[BCS-062 E-COMMERCE]

BLOCK-1
CHAPTER-1: INTRODUCTION TO E-COMMERCE

1. What is E-Commerce? Write the advantages of E-Commerce.

Answer:
E-Commerce: E-Commerce is defined as sharing of business information, maintaining business relationships, and
conducting business transaction by means of telecommunications networks. E-Commerce includes not only buying
and selling goods over Internet, but also various business processes within individual organizations that support the
goal.

The advantage of E-Commerce is to transact online. Transaction through online can be either on products or
services.

2. Explain the E-Commerce work-flow with suitable diagram.

Answer:
Order
place
Customer Shopping cart Credit Card/
Debit Card/ Net
Banking/COD
Shipment sent to customer

Payment processed

E – mail confirming placement of order

Order form

E – mail for
fulfilment

Courier picks up Warehouse

shipment

Fig: E – commerce Work – Flow

3. What is M-Commerce? Write the scope of M-Commerce.

Answer:
M-Commerce: M-Commerce stands for Mobile Commerce. Its transactions are basically electronic transactions
conducted using a mobile terminal and a wireless network.

Scopes of M-Commerce:
i. Mobile banking: This application makes it possible to perform bank-related transaction.
ii. Mobile entertainment: This application offers services that provide entertainment through mobile devices.
Ex. Ring tones, gaming, movies etc.
iii. Mobile Information Services: This term refers to mobile services that provides information. Examples of
such services are news updates of any nature (finance, politics, sports, etc.) travel information, access to
search engine etc.
iv. Mobile marketing: This terms refers to services based on mobile communication technologies that
provide firms with new and innovative instruments to increase sales.
v. Mobile shopping: This application bundles services that allow for transactions involving purchase of
goods using mobile devices.

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4. Explain E-Commerce Trade Cycle.

Answer:
A general trade cycle consists of the following phases:
i. Pre-sales (Finding a supplier and agreeing the terms).
ii. Execution (Selecting goods and taking delivery).
iii. Settlements (Invoice, if any and payment).
iv. After-sales (Following up complaints or providing maintenance).

5. What is Electronic Markets? Explain.

Answer:
E-Marketplace is a virtual marketplace where buyers and suppliers meet to exchange information about product and
service offers, and to negotiate and carry out business transactions.
E-Marketplace is supporting many different processes between a buyer and a seller. Some E-Marketplaces supports
only the aggregation of supply and demand, and the searching and matching of buyers or sellers. Many E-
Marketplaces support different types of auctions and negotiations.

6. Write the characteristics of e-marketplace.

Answer:
Characteristics of E-Marketplace:
i. An E-Marketplace system can reduce customers cost for obtaining information about the prices and product
offers of alternative suppliers.
ii. The benefits to individual participants in an E-Marketplace increase as more organizations joins the system.
iii. The E-Marketplace can impose significant switching costs on its participants.
iv. The E-Marketplace typically requires large capital investments and offers substantial economies of scale
and scope.

7. What are the roles of intermediary in marketplace?

Answer:
An intermediary can provide the following four important mechanisms that cause marketplaces to add value:
i. Matching buyers and sellers to negotiate prices on a dynamic and real-time basis.
ii. Ensuring trust among participants by maintaining a neutral position.
iii. Facilitating market operations by supporting certain transaction phases, and
iv. Aggregating a large number of buyers and sellers together.

8. Explain Internet commerce.

Answer:
By Internet Commerce, we mean the use of Internet for purchase and sales of goods, services, including services and
support after sale.

9. What are the classification of Internet Commerce? Explain each of them.

Answer:
Internet Commerce are divided into main categories:
i. Transplanted Real-World Business Models: Business activities which occur naturally in real world and
have been transplanted onto the Internet.

The following are some of the business models that fall into the above mentioned category:
 Mail-Order Model: A website shop front is employed to sell physical goods which are then
posted or delivered. (Amazon.com)
 Advertising Based Model: Where advertising revenues support the operation of a free service.
(Yahoo.com)
 Subscription Model: User subscribe for access to a database of digital products; well suited for
combination with digital delivery. (Informationweek.com)
 Free Trail Model: Software is available for free download or distributed on CD-ROM but will
only work for a limited period or will not be fully functional until a free is paid.
 Direct Marketing Model: The use of e-mail based direct marketing (often end up as spam).
 Real-Estate Model: Sell web space, domain names and e-mail addresses.
 Incentive Scheme Models: Opportunities to win prizes or to secure “free” or inexpensive goods
or services are used to entice people to accept advertising or to provide personal information.

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ii. Native Internet Business Model: Business activities that have evolved in the Internet environment and are
native to it.

The following are some of the business models that fall into above mentioned category:
 Library Model: The Website that offers free information.
 Freeware Model: It provides free software (basic version may be free) or open source software.
 Information Barter Model: Some sort of exchange of information over the Internet between
individuals and organizations.
 Digital Products Model: Images, movies, animation, audio, text, certificates and software will be
available as products.
 Access Provision Model: Provides access to Internet from enterprises called Internet Service
Providers (ISPs).
 Website Hosting and other Internet Services: Hosting web servers, e-mail as well as URL and
e-mail re-direction services.

