer are the following:-
1. Security – unauthorized access is prevented by a lock function
2. Convenience
3. Flexibility
4. Control
E-Commerce Page 49
5. International use
6. Interest free loan
5. Debit Cards
It is a popular method of making payment. Banks issue debit cards to their
customers who have maintained an account in the balance with sufficient credit
balance. Each time the customer makes a purchase, an equal amount of the
purchase is debited in his account.
The transaction works much like a credit card transaction. For Eg. A
customer gives an ATM card to the seller for the purchase. The merchant read
the card through a transaction terminal and the customer enters his personal
identification number. Then the terminal route the transaction through the ATM
networks back to the customer’s bank for authorization against customer’s
deposit account. The funds, are approved, are transferred from the customer’s
bank to the sellers bank.
6. Electronic Purse
Electronic Purse is a card with a microchip that can be used instead of

cash and coins for everything from vending machines to public transportation.
The Electronic Purse would consist of microchip embedded in a credit card,
debit card, or stand alone card to store value electronically. The card would
replace cash and coins for small ticket purchases such as gasoline stations, pay
phones, road/bridge tolls, video games, school cafeterias, fast food restaurants,
convenience stores, and cash lanes at supermarkets. Cardholders can “reload”
the microchip and control the amount of value stored in the card’s memory. The
Electronic Purse provides cardholders with the security and convenience of
carrying less cash and coins, eliminating the need for exact change.
Electronic purse is a term applied to a number of formats, each with
different applications. At the moment, smart card based systems are used as a
direct replacement for money that the user would have in his pocket and
software based systems are used for online purchases. The e-purse is an
electronic / cash less payment option for making small purchases within the
campus.
To load an electronic purse, the user must be able to operate an ATM or

card loading machine. Usually this requires the user to be able to read a visual
display, but methods for alleviating this problem have been developed. To use the
electronic purse, the user hands the card to the shop assistant who inserts the
card in a terminal and keys in the amount of the transaction. This is displayed
visually to the customer. Once again, the person must be able to read a display
screen. The customer confirms that the amount is correct, and the money is
transferred from the card to the terminal. In some systems the customer need to
key in their PIN [Personal Identification Number] before the transaction can be
completed.
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Security issues on Electronic Payment System

It is recommended that the clients instruct their banks to make the
transfer of large payments directly to the agency’s bank and not use Internet-
based payment systems. In common with all other electronic information
processing systems, payment systems are prone to disruption by people
exploiting the systems innate vulnerabilities. Those considering employing a
payments system must decide whether to accept the consequent risks. Data in
computers are more liable to destruction, fraud, error and misuse. Since
payment information is so valuable its security is all the more important than
other kinds of tangible assets in the organizational context.
Security refers to the policies, procedures and technical measures and to
prevent unauthorized access, alteration, theft or physical damage to information
systems. The basic objective of information security is the protection of interests
of those involved in online business. All electronic information processing
systems are vulnerable to denial of service attacks where the attacker employs
any one of a variety of methods to prevent a client using a service a provider
offers. Such attacks can have the effect of closing down a business. Some of the
attacks were as follows:-
 Development of a method of obtaining the goods or services without
making the appropriate payment
 Compromise of clients’ financial details credit card number, etc, which may
result in the unauthorized transfer of funds and or political
embarrassment by their publication.
 Illicit modification of the electronic goods offered by the merchant or of the
descriptions of the other goods or services on the merchant server
 Other methods permitting the unauthorized transfer of funds.
Solutions to Security issues
1. Anti-Virus Programs
It is reported that 300 new viruses appear each month and if we are not
constantly protecting our system against this threat our computer will become
infected with at least one virus. Antivirus software scans computers for
signatures of a virus. A virus signature is the unique part of that virus. It can be
a file name, how the virus behaves or the size of the virus itself. Good antivirus
software will find viruses that have not yet infected your PC and eliminate the
ones that have. Antivirus program can be used on the server level itself. Such
programs can scan the files that the server receives and looks for patterns that
match known malicious software. The antivirus scanners are set to update them
automatically.
2. Standards for Security of the Products and systems
Security products require special expertise to design, are complex to build,

