Module 4

E-business, short for electronic business, is the conduct of business processes through the use
of digital technologies, primarily on the Internet. It involves using the internet to perform
various business functions, such as marketing, buying and selling products or services,
managing supply chain operations, providing customer service and support, and conducting
financial transactions.

The term ‘e-business’ is made up of two distinct terms:

 Electronic: This term is related to the technical concept of information technology

(IT). An object that is electronic operates through certain electronic mediums and
electronic devices, such as a computer, the Internet or television.

 Business: This term mainly refers to the activities of buying and selling of
products and services at various individual, organisational and national levels.
These activities are related to the transaction of money or other commodities.
 Thus, e-business deals with commercial activities that are performed through an
electronic medium for the exchange of data. In other words, e-business can be defined
as online business transactions of products and services through electronic media or
any other computer-mediated network. These transactions often result in the transfer
of funds or the rights to use a product or avail a service. Here, the user can be an
individual, a business or the government of a country.
 E-business websites interact with the user of the e-business system. These sites are
developed and administered by the site manager and administrators. The database of
information regarding the products and services are ready to be made available to the
user at any time. If the user is happy purchasing the product or service, he/she can
select the option to pay electronically. Shipment support gets the product delivered to
the customer. There can be another trend where the shipment takes place first and
payment is done afterwards. In that case, it may or may not be an electronic payment

Characteristics of E-business
E-business helps organisations to reach more and more consumers; thereby providing a wider
market to enhance their business domains. In other words, e-business provides new business
opportunities for the organisations. It also facilitates customers to choose the desired product
from a variety of products offered by different manufacturers. E-business saves time and
effort of both the parties (buyers and sellers) while making a transaction.

The following are the main characteristics of e-business:

 Provides support to manage different business transactions over different

networks.

 Provides better quality and maximum customer satisfaction with optimal corporate
decision-making.

 Enables business organisations to achieve high economic gain (lower cost) and
rapid (high-speed,accelerated)transactions with the consumers.

 Allows customers to access the products and services of an organisation anytime

and anywhere using the Internet.

 Provides better trading opportunities to small merchants as well as consumers, as

they can have their own Web stores on the Internet to trade online.

 Opens new opportunities of earnings and revenue generation where consumers can
also sell products to other consumers without maintaining an inventory of their
own.

 Helps business organisations to improve the quality of their products and services
on the basis of the feedback received from their online customers and consumers
Features of E-Business
 Minimum investment
Since e-business operates exclusively through the Internet, the organisations do not
need to invest in shops, warehouses, showrooms or any other property. The
maintenance cost of implementing e-business is negligible as compared to the
establishment of physical shops or stores.
 Easy to use
It allows customers to easily access a wide variety of products. A customer only needs
to click a few links for accessing the desired product. The traditional mode of retailing
 was quite complex and required lots of searches to find the required items. Moreover,
traditional trading was a time-consuming process; whereas, e-business is quite simple
and time-saving.
 Customer interaction
E-business helps in maintaining healthy relationship between the organisation and its
customers. The feedback provided by the customers helps the organisations to
understand customer requirements. It also provides better customer satisfaction by
improving their products and services accordingly.
 Mass media
While doing e-business, the information can be accessed from any part of the world,
as it is a web-based service.
 Option to search
Through e-business, an organisation can offer a wide range of search options to its
customers. This helps the customer to get information of the desired product.
Therefore, depending on the requirement, the customer can purchase the appropriate
product.
 Optimised product list
It provides the product list in an optimised and customised manner. In other words,
the list of products can be generated for a customer on the basis of earlier purchases
made by him/her

B2B Ecommerce Model

B2B eCommerce is the selling, buying, and trading of goods and services through an online
sales portal between businesses. Since both parties involved are business entities, the
transactions are more rational than impulsive. Furthermore, the relationship between the
companies involve long-term interests.

Trading online has several benefits such as the expansion of business, the rise in the number
of customers, and increased brand-awareness.