10. What are the benefits of E-Commerce for an organization?

Answer:
The following are the benefits of E-Commerce to organizations:
i. Expands a company’s marketplace to national and international markets.
ii. Enables companies to procure material and services from other companies, rapidly and at less cost.
iii. Shorten or eliminates marketing distribution channels, making products cheaper and vendor’s profits
higher.
iv. Decreases the cost of creating, processing, distributing, storing, and retrieving information by digitizing the
process.
v. Reduces telecommunication costs as Internet tools are used.

11. What are the benefits of E-Commerce for a customer?

Answer:
The following are the benefits of E-Commerce to customers:
i. Provides products at reduced cost as well as services by allowing consumers to conduct quick online
comparisons.
ii. Give more choices to consumers than they could locate otherwise.
iii. Enables customers to shop or make transactions 24X7 from any location.
iv. Make it possible for people to work and study at home.
v. Make electronic auctions possible.

12. What are the benefits of E-Commerce for society?

Answer:
The following are the benefits of E-Commerce to society:
i. Enables individuals to work from home and to do less travelling, resulting in increased productivity.
ii. Allows merchandise to be sold at lower prices, there-by increasing people’s standard of living.
iii. Enables people in developing countries and rural areas to enjoy products and services that are otherwise
difficult to buy.

13. Explain those areas which have an impact of E-Commerce.

Answer:
The following are some of the areas which have an impact of E-Commerce:
i. Marketing
ii. Computer Science
iii. Finance and Accounting
iv. Economics
v. Production and Operations Management
vi. Productions and Operations Management (Manufacturing).
vii. Management Information System
viii. Human Resource management
ix. Business law and Ethics

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CHAPTER-2: ELEMENTS OF E-COMMERCE

1. What do you mean by E-Visibility? Write some strategies to increase e-visibility of e-commerce website.
Answer:
E-Visibility: Being able to stand out and getting customers is very challenging task in the ever growing global
market when too many e-commerce sites are competing for the same target customers.
E-visibility is a portal which provides visibility on orders, stock and transactions and further details on each of these
elements.

Strategies to increase E-Visibility of E-Commerce Website:

i. Increasing traffic: It is essential for site to regularly post on social networking sites. It is essential to
remember that anything out of sight of customer will be out of his/her mind. This can be improved by
taking the following measures:
 Uploading contents like special offers, news, pictures, phrases, any eye catering information for
the regular followers.
 Knowledge about competitions, doing research and checking what the competitors are uploading,
their offers and number of posts are they doing.

ii. Easy URL: The website UPL must be simple and catchy so that can be easily remembered.
iii. Adding icons of social networks: It helps users/followers and other potential customers to know about the
site and business.
iv. Advertising: Word of mouth marketing is more powerful than ever but even the conventional way of
advertising using media such as TV, newspapers, etc.
v. Social empire optimization: It is a process of imposing the visibility of website in the search engine’s
search result. The higher appearance of website in the search engine, the higher the probability of increase
of number of customers.

2. What are the classifications of search engine? Explain each of them.

Answer:
Search engines are classified into two categories:
 Crawler based search engine: These search engines called robot or bat, generally index sites based on the
content and links to website. Google and Alta vista are examples. The exact confidential as rules keep on
changing with time.

 Human powered directories: These are actually compiled by human reviewers who examine and evaluate
description of website and then they rate the contents using their own criteria. Normally, this type of
combination is done for listing by paid search engines.

Link Popularity is a key factor for increasing ranking of web pages. It refers to the number and quality of
links that point to website.

3. What is E-Shop? Write the features of E-Shop.

Answer:
E-Shop: E-Shop is also referred to as E-Website or Virtual Store. It allows the customers to purchase goods from
various sellers using Internet. E-Shop can be of any type (B2B, B2C, C2C) and size. The aim of E-Shop is to
provide a global, reliable, 24X7 web based effective sales management system.

Features of E-Shop:
i. Ease of Navigation: Effective navigation is very important and critical for e-shops because lost visitors
will result in lost sales. Large sites have huge range of products and have to be more careful as finding a
product of choice is a big task. Sufficient user testing will be extremely useful for identifying potential
navigation issues.

ii. Shopping cart, login and search options: An e-shop without these features is of no use. Many e-shops
provide private accounts to customers so that they can check their order history. Search options are
essential for finding suitable products for customers by customers, specifically in large websites.

iii. Deals, freebies and free shipping: People generally tend to buy more during sales and discounted periods.
Some are also attracted by free shipping. So making eye-catching banners with discount offers on the upper
part of home page of e-shop website will lead to increase in sales.

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iv. Payment system Icons: E-shops have many customers from round the globe and each have their own
preferred payment system ranging from credit & debit card, gift vouchers and cash on delivery, etc. These
options always display the delivery and after sales terms and conditions.

v. Links from social media: Almost 30% of online purchases are accomplished after surfing through social
media sites such as Twitter and Facebook. They are good options as customers are inclined by public
opinion also.

vi. Phone number and online chats: The customer helpline numbers and online chat with customers to clear
queries are highly appreciated forms of value added customer service since E-shops are working 24X7 and
customer service can solve majority of pre-sales and after sales questions.

vii. Store finder: This feature is useful and must for E-shops that have wide dealer network. Many
international customers prefer to visit website to find nearest branch as well as for information but prefer to
visit nearest store physically.

viii. Trust marks: Trust marks are small images or a logo that shows a security guarantee by an external party
indicating that it is safe to shop onsite. Some of these trust marks come from Verisign, TRUSTe, McAfee,
etc.