and are very vulnerable to bugs. The manufacturers guarantee is inadequate for
security products unless supported by independent evaluation. Defense signals
Directorate has set up an evaluation scheme, the Australasian Information
E-Commerce Page 51
Security Evaluation Programme [ AISEP], to test IT security products against

international standards. Products which satisfy the standards are certified by
DSD and are normally listed on Evaluated Products List.
3. Firewalls
Merchants place firewalls between their installations and their clients.
They should also place firewalls between themselves and their payment
providers, the financial institutions they use, and in fact, any other installation to
which they are connected unless the installation is under their direct control .A
network firewall is basically a secure gate between our organizations data and
the Internet. The firewall is a combination of hardware and software. The firewall
then filters traffic based on our requirements. Firewall security is designed to
detect and resists unwanted attempts to penetrate our server security.
4. Secure Socket Layer [SSL]
The standard SSL developed by Netscape provides a high level of

protection. Many product manufacturers advertise their use of 56-bit or 128- bit
DES encryption and 1024- bit public keys. They can protect against any casual
attacks .Browsers that support this feature a dialog box, a padlock in the bottom
task bar , or a Blue key to indicate that a secure session is in progress.
5. Secure Electronic Transaction [SET]

SET encrypts payment transaction data and verifies that both parties in
the transaction are genuine. SET, originally developed by MasterCard and Visa in
collaboration with leading technology providers, has a large corporate backing
and is perceived to be more secure as a result of its validation from card
companies.
6. Public Key software Infrastructure [PKI]

PKI is similar to bank’s night safe in that many public keys can be used to
deposit items into the safe, but only one private key, belonging to the bank can
make withdrawals.
BIOMETRICS
Biometrics comprises methods for uniquely recognizing human based upon

one or more intrinsic physical or behavioral traits. In computer science, in
particular, biometrics is used as a form of identity access management and
access control. It is also used to identify individuals in groups that are under
surveillance. Biometrics characteristics can be divided into two main classes:-
 Physiological are related to the shape of the Body. E.g. Fingerprint, face
recognition, DNA, hand and palm geometry, iris recognition
 Behavioral are related to the behavior of a person. E.g. typing rhythm, gait,
and voice.
E-Commerce Page 52
Biometrics is the science and technology of measuring and analyzing biological

data. Biometrics is automated methods of recognizing a person based on a
physiological or behavioral characteristic.
To verify an individual’s identity, biometric devices scan certain

characteristics and compare them with a stored entry in a computer database. In
Information Technology biometrics refers to technologies for measuring and
analyzing human physical and behavioral characteristics for authentication
purposes. The simplicity that biometrics lends to secure verification of an
individual provides greater opportunities for e-businesses to offer more products
and services online.
A biometric system can operate in the following two modes:-

1. Verification – A one to one comparison of a captured biometric with a
stored template to verify that the individual is who he claims to be. Can be
done in conjunction with a smart card, username or ID number
2. Identification – A one too many comparison of the captured biometric
against a biometric database in attempt to identify an unknown individual.
The identification only succeeds in identifying the individual if the
comparison of the biometric sample to a template in the database falls
within a previously set threshold.
Types of Biometrics
There are two types of biometrics: behavioral and physical. Behavioral

biometrics are generally used for verification while physical biometrics can be
used for either identification or verification. The different types of biometrics
under these includes:-
1. Signature
Computers can quantify, analyse and compare the different properties of