Basic Models in B2B eCommerce

1. Supplier Oriented Marketplace (eDistribution)

In this type of model, there are many buyers and few suppliers. The supplier provides a
common marketplace. This market is used by both individual customers as well as
businesses. For the success of this model, goodwill in the market and a group of loyal
customers is very important.

A successful example of this business model is Cisco. Cisco owns an online

marketplace which goes by the name of Cisco Connection Online. In 1997 Cisco sold US$1
billion worth of network products such as routers and switches to business customers.

Cisco started its online business in 1991. It began by providing basic electronic support via
the Internet. Three years later, in 1994, Cisco launched its website Cisco Connection Online.
By 1998, customers were using Cisco’s website — accessed about one million times a month
— for technical assistance, to check orders, or to download software.

In 1998, Cisco disclosed that launching its applications online saved the company US$363
million per year!

Also, it saved US$180 million per year in distribution, packaging, and duplication as
customers downloaded new software updates directly from Cisco’s website. Additionally,
US$50 million was saved per year because there was no need for printing and distribution of
catalogs

2. Buyer Oriented Marketplace (eProcurement)

In this model, there are few buyers and many suppliers. The buyer has his/her own online
marketplace. It then invites suppliers and manufacturers to display their products. Buyers
search in electronic stores in malls and markets for similar service providing products and
compare them.

So the buyer company makes it simple by opening a bidding site where a particular product is
available from different sellers at different prices.

A successful example of a buyer-oriented marketplace is GE’s electronic bidding site which

goes by the name of GE TPN Post. On GE’s bidding site, buyers pay a nominal fee for using
the site. After that, the buyers post their project information on site. Potential suppliers
download the project information and submit bids for the project. Buyers then compare the
suppliers’ bids. This helps buyers to build new partnerships with sellers and receive and
compare different bids and negotiate for better prices.

Sellers also benefit as they get a communication platform which has large-scale buyers and
thus, in turn, expand the market with low marketing and sales costs

3. Intermediary Oriented Marketplace (eExchange)

In this type of model, there are many buyers and many suppliers. An intermediary company
runs a marketplace where business buyers and sellers meet and do business with each other.

The best example of an intermediary-oriented marketplace is the giant player in this space,
Alibaba. It started in 1999 when the founder created Alibaba.com, a business-to-business
portal to connect many Chinese manufacturers with many overseas buyers. In 2012 alone,
two of Alibaba’s portals handled $170 billion in sales. To get a feel for the size of Alibaba,
since 2015 its online sales and profits surpassed that of all US retailers, including
Walmart, Amazon, and eBay combined!

Electronic Data Interchange (EDI)

Electronic Data Interchange (EDI) is the electronic interchange of business information using
a standardized format; a process which allows one company to send information to another
company electronically rather than with paper. Business entities conducting business
electronically are called trading partners.

Many business documents can be exchanged using EDI, but the two most common are
purchase orders and invoices. At a minimum, EDI replaces the mail preparation and handling
associated with traditional business communication. However, the real power of EDI is that it
standardizes the information communicated in business documents, which makes possible a
"paperless" exchange.

The traditional invoice illustrates what this can mean. Most companies create invoices using a
computer system, print a paper copy of the invoice and mail it to the customer. Upon receipt,
the customer frequently marks up the invoice and enters it into its own computer system. The
entire process is nothing more than the transfer of information from the seller's computer to
the customer's computer. EDI makes it possible to minimize or even eliminate the manual
steps involved in this transfer.

In EDI transactions, information flows straight from one organization’s computer application
to another’s computer program. The transaction entails the following:
 Data elements: These are distinct pieces of information such as firm name,
product code, quantity, and price. Each EDI standard comprises a specification
for each data element inside every transaction set, which determines the data
type (numeric, alphanumeric, date, time), minimum and maximum permissible
length, and any related ‘code values’ (e.g., currency exchange code component
for prices).
 Segments: This refers to logically related sets of data components such as order
number, volume, units, or price linked with a product inside a purchase order. A
segment is always preceded by a segment ID, which indicates the type of
material or information components comprising the segment.
 Envelopes: This encapsulates transaction sets for transmission. Each
transaction set is included in a separate message envelope, whereas a cluster of
transaction sets (such as a group of bills) is enclosed in a group envelope.
EDI is currently employed by businesses to exchange a multitude of document types,
including purchase orders, invoices, requests for quotes, loan applications, and much more. In
most instances, these businesses are trade partners that frequently exchange products and
services as a component of their supply chains or business-to-business (B2B) partnerships.