4. Who are involves in delivery value chain? What are the aspects of delivery of e-shopper?
Answer:
The delivery value chain may have the involvement of the following groups of stakeholders:
 E-Shoppers: BY products and delivery services from e-retailers.
 E-Retailers: Buy delivery services from delivery operators and logistics intermediaries.
 Delivery operators: Operate in the intersections that exist between e-shoppers, e-retailers and delivery
operator.

The most important aspects of delivery of e-shopper are:

 Low cost delivery.
 Delivery at home address.
 Access to electronic delivery notifications such as SMS, e-mail etc.
 Convenient return options.

5. What are the ways for delivery of goods? Explain.

Answer:
The following are some of the ways for delivery of goods:

i. Home delivery: The product is shipped to the address given by customer. The home delivery of products
can be in the form of parcels of delivery by hand.

ii. Content delivery as electronic delivery: Also referred as online distributors, they deliver media content
like audio, video, games, downloadable add-ons of other products.

iii. Drop shipping: It is the way in which the retailers transfer the customer order and shipment details to
either the manufacturer, distributers or whole sellers who then deliver the products directly to customers.
This means that retailer does not have to keep goods in stock and saves time, money and space.

iv. Collect your own: Sometimes, traditional customers can’t trust for timely delivery of products so they pay
for the product online and select a local store using locator software and pick up the products from selected
locations. This will save time as queues are avoided at checkout time.

v. Printing out: Products like insurances policies, gift vouchers, tickets etc. can be e-mailed to customer and
the print outs of products can be easily redeemed at appropriate online or physical stores.

6. Explain online payments in detail.

Answer:
Online payments:

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E-Cash Debit Card

Pay Pal

Types of EPS Credit Cards

Smart Cards

E-Wallet EFT

Fig: Types of Electronic Payment Systems (EPS)

i. Credit cards: This is one of the frequently used modes of payment used for purchases by Internet as it is
the most convenient mode. But, it has spending limit based on user credit history.

Advantages:
 Ease of use,
 Increased sales as credit card orders are generally bigger in nature,
 Secured than carrying cash, and
 Authentication is online. Thus, retailers are sure of payment.

Disadvantages:
 Cost of credit card processing is more than cash payment in some cases,
 Phishing of Internet frauds pose a major security issue, and
 Peer to peer transaction is not possible.

ii. Debit cards: Debit cards are quite similar to credit cards which are issued to customers by banks. The
major difference in debit card are credit card is that in case of debit card amount is immediately deducted
from account as soon as transaction is done. Like credit cards, there is no transaction of spending limit in
debit card.

Advantages:
 Since amount is debited immediately from the corresponding account, chances of
becoming bankrupt are less.

Disadvantages:
 Debit card security is major task, theft of user pin is much easier,
 Debit cards are pay now option i.e. no grace period of paying your amount, and
 Sometime the extra processing charges are added when paying through debit cards.

iii. Smart cards or Stored Value cards: Smart cards are also similar to credit and debit cards but they have
additional microprocessor chip added to the plastic cards. This chip stores the customer details and digital
cash value in it encrypted form and can be accessed using customer PIN only. Smart cards are more secure
and provide faster processing. Visa Cash card/Mondex cards are examples.

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Advantages:
 Atomic transactions,
 Good for very small transactions,
 Anonymous in nature,
 Security of physical storage, and
 It is currency neutral.

Disadvantages:
 Due to lesser transaction limit, it is not suitable for B2B or B2C, and
 Due to high interface cost, it is not suitable for C2C.

iv. EFT: EFT is the computer based system that transfers the money electronically from one account to
another. Sometimes, it is also known as e-cheque. Interbank transfers are example of EFT.

Advantages:
 Scheduled electronic payment helps in managing delayed disbursements easily,
 The manual cheque involves the cost of ordering cheques, stamps, envelopes, visit to
bank, etc. but, EFT reduces all such administrative costs. It requires less labor and
simplifies reconciliation of bills,
 Money transfer is faster as transfer is normally done within 24 hours,
 It provides greater control to approve payment by using built in feature of segregation
of duties. Only a password is required to issue payments, and
 Process is secure when compared to cheques as no issue of lost or stolen cheques
arises.

Disadvantages:
 It is limited to large companies,
 Risk is involved as the account number added may be incorrect sometimes, and
 The transactions are irreversible.

v. PayPal: This is also electronic payment system in which money is transferred between the accounts. It is
analogous to next banking.
The following is the process of validating the account particulars:
 Customer gives PayPal account number,
 PayPal transfers small amount to the account,
 Customer confirms the payment amount,
 If correct, authentication is treated as successful, and
 PayPal sends email to both the payment sender and receiver of the transactions.

Advantages:
 Easy to use, and
 No Credit card is required

7. Write the advantages and disadvantages of the following online payments methods:
i. Credit Cards
ii. Debit Cards
iii. Smart Cards or Stored Value Cards
iv. EFT
v. PayPal
Answer:
i. Credit Cards:
Advantages:
 Ease of use,
 Increased sales as credit card orders are generally bigger in nature,
 Secured than carrying cash, and
 Authentication is online. Thus, retailers are sure of payment.