signature to make signature recognition a viable biometric technology. Being
based on things that are not visible [pen pressure and velocity], signature based
biometric technology offers a distinct advantage over regular signature
verification. A Signature based biometric system could mimic our current legally
customary acceptance of a signature to simultaneously convey both identity and
authority.
2. Keystroke Dynamics
The rhythms with which one types at a keyboard are sufficiently distinctive
to form the basis of the biometric technology known as keystroke dynamics. Key
stroke dynamics unlike other biometric technologies is 100% software based, and
it just requires a home computer to operate it.
E-Commerce Page 53
3. Hand geometry
This system requires the subject to place his right hand on a plate where it
is photographically captured and measured. Made of 27 bones and a complex
web of interconnected joints, muscles, and tendons, the human hand presents a
sufficiently peculiar conformation of anatomical features to enable
authentication. Airports, prisons, and factories have successfully employed hand
geometry system
4. Finger Print
It is a forensic criminological technique, used to identify perpetrators by
the fingerprints they leave behind them at crime scenes. In modern biometrics,
the features of fingerprint called fingerprint minutiae, can be captured, analyzed,
and compared electronically, with correlations drawn between a live sample and
a reference sample, as with other biometric technologies.
5. Facial Recognition
With good cameras and good lighting, a facial recognition system can
sample faces from tremendous distances without the subject’s knowledge or
consent. It works by two methods ; facial geometry or eigenface comparison.
Facial geometry analysis works by taking a known reference point, say, and
distance from eye to eye, and measuring the various features of the face in their
distance and angles from this reference point. Eigen face comparison uses a
palette of about 150 facial abstractions, and compares the captured face with
these abstract faces.
6. Eye biometrics [ Iris/ Retina]

Both the iris and the veins of the retina provide patterns that can uniquely
identify an individual. The pattern of lines and colors on the eye are, as with
other biometrics, analyzed, digitized, and compared against a reference sample
for verification.
7. Voice Verification
The identity of a person can also be verified with his voice. It is a difficult
problem for computers to identify the voice of a person. The prospect of accurate
voice verification offers one great advantage. It would allow a remote
identification using the phone system without any additional cost.
E-Commerce Page 54
MODULE V
LEGAL AND ETHICAL ISSUES IN E-COMMERCE
Transaction security has become very important in e-commerce since more
and more number of merchants doing their business online. At the same time
merchants are facing threats against security of their valuable documents
transacted over Internet. Consumers are not prepared to provide credit card
payment due to lack of security. There are many different transactions that make
security difficult. In order to succeed in the highly competitive e-commerce
environment, business organizations must become fully aware of Internet
security threats, so that they can take advantage of the technology that
overcomes them, and thereby win customer’s trust. The merchants who can win
the confidence of the customers will gain their loyalty and it opens up vast
opportunity for expanding market share.
Security Issues in E-commerce
The major security issues with e-commerce include the following:-

1. Spoofing
The low cost of web site creation and the ease of copying existing pages
makes it all too easy to create illegitimate sites that appear to be published by
established organizations. In fact, unscrupulous artists have illegally obtained
credit card numbers by setting up professional looking storefronts that resembles
legitimate businesses.
2. Snooping the shopper’s computer
The software and hardware vendors sell their products with security
features disabled. Most users may not have adequate knowledge of enabling
these security features. This provides a best opportunity for attackers. A popular
technique for gaining entry into the shopper’s system is to use a tool such as
SATAN, to perform port scans on a computer that detect entry points into the
machine. Based on the opened ports found, the attacker can use various
techniques to gain entry into the user’s system. Upon entry, they scan the file
system for personal information, such as passwords.
3. Sniffing the network
Attacker monitors the data between the shopper’s computer and the server.
He collects data about the shopper or steals personal information, such as credit
card numbers A request from the client to the server computer is broken up into
small pieces known as packets as it leaves the client’s computer and is
reconstructed at the server. The packets of a request are sent through different
routes. The attacker cannot access all the packets of a request and cannot
decode the message sent. A more practical location for this attack is near the
shopper’s computer or the server. Wireless hubs make attacks on the shopper’s
E-Commerce Page 55
computer network the better choice because most wireless hubs are shipped with
security features disabled. This allows an attacker to easily scan unencrypted
traffic from the user’s computer.
4. Guessing passwords.
This style of attack is manual or automated. Manual attacks are difficult
and only successful if the attacker knows something about the shopper.
Automated attacks have a higher likelihood of success because the probability of
guessing a user ID/ password becomes more significant as the number of tries
increases. There are tools which can be used to test all the words in the
dictionary to know the user ID/ password combinations, or that attack popular
user ID/ password combinations. The attacker can automate to go against
multiple sites at one time.
5. Unauthorised Disclosure
When information about transactions is transmitted in a transparent way,