A typical EDI process will have the following steps:

1. The buyer determines the purchase and generates the purchase order but does
not print it.
2. EDI software generates an electronic purchase order and automatically
communicates it to the supplier.
3. The supplier’s order entry system promptly updates the database upon receipt
of the purchase order.
4. The supplier’s system generates and dispatches an acknowledgment to confirm
receipt.
Types of EDI

1. Direct EDI
Direct EDI, often called point-to-point EDI, creates a single link between two business
partners. In this methodology, users connect with every business partner individually. It
offers control to business associates and is utilized most frequently between big customers
and suppliers who conduct multiple daily transactions.

2. Value-added Network (VAN)-enabled EDI

An option to the direct EDI framework is the EDI network service provider, also known as a
value-added network (VAN), which was in operation even before the internet arrived.
This network approach is preferred by many businesses because it shields them from the
ongoing challenges of maintaining the diverse communication protocols demanded by
various business partners. VANs are private networks on which partners exchange electronic
business documents. The VAN provider manages the network while providing businesses
with mailboxes, enabling them to send and receive EDI documents.

3. Applicability Statement 2 (AS2)-enabled EDI

AS2 is a network communications protocol that permits the transmission of data over the
internet in a secure manner. It consists of two computers — a client and a server —
communicating point-to-point via the internet. AS2 generates an ‘envelope’ for EDI data,
enabling it to be transmitted securely over the internet employing digital certificates or
encryption. This EDI type is easily accessible to all.

4. Web EDI
Web EDI refers to the process of completing an EDI transaction using a web browser. It
mimics paper-based documents in a web form. Information-entry areas will be part of the
form. After all pertinent information has been supplied, the document is instantly transformed
into an EDI message and sent using secure internet protocols such as file transfer protocol
secure (FTPS), HyperText Transport Protocol Secure (HTTPS), or AS2.

5. Mobile EDI (emerging)

Traditionally, users have accessed EDI through a network, such as a VAN or the internet, to
send and get EDI-related business documents. The adoption of mobile EDI applications has
been constrained, in part, due to security concerns and limitations in screen quality or device
size. Yet, a burgeoning sector is building EDI applications for mobile download. Oracle’s JD
Edwards EnterpriseOne, for example, offers mobile EDI applications.
6. Outsourced EDI
EDI outsourcing (EDI managed services) is a rapidly expanding solution that allows
businesses to use outsourced EDI environment management specialists. This is partly driven
by the requirement for businesses to interface with back-office business systems, such as
enterprise resource planning (ERP) systems. This is also beneficial as many businesses do not
like to devote internal capabilities to the continuing and repetitive tasks involved with EDI
transactions.

7. Indirect EDI
An indirect EDI transaction is the communication between an ERP and customers, vendors,
or third-party logistics service providers (3PL) through an EDI broker or value-added
network. Initially, the message, including all the data you want from your business partners,
is sent from the ERP to the broker or VAN. The broker then divides the message into
additional forms — based on the preferences of your consumers or vendors — and distributes
them to respective parties.

Virtual Private Network

VPNs protect customer data and e-commerce platforms. VPNs are Virtual Private Networks
that create a virtually operated network for the data to pass through a private route so that no
one is able to get a hold of it. VPNs are considered to be the most secure and trusted
application for the protection of user data. Since robust solutions are essential as cyber threats
rise, VPNs protect sensitive data and ensure internet security.