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Disadvantages:
 Cost of credit card processing is more than cash payment in some cases,
 Phishing of Internet frauds pose a major security issue, and
 Peer to peer transaction is not possible.

ii. Debit Cards:

Advantages:
 Since amount is debited immediately from the corresponding account, chances of
becoming bankrupt are less.

Disadvantages:
 Debit card security is major task, theft of user pin is much easier,
 Debit cards are pay now option i.e. no grace period of paying your amount, and
 Sometime the extra processing charges are added when paying through debit cards.

iii. Smart Cards or Stored Value Cards:

Advantages:
 Atomic transactions,
 Good for very small transactions,
 Anonymous in nature,
 Security of physical storage, and
 It is currency neutral.

Disadvantages:
 Due to lesser transaction limit, it is not suitable for B2B or B2C, and
 Due to high interface cost, it is not suitable for C2C.

iv. EFT:
Advantages:
 Scheduled electronic payment helps in managing delayed disbursements easily,
 The manual cheque involves the cost of ordering cheques, stamps, envelopes, visit to
bank, etc. but, EFT reduces all such administrative costs. It requires less labor and
simplifies reconciliation of bills,
 Money transfer is faster as transfer is normally done within 24 hours,
 It provides greater control to approve payment by using built in feature of segregation
of duties. Only a password is required to issue payments, and
 Process is secure when compared to cheques as no issue of lost or stolen cheques
arises.

Disadvantages:
 It is limited to large companies,
 Risk is involved as the account number added may be incorrect sometimes, and
 The transactions are irreversible.

v. PayPal:
Advantages:
 Easy to use, and
 No Credit card is required

8. What do you mean by after sales services? What steps should be taken to improve after sales services?
Answer:
Customer service is service given during and after sales. Poor or lack of service yields negative word of mouth
advertising which in turn keeps people away from our business.

The following steps can be taken to improve after sales service:

 Make delivery procedure easy: Flexible and convenient delivery methods of returning/exchange method
always make customer happy.
 Send delivery notifications: Sending e-mails and SMS about delivery gives a feel of personal touch to
customers. Text in e-mail and SMS should be simple and easily manageable.

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 Loyalty count: Give increased benefits to customers who are regular for their loyalty.
 Feedback: Customer feedback and service helps to analyse you own business loopholes and problems.
This is useful to increase customer base.

9. What are the security features that can be implemented for success of e-commerce?
Answer:
The following are some of the security features that can be implemented for success of e-commerce:
 Identification or Authentication: The persons/entities with whom we are communicating are really who
they say are
 Confidentiality: The content of the message or transaction is kept confidential. It should only be read and
understood by the intended sender and receiver.
 Integrity: The content of the message or transaction is not tampered accidentally or deliberately.
 Non-repudiation: The sender and receiver cannot deny sending and receiving of the message or
transaction respectively. It is a guarantee that the sender of a message cannot later deny, having sent the
message and the recipient cannot deny, having received the message.
 Access Control: Access to the protected information is only realized by the intended person or entity.

10. What are the two levels for securing information over the Internet? Explain each of them in details.
Answer:
There are two levels for securing information over the internet:
i. Digital Certificates: Digital certificates are electronic files that are used to uniquely identify people and
resources over the internet. They enable secure, confidential communications between two parties. Digital
certificates are issued by CA (Certifying Authorities), such as VeriSign or Entrust Technologies.

There are four types of certificates available:

 Server Certificates: These types of certificates are used by web servers to identify the company
running the server and allow encrypted SSL sessions and SET (Secure Electronic Transaction)
processing.
 Personal Certificates: These certificates are for individuals who want to send S/MIME message
and access web servers using SSL and SET.
 Publisher Certificates: These are used by software authors to sign and identify their realise code
so that users will know of tampering, if it happens.
 Certificate Information: All digital certificates include information about its owner and the CA
who issued it.
A digital certificate includes the following information:
- Name of the certificate holder and other identifying information unique to the holder
such as URL or e-mail address,
- Holder’s public key
- Name of the CA who issued the certificate,
- serial number of certificate and validity period of the certificate (start and end date)

ii. SSL (Secure Socket Layer): SSL allows the client and server to communicate with each other in a way
that prevents the tampering of data that is being transmitted. SSL requires all information sent between a
client and a server be encrypted (by the server) when sent and decrypted (by the client) when received. SSL
also has the ability to detect any tampering of data.

Request to connect

SSL certificate and Server public key

Web CA is validated and Session key established Web Server

Browser
Acknowledgement for starting session

Both communicate with encrypted

Fig: Working of SSL

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CHAPTER-3: ELECTRONIC DATA INTERCHANGE (EDI) AND ELECTRONIC PAYMENT SYSTEM

(EPS)

1. What do you mean by EDI? What are the characteristics of EDI?

Answer:
Electronic Data Interchange (EDI): Basically an EDI is a structured, machine readable document used in business
exchanges. Employing EDIs in business functions would reduce the overall transaction time and automates the
process. Some of the examples of EDI include purchase orders, sales orders, invoices, bills etc. EDI are pre-
dominantly used in B2B scenario.