hackers can catch the transmissions to obtain customers sensitive information.
6. Unauthorised action
A competitor or unhappy customer can alter a Web site so that it refuses
service to potential clients or malfunctions.
7. Eavesdropping
The private content of a transaction, if unprotected, can be intercepted

when it go through the route over the Internet.
8. Data alteration
The content of a transaction may not only be intercepted, but also altered,
either maliciously or accidently. User names, credit card numbers, and dollar
amounts sent are all vulnerable to such alteration.
Types of Threats and sources of threats
The different types of factors behind the threats are as follows:-
µ Email attachments – opening an attachment could unleash a virus and

they can propagate themselves even without a user double- clicking on
them.
µ VPN tunnel vulnerabilities – a hacker who works his way into the VPN has
free and easy access to the network
µ Blended attacks – Worms and viruses are becoming more complicated, and
now a single one may be able to execute itself or even attack more than one
platform.
E-Commerce Page 56
µ Diversionary tactics – hackers may strike a set of servers in a target

company and then when security administrators are busy securing that,
they slip in and attack another part of the network.
µ Downloading Tactics - Workers frequently misuse their Internet access in
the workplace, downloading games, movies and music and even porn. It
opens the network up to attack and sucks up valuable bandwidth.
µ Supply chain partners Added to the Network – An administrator may grant
access to the network for a partner company and then forget to close that
access point when the job is over.
µ Renaming documents – A employee could save business critical
information in a different file, give it a random , unrelated name and email
the information to her home computer, a friend or even a corporate
competitor.
µ Peer to peer applications – Here, there is implied trust between servers.
That means if a user has access to one server, he automatically has access
to another server if the servers share trust.
µ Music and Video Browsers – These are browsers that automatically will
connect the user with related web sites – all without the user’s permission.
Security tools
1. Encryption
Implementation of technology solutions to secure information that travel
over public channels can be protected using cryptographic techniques.
Cryptography is the process of making information unintelligible to the
unauthorized reader. But decryption is a reverse process of encryption, to make
the information readable once again. Cryptography techniques make use of
secret codes or key to encrypt information. The same secret key is used by the
receiver to decrypt the information; A key is a very large number, a string of zeros
and ones.
2. Digital Signatures
They are used to verify the authenticity of the message and claimed identity
of the sender but also to verify message integrity. A message is encrypted with
the sender’s private key to generate the signature. The message is then sent to
the destination along with the signature. The recipient decrypts the signature
using the sender’s public key and if result matches with the copy of the message
received, the recipient can ensure that the message was sent by the claimed
originator.
A digital signature performs the similar function to a written signature. A

recipient of data such as e-mail message can also verify the signed data and that
the data was not modified after being signed. In order to digitally sign a
document, a use combines his private key and the document and performs a
E-Commerce Page 57
computation on the composite in order to generate a unique number called the

digital signature.
3. Digital Certificates
A digital certificate is an electronic file that uniquely identifies individuals

and web sites on the Internet and enables secure, confidential communications.
The security of transactions can be further strengthened by the use of digital
certificates. Certification Authorities issues digital certificates to users who wish
to engage in secure communication. Once sender has provided proof of his
identity, the certification authority creates a message containing sender’s name
and his public key. This message is known as a certificate, is digitally signed by
the certification authority. To get the maximum benefit, the public key of the
certifying authority should be known to as many people as possible. The public
key of certification authority can be accepted as a trusted third party way of
establishing authenticity for conducting e-commerce.
Regulatory framework of E-commerce