 Hiding IP Address- Internet users desiring privacy and security should conceal their
IP addresses. VPNs allow users to browse the internet, access online resources, and
communicate securely by hiding their IP addresses. Usually, it is done by changing
the original IP address to something that is not decipherable. Users might appear to
access the internet from a different location by using a VPN connection to anyone
who wants to access through IP addresses. Users might feel safer online by masking
their IP address. VPNs improve online security and protect critical data. VPNs
encrypt data, making them ideal for e-commerce. Customers can hide their IP address
by connecting to servers in other countries with a VPN as well.
 Encryption- The users’ devices and the e-commerce platforms’ data are encrypted
while connected to a VPN, making it nearly hard for hackers to intercept and decrypt.
VPNs safeguard internet conversations. VPNs add security by encrypting data
between a user's device and a remote server. Encryption encodes data so only the
recipient can decipher it. VPNs encrypt user data sent to the distant server. In the age
of cybercrime, protecting sensitive data is more important than ever. Encryption helps
individuals and organizations. Hackers cannot read encrypted data, even if they
intercept it. Encryption converts plaintext into ciphertext. Complex algorithms and
cryptographic keys transform this. Only permitted persons with the relevant
decryption key can decipher and restore the ciphertext. Encryption's main goal is data
security. Encryption protects against cyberattacks by making data unreadable. VPNs
can also help e-commerce sites protect pricing information from competitors.
Competitors often scrape websites for pricing info to copy and steal.

 Bypassing Geo-restrictions- Users can access geo-restricted content by connecting

to a foreign server. Someone in a nation with stringent internet censorship can use a
VPN to connect to a server in a more tolerant country and browse the internet freely.
This is directly associated with the changing of IP addresses. Once you choose a
server, you can connect it to your device and use it to access content from that region
that is otherwise restricted in your location. This also allows customers from different
regions to access your business profile, helping you to go global.

 Public Wi-Fi Security: Protecting your personal information in today's digital world,
public Wi-Fi is everywhere. Internet connection in coffee shops and airports has never
been easier. E-commerce clients increasingly use public Wi-Fi networks. Hackable
networks offer a major concern. Due to their capacity to improve online security and
privacy, VPNs have grown in popularity. VPNs reduce data eavesdropping by
encrypting network data. In the age of cyber threats, protecting sensitive data is a
priority for individuals and organizations. A VPN encrypts data so only permitted
parties may decipher it. This encryption technique assures that even if data is
intercepted, it cannot be read.

 Transactional Process- Online shopping and electronic transactions have made

protecting sensitive financial information more crucial than ever. E-commerce
platforms use VPNs to secure customer-payment gateway connections. VPN
 encryption makes it impossible for hackers to steal credit cards, passwords, or
personal data. These systems can secure consumer data with VPN technology. As
mentioned before, VPNs encrypt data between users' devices and e-commerce
platforms' servers. This encryption keeps credit card and personal data secure. Using
VPNs in e-commerce protects sensitive financial data from interception.

 No-log Policies- No-log policies are vital when choosing a VPN service. No-log
policies prohibit storing user data or online activity. Good and trustworthy VPN
services do not save browsing history, IP addresses, or other personal data. This
makes it impossible for any third party to gain access to the information that a VPN
service has of yours.

 Preferred Protocols- Service provider security policies are crucial to data privacy.
Encryption protocols protect sensitive data. OpenVPN, OpenConnect, WireGuard,
Shadowshocks, and IKEv2 are some of the recommended ones. The most secure and
flexible protocol is OpenVPN. It secures the user's device-to-server connection via
symmetric-key encryption and public-key cryptography. OpenVPN is reliable and
secure. IKEv2 is also dependable. It's a popular security protocol. IKEv2 is popular
because of its stability and quickness.

 Customer Support- A responsive and helpful customer support team that can quickly
resolve technical issues. VPNs enable safe and private internet connections. It secures
and encrypts your internet traffic by routing it through a separate server. Even the best
VPNs can have technical troubles. A professional customer support team can help
with server connection issues, sluggish internet connections, and other technical
issues.

VPNs have grown in popularity due to their security benefits. VPNs make man-in-the-middle
attacks and phishing scams much harder for attackers. A VPN secures a device's internet
connection. VPN servers send internet traffic through an encrypted tunnel, protecting users'
data. This encryption prevents attackers from deciphering or exploiting data even if they
intercept it. VPNs prevent man-in-the-middle attacks, which is a major benefit.