Characteristics of EDI:
i. Provides structured and standardized format for business transactions such as purchase orders, sales orders,
bills etc.
ii. Provides electronic exchanges of data automatically.
iii. Automates most of the business transactions, and
iv. Drastic reduction of manual errors in overall transactions and business process.

2. Explain “Conventional Processing of Purchase Order (PO)” with the help of a suitable diagram.
Answer:

Buyer initiates PO Buyer’s internal Print PO

process ERP System

PO Sent

PO fed into seller’s Seller’s executive Seller receives PO

System processes PO

Fig: Conventional Processing of PO

Consider the following conventional B2B (Business to Business) scenario:
A manufacturing company generates a Purchase Order (PO) of materials it wants to purchase from a business
partner. The PO is typically generated using internal systems including the inventory control systems, pricing
systems and others. The manufacturing company then transfers PO to the partner via fax or mail. The business
partner then would use its own internal systems to translate the items in PO complying with its internal standards.
After this translation and processing, the PO transaction is finalized.

3. Explain the Processing of PO in the era of EDI with a suitable diagram.

Answer:

Buyer initiates PO Buyer’s internal PO fed into

process ERP System EDI Seller’s System

Fig: Processing of PO in the era of EDI

After using EDI, the complete process can be automated and the structured information can be exchanged between
system belonging to manufacturing company and its business partner.

4. Explain the architecture of EDI.

Answer:

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Application Layer

Format Layer

Data Transport Layer

Data Connection Layer

Fig: EDI Layered Architecture

Application Layer: This layer consists of business applications which use the EDI. The main responsibility of these
applications is to convert the internal documents of company in electronic format to the standard format supported
by EDI system. So, these applications act as converters in Application Layer

Format Layer: This layer processes the documents in EDI formats. Two popular industry wide EDI standard
formats are ANSI X12 and EDIFACT (Electronic Data Interchange for Administration, Commerce and Transport).

Data Transport Layer: This layer is responsible for automatically transferring the EDI. Though e-mail is a popular
format of data exchange, there are other transportations mechanisms such as FTP, HTTP, HTTPS and X.435, etc.

Data Connection Layer: This layer consists of enterprise network infrastructure which is used to transport data.
This include dial-up/modem based connections, Internet, point-to-point communication etc.

5. Explain the following two EDI standards:

i. ANSI X12
ii. EDIFACT
Answer:
i. ANSI X12: ANSI X12 is most popular in North American region. It defines standards for various business
transactions such as order processing, material handling, warehousing services, manufacturing services, etc.
X12 standard uses transaction set to identify each business transaction and each transaction set is denoted
by a numeric code.

ii. EDIFACT: EDIFACT (Electronic Data Interchange for Administration, Commerce and Transport) is an
EDI standard format developed under UN (United Nations). Hence, EDIFACT is also denoted as
UN/EDIFACT.
This is the international standard which consists of the following four key elements:
 Syntax which defines the message structure.
 Data elements within the document.
 Segments which groups the date elements.
 Messages which are an ordered group of segments and symbolize a business transaction.

6. Write the benefits of EDI.

Answer:
Following are the benefits of EDI:
i. Minimizes the manual work and redundancy in exchange of business documents,
ii. Automates the business exchange transactions,
iii. Optimizes the lead time for inventory,
iv. Contributes directly to increased sales and revenue due to increased cooperation,
v. Reduced time in all business transactions such as PO generation, and
vi. Better customer service due to improved turnaround times.

7. Write the application of EDI.

Answer:
Following are the applications of EDI:
i. EDI is used by educational institutions to exchange student information,

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ii. HIPAA (Health Insurance Portability and Accountability Act) standard in healthcare requires EDI,
iii. Automotive industry uses EDI for streamlining operations with suppliers and vendors,
iv. Retail players uses EDI to streamline their procurement processes, and
v. Manufacturing firms use EDI for product purchases and interaction with resellers.

8. Explain Electronic Payment System with some examples.

Answer:
Electronic Payment System (EPS): EPS are an application of EDI which provides a system for electronic payment
and transactions. EPS facilitate a commerce transaction electronically by allowing the buyer to pay online. EPS are
hugely popular among (B2C) transactions.

Examples of EPS:
 Credit/Debit/Smart Cards: Credit card is the most popular way of performing online transactions. The
cards are identified by 16-digit number and have a maximum limit on spending. Buyers needs to enter card
information such as number, CVV (Card Verification Value) code, and expiry date etc. to authenticate the
transaction.
Unlike credit cards, debit cards are linked to user’s bank accounts and they can use their debit cards as their
debit cards as one of the channels to use their account. Often online banking or net banking rules apply
while using debit cards.
Smart cards have built-in integrated circuits and act as electronic wallet for the users. They can be pre-
loaded with tokens or funds and they can be used to make electronic and physical payments similar to debit
cards.

 E-Credit Accounts: E-credit account allows an online business transaction to happen. Typically, B2B
business transactions use e-credit accounts. Companies offering e-credit facilities offer a higher end credit
limit and a fixed repayment time period. E-credit account is mainly used for large financial transactions
without any physical presence.
Companies like http://www.alibaba.com permit e-credit for overseas buyers to boost trade.