Traditional legal systems have a great difficulty in keeping pace with rapid
growth of the Internet and its impact throughout the world. Growth of e-
commerce gave rise to a variety of legal issues, often related to intellectual
property concerns, copyright, trademark, privacy etc. Cyber law governs the legal
issues of cyberspace. The term cyberspace is not restricted to the Internet. It is a
very wide term that includes computers, computer networks, the Internet, data
software etc. The various cyber laws include:-
1. Electronic and Digital signature Laws – Comprehensive laws are required so
that uniform standards and procedures can be established. These laws relating
to Electronic Signatures e.g. the electronic Signatures in Global and national
Commerce Act of USA are part of cyber law.
2. Computer Crime Law – some countries have enacted legislations that
specifically deal with computers crime and yet other has adapted their existing
laws to make computer crime an offence under existing states.
3. Intellectual Property Law – It includes copyright law in relation to computer

software, computer source code etc. Trademark law in relation to domain names,
Semiconductor law which relates to the protection of Semiconductor Design and
Layouts and Patent law in relation to computer hardware and software.
4.Data protection and Privacy Laws – It is pertinent to note that due to the
nature of the Internet and the amount of information that may be accessed
through it, such legislation is critical to protect the fundamental rights of privacy
of an individual. These laws would probably play a vital role, as the dependence
on insecure networks such as the Internet grows further.
5. Telecommunication Laws – telecommunication systems also fall within the

purview of cyberspace and therefore would form an integral part of cyber laws.
E-Commerce Page 58
The word cyber and its relative dot.com are probably the most commo0nly used
terminologies of the modern era. In the information age the rapid development of
computers, telecommunications and other technologies has led to the evolution
of new forms of transnational crimes known as cyber crimes. Cyber crimes have
virtually no boundaries and may affect every country in the world.
Cyber crime may be defined as any crime with the help of computer and
communication technology with the purpose of influencing the functioning of
computer or computer systems. The extent of loss involved worldwide of cyber
crimes is tremendous as it is estimated that 500 million people who use the
Internet can be affected by the emergence of cyber crimes.
India is a signatory to the Model Law and is under an obligation to revise

its laws. Keeping in view the urgent need to bring suitable amendment in the
existing laws to facilitate electronic commerce and with a view to facilitates
Electronic Governance, the Information Technology Bill [IT Bill] passed by Indian
Parliament on May 17 , 2000.The Information Technology Act [IT Act] came into
effect on 17th October 2000.
Information Technology Act-2000
The main objective of the Act is to provide legal recognition for transactions
carried out by means of electronic data interchange and other means of
electronic communication and storage of information to facilitate electronic filing
of documents with the government agencies. It also involves legal provisions
relating to piracy, defamation, advertising, taxation, digital signatures, copyrights
and trade secrets in the cyber world. Some of the major provisions contained in
the IT Act are as follows:-
 Electronic contracts will be legally valid
 Legal recognition of digital signatures
 Security procedure for electronic records and digital signature
 Appointment of certifying authorities and controller of certifying authorities
including recognition of foreign certifying authorities.
 Various types of computer crimes defined and stringent penalties provided
under the Act.
 Establishment of Cyber Appellate Tribunal under the Act.
 Act to apply for offences or contraventions committed outside India.
 Power of police officers and other officers to enter into any public place and
search and arrest without warrant
 Constitution of Cyber Regulations Advisory committee who will advice the
Central Government and Controller.
E-Commerce Page 59
Information Technology [Amendment] Act, 2008
Rapid increase in the use of computer and Internet has given rise to new
forms of crimes like, sending offensive emails and multimedia messages, child
pornography, cyber terrorism, publishing sexually explicit materials in electronic
form, video voyeurism, breach of confidentiality and leakage of data by
intermediary, e-commerce frauds like cheating by personation – commonly
known as phishing, identity theft, frauds on online auction sites, etc. So, penal
provisions were required to the included in the Information Technology Act,
2000. Also, the Act needed to be technology neutral to provide alternative
technology of electronic signature for bringing harmonization with Model Law on
electronic Signatures adopted by United Nations Commission on International
Trade Law [UNICITRAL]
Keeping in view the above, Government had introduced the Information
Technology [Amendment] Bill, 2006 in the Loka Saba on 15th December 2006..
Both Houses of Parliament passed the Bill on 23rd December 2008.Subsequently
the Information Technology [Amendment] Act, 2008 received the assent of
President on 5th February 2009 and was notified in the Gazette of India..
The Amendment provides for eight different types of offences, which range
from using computer resource code or communication device to disseminating
and composing information which is false, offensive or menacing in nature,
fraudulent, dishonest use of electronic signatures, password or other
identification features to any computer source or communication device in
capturing, publishing or transmitting any form of obscene images and visuals, as
being crimes affecting individuals or other persons. Cyber cafes have been
brought in the net, increasing accountability of intermediaries, thereby including
search engines, service providers, online markets, without clarity on how to trap
the fox. These provisions structured in a diffused manner, with unrelated aspects
such as cyber terrorism clauses juxtaposed in between.
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E-COMMERCE