 E-Money: E-money or digital cash is the financial instrument stored in computer systems and can be
example used for online transactions. They are electronic counter parts or representatives of physical cash.
For example, bit coins or EFT is referred to as e-money. Various cryptographic methods such as public-
private key encryption, digital signatures are used to authenticate and authorize the usage of e-money.

The following are some of the scenarios where e-money is currently being used:
- Facilitate travel in public transport system using wireless payment, and
- Electronic pre-paid cards for various online transactions.

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CHAPTER-4: INTRODUCTION TO E-COMMERCE MODEL

1. What do you mean by “Inter-Organization” and “Intra-Organization” E-Commerce?

Answer:
When e-commerce transaction involves multiple organizations, then it is termed as Inter-organizational e-
commerce.
When e-commerce transaction does not involve multiple organizations, then, it is termed as Intra-organizational e-
commerce.

2. What are the various e-commerce models?

Answer:
Various e-commerce models are given below:
 Business to Business (B2B)
 Business to Consumer (B2C)
 Consumer to Consumer (C2C)
 Consumer to Business (C2B)
 Business to Government (B2G)
 Government to Business (G2B)
 Citizen to Government (C2G)

3. Explain B2B model with a suitable diagram.

Answer:
In B2B e-commerce model, the transactions are between businesses. An example of such transaction is between
wholesaler and retailer.
An example of such transaction is between wholesalers and retailer.
Example of B2B portals includes:
http://www.infobanc.com
http://www.ask4plastic.com
http://www.matexnet.com
http://www.pcbindia.com

Retailer Wholesaler Portal

Supplier

Fig: B2B Model

4. Explain B2C model with a suitable diagram.

Answer:
In B2C e-commerce model, the transactions are between businesses and consumers. An example of such transaction
is between Indian Railways and Passenger.
Examples of B2C portals include:
http://www.irctc.co.in
http://www.amazon.com
http://www.tatasky,com
Supplier

Consumer Portal

Fig: B2C Model

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5. Explain C2C model with a suitable diagram.

Answer:
In C2C e-commerce model, the transactions are between consumers and consumers.
An example of such transaction is between sellers and buyers of shares.
In C2C model, organization may be present intermediaries.
Examples of C2C portals include:
http://www.olx.in
http://www.quickr.com

Portal

Consumer Consumer

Fig: C2C Model

6. Explain C2B model with a suitable diagram.

Answer:
In C2B e-commerce model, a consumer approaches website showing multiple business organizations for a particular
service. Consumer may place an estimate of amount s/he wants to spend for a particular service.
Interest rates of personal loan/car loan provided by various banks via website is an example.
Examples of C2B portals include:
http://www.razerfinish.com
http://www.reverseauction.com
http://www.priceline.com

Portal

Supplier Consumer

Fig: C2B Model

7. Explain B2G model with a suitable diagram.

Answer:
B2G model is a variant of B2B model. Such websites are used by Government to trade and exchange information
with various business organizations.
An example of B2G portal is: http://www.lockheedmartin.com

Supplier Portal Government

Fig: B2G Model

8. Explain G2B model with a suitable diagram.

Answer:
Government uses G2B model to approach business organizations. Such websites support auctions, tenders and other
functionalities such as submission of application forms etc.
An example of G2B portal is:
http://www.dti.gov.uk

Government Portal Supplier

Fig: B2G Model

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9. Explain G2C model with a suitable diagram.

Answer:
Government uses G2C model to approach citizens in general. Such portals may support auctions of vehicles,
machinery or any other material. Such portal also provides services like registration of birth, marriage or death, etc.
One of the main objectives of a G2C portal is to reduce time for performing various government services.
An example of G2C portal is:
http://www.incometaxindia.gov.in

Government Portal Citizen

Fig: G2C Model

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BLOCK-2
CHAPTER-5: E-BUSINESS

1. What is Internet Bookshops? Explain the shopping procedure of Internet Bookshops. What are the
advantages and disadvantages of Internet Bookshops?
Answer:
Internet base bookshops are the online bookshops that provide an opportunity to users to scroll through various
books so as to pick and choose any book of their liking on a click of a button while sitting in comfort of their homes
or lounges.

Shopping Procedure:
i. How to order
ii. How to become a member
iii. How to check out
iv. Shopping cart facility
v. Help desk
vi. Discount/special packages
vii. Payment procedure and options, and
viii. Delivery options.

Advantages:
i. These books act as databases of a vast amount of information about books currently available in the market.
All Internet users can use these databases and have knowledge of the same.
ii. Online bookshops are open 24X7. The access is available to anyone, at anytime, from anywhere.
iii. User can take time in searching and selecting books.
iv. These bookshops are extremely useful to people looking for specific books.
v. Most of the instances, there will be a discount on the price of the book.

Disadvantages:
i. Any delay in updating of database in detail such as edition, cost, etc. will create problems in identifying the
correct book and payment thereof.
ii. Security issues are another concern while making payment online especially through credit cards.
iii. Some users may not have access to credit card facility, hence will not be able to transact and purchase
books online.
iv. There may be abnormal delays in shipping.
v. A book that is different from what is ordered may be shipped.

2. What is Grocery Suppliers? Explain the shopping procedure of Grocery Suppliers. What are the
advantages and disadvantages of Grocery Suppliers?
Answer:
Purchasing of groceries is one of the basic shopping requirements. http://www.eazygrocery.com,
http://www.bigbasket.com are some of the online grocery suppliers.

Advantages:
i. E-grocery suppliers provide a wide range of products and payment options.
ii. It is a big welcome to an easy and relaxed way of browsing and shopping for groceries at customers’
comfort.
iii. The customer can discover new products and get everything right at the doorstep.
iv. The e-grocer guarantees timely delivery and best quality.
v. From the user prospective, free home delivery, time saving and various payment options are the advantages
of online grocery shopping.

Disadvantages:
i. Online grocer caters to a specific city or certain areas.
ii. Online grocer caters Internet savvy customers only.
iii. Handling perishable products is a big challenge.
iv. Late delivery of goods due to various reasons like traffic etc. can create problems.
v. Buyers still relate groceries with local store and malls.

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Shopping Procedure:

Customer makes list of required grocery items

Open website of vendors and registers if placing order for the first time

Checks offers, selects items and adds them to shopping cart

Make payment using any of the payment options given

Server takes order and forwards it to the nearest retail outlet for fulfillment

Retailer fulfils the order

Retailer sends confirmation Retailer packs grocery

that the order is placed and items and delivery to the
will be delivered customer

Fig: Shopping Procedure from Online Grocery Suppliers

3. What is Software Supplies and Support? Explain the shopping procedure of Software Supplies and
Support. What are the advantages and disadvantages of Software Supplies and Support?
Answer:
With the phenomenal growth of Internet, selling software and providing related support through Internet allows the
seller to reach a large computer savvy global market easily, economically and efficiently.

Shopping Procedure: With online software suppliers and support, the entire sale/purchase including delivery of the
product is completed with an online transaction. The following is the shopping procedure normally followed:
i. Customer logs on to the website.
ii. Places an order through a secure order from.
iii. Submits payment information.
iv. Proceeds to download the purchased software.

Advantages:
i. It is a great market channel for IT companies to market their products.
ii. By selling through the Internet, software sellers get an easy and cheap distributing channel.
iii. Software buyers get a quick and efficient way of getting software.
iv. It eliminates the need to manufacture and store large inventories of shrink-wrapped goods, costly
courier/shipping charges.

Disadvantages:
i. There may be portability issues as it may not be easy to port it to machine that is different from the
machine to where it is downloaded.
ii. Chances of online threats such as viruses, malware, etc. increases manifold.
iii. Not all software products are available for download.

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iv. Bandwidth may become a major constraint as memory size of the software product to be downloaded may
be large.

4. What is e-newspaper (Electronic Newspaper)? What are its advantages and disadvantages?
Answer:
Electronic newspaper is the newspaper which exists on the Internet either separately or as online version of a printed
periodical.
Examples of e-newspaper:
http://thehindu.com
http://timesofindia.com

Advantages:
i. It is accessible 24X7. Online newspapers can be read anywhere, anytime.
ii. Content can be updated any number of times in a day by the online newspaper.
iii. The reader can select the news of interest and leave the rest.
iv. Some e-paper are free.
v. It is environmental friendly than getting a printed newspaper.
vi. Archives are easily available.
vii. It is reliable source of news information as it is updated at regular intervals.

Disadvantages:
i. A newspaper company should be prepared for reduced revenues if it provides e-paper free of cost.

5. What is Online Auction? Explain the procedures for Online Auction. What are the advantages and
disadvantages of Online Auction?
Answer:
In the online auction, the seller sells the product or service to the person who bids the highest price. These auctions
facilitate online sale and purchase between the sellers and buyers in different locations or geographical areas.
Examples of such websites:
http://www.ebay.com
http://www.ubid.com

Advantages:
i. May get goods cheaply
ii. Includes a large number of sellers and bidders which encourages a high volume of online business.

Disadvantages:
i. There are chances of the product being a stolen or pirated one.
ii. Sellers will not always accept all forms of payment.
iii. There is always a risk of item not being of the value for which it is brought.

Online Auction Procedure:

Seller registers a particular item of auction at the online auction website
 Provides images of the item
 Provides description of the item
 Sets a minimum bid

Bidders registered at that online auction website get opportunity to search and browse all active auctions

Bidders start bidding at the auction in which they are interested

At the time set, the bidding process ends

The buyer pays the price and the seller dispatches the item

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6. What is Online Trading System? Explain the procedures for Online Trading. What are the advantages
and disadvantages of Online Trading System?
Answer:
Online trading in securities refers to the opportunity to an investor to place orders using Internet as trading platform
offered by the trading member (broker). The transactions of buying and selling are made through Internet. The
investor/trader gets updated information online.
Examples:
http://www.icicidirect.com
http://www.sharekhan.com

Online Trading Procedure:

 Find an online brokerage house.
 Make an application to open a Demat Account and Online Trading Account.

 Once the Demat Account and Online Trading Account are opened, bank account is to be linked with the
trading account. Credential to operate and received from online brokerage house.

 Allocate funds from the bank account to the trading account.

 Go to the trading page of your brokerage account. Alternatively, you can look for a stock of interest in
trading and select to trade in that security.

 Buying and selling stock is done by placing “Orders.” You can place a “Buy Order” to buy the stocks at a
price. Similarly, to sell a stock at a price, you have to place a “Sell Order.”
 Provide the following basic options when placing an order:
- Option to choose whether you wish to buy or sell a particular stock.
- The name/symbol of the particular stock which you want to either buy or sell.
- The number of shares (quantity) that you want to either buy or sell.
- The price at which you would like to either buy or sell this stock.

 After you have confirmed the order, it is placed in the stock exchange through the online trading system.
 Confirmation of placement order is received.

 Stocks are actually brought or sold once this order gets executed in the exchange.
 Confirmation of execution of order is received.
 Online trading is complete

Advantages:
i. It leads to paperless transactions. That is, shares are held electronic form in the demat account.
ii. It helps in market transparency.
iii. All the records of transactions are available online.
iv. Investor can manage his own stock portfolios.
v. There is free access to high quality research reports generated by financial players.

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Disadvantages:
i. There are chances of losing the trade if online trading system fails.
ii. The scope of manipulation, speculation and malpractice is more due to the security issues associated with
Internet.
iii. Due to the policy of online brokerage house, some stocks may not be available for trading online for whom
the customer needs to contact other brokerage houses.

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CHAPTER-6: E-SECURITY AND LEGAL ISSUES

1. What are the objectives of security in e-commerce?

Answer:
The main objectives of security in e-commerce are the following:
 Computer security: Protection of assets from unauthorized access, use, alteration or destruction.
 Physical security: Includes tangible devices for protection.
 Logical security: Protection of assets using non-physical means.
 Threat minimization: Any act or object poses a danger to computer assets.

2. What are the security concerns in E-Commerce? Explain each of them.

Answer:
Security concerns in e-commerce can be studied from three perspectives as given below:
i. Security concern of client: Client security means privacy of the client and integrity of his computer.
 Active content: Active content is the program embedded transparently in web pages which can
cause actions to occur. It creates security risk because malicious programs hidden inside webpage
can reveal and destroy the confidential and sensitive information in the form of cookies.

 Viruses, Worms and Trojan Horses:

 Viruses is a piece of software that is designed to replicate itself by copying itself into
other programs stored in a computer which can cause the program to operate incorrectly
or corrupt the Computer’s memory.
 Worm is software that is capable of reproducing itself. It can also spread from one
computer to the next over a network.
 Trojan horse is a program that appears to have a useful function but contains a hidden
function which is harmful.
 These viruses can delete stored data or manipulate actual data malicious software can
damage the system and id a major threat.

 Masquerading: Masquerading occurs when one person uses the identity of another to gain access
to computer. This may be done in person or remotely.

ii. Security concern of communication channel: Another major concern in any e-commerce application is
the security of the communication channel. That is, the security of the message when it passes through the
Internet. The data/message being transferred through the network must be secured from any unauthorized
disclosure and alteration.
Replying older messages, tapping of communications, unauthorized changes to messages, misuse of remote
maintenance accesses are the dangers to the communication channel.

iii. Security concern of server: Another major concern in any e-commerce application is the security of the
web server, commerce server and databases. Any loss or manipulation of stored data can create irreparable
damaged. The server is required to be protected from break-ins, site vandalism, and denial od service
attacks.

3. What is Secure Socket Layer (SSL)? Write the characteristics of SSL. Explain SSL Handshake with a
suitable diagram.
Answer:
Secure Socket Layer (SSL): SSL allows the client and server to communicate with each other in a way that
prevents the tampering of data that is being transmitted. SSL requires all information sent between a client and a
server be encrypted (by the server) when sent and decrypted (by the client) when received. SSL also has the ability
to detect any tampering of data.
It will be developed by Netscape. It operates between the application and transport layers. It is commonly used to
manage the security of message transmission on the Internet.

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Request to connect

SSL certificate and Server public key

Web CA is validated and Session key established Web Server

Browser
Acknowledgement for starting session

Both communicate with encrypted

Fig: Working of SSL

Characteristics of SSL:
i. It operates at TCP/IP transport layer.
ii. It uses a dedicated TCP/IP socket.
iii. It encrypts the communications between the server and client when connection is established,
iv. It requires a server certificate.

5
SSL
Client 6 Web
Server
7

10

11

Fig: SSL Handshake

The following are various steps of SSL:

1) SSL client attempts to connect to a SSL server (website secured with SSL) by sending a client hello
message.
2) Web server responds with a server hello.
3) Client requests web server to prove its identity.
4) Web server sends a copy of its SSL certificate to authenticate its identity to client.
5) Client verifies it. Accordingly, it sends a message to the server.
6) If the server requires client authentication, it asks for “client certificate request.”
7) Then the client sends its certificate.
8) SSL server verifies the signature on the client certificate.

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9) Client sends a digitally signed acknowledgement to start sharing.

10) Server sends a digitally signed acknowledgement to start sharing.
11) The data is encrypted form is shared between the server and browser and a secured session starts that
protects message privacy, integrity and security.

4. What is Digital Signature? What are the steps in the working of a Digital Signature?
Answer:
Digital Certificates: Digital certificates are electronic files that are used to uniquely identify people and resources
over the internet. They enable secure, confidential communications between two parties. Digital certificates are
issued by CA (Certifying Authorities), such as VeriSign or Entrust Technologies.

As per Information Technology Act, 2000, Digital Signature may be defined as authentication