(For candidates with Programmes

SCHOOL OF DISTANCE EDUCATION

Prepared by: Baijumon. P,

Scrutinized by: Dr. K. Venugopalan,

Layout: Computer Section, SDE

MODULE I INTRODUCTION TO E-COMMERCE 4

MODULE II BUSINESS MODELS OF E-COMMERCE 15

MODULE III MARKETING STRATEGIES AND E-COMMERCE 31

MODULE IV ELECTRONIC PAYMENT SYSTEM 44

MODULE V LEGAL AND ETHICAL ISSUES IN E-COMMERCE 55

E-Commerce is a latest technology related with commerce and

E-commerce is the process of doing business electronic. It changes the

E-commerce is a composite of technologies process and business strategies

E-commerce V/s Traditional Commerce

DIFFERENCE BETWEEN E-COMMERCE AND TRADITIONAL COMMERCE

BASIS E-COMMERCE TRADITIONAL SYSTEM

1 Reduce Doesn’t involve data at The buyer and seller create

2. Reduce cost Initial cost of E-commerce Time is directly ;linked to saving

3. Reduce E-commerce data in the It requires re-entry of data at

4. Reduce E-commerce reduces the When the buyer order in a paper

5. Reduce No need to maintain large Need to maintain a large number

E-Business and E-commerce

or exclusive portal to its customers. Amazon or e-bay conducts all of their

Open system [statistics] Closed System

Not secured Secured

Deals more with technology Deals with processes needed to

Does not involve the use of EDI Used EDI

Always operate on Internet Always operates on intranet

Involves all types of commerce Involves explicitly business

Focused on Business to consumer Focused more on business to

e-commerce is an extension of a e-business is an online business only

XML, as a Meta Markup Language, provides a development tool for defining

It enables the firms to exchange business information faster, more cheaply

business documents such as purchase order, request for quotation, bills of

 Lower Processing cost

1. Preparation of electronic documents

The next step is to translate the electronic file or database in to a standard

5. Processing the electronic documents

Importance, features and benefits of E-commerce:

Through, E-commerce, operating efficiency of the business firm will definitely

E-commerce is the most cost effective compared to traditional commerce

To both the consumers and business, connectivity plays an important part

through a whole directories of catalogues without any hassle, compare prices

Impacts, Challenges and Limitations of E-commerce

The introduction of e-commerce has impacted on the traditional means of

Electronic commerce is also characterized by some technological and

A SUPPLY CHAIN is a network of supplier, manufacturing, assembly,

Supply chain Management is utilized to facilitate the coordination with

with large suppliers. A Supply chain is a collection of interdependent steps that,

Suppliers – organizations that provide foods or services to a purchasing

Types of Supply Chain Management Systems

In this type of supply chain Management system, companies get more

It is developed for specific industry and particular company.SCM systems

To reduce inventory costs

E-Commerce is a much wider subject than selling online. It is of the view

1. Business to Business [B2B]

B2B (business – to- business) is the major and valuable model of e-

Some B2B applications are the following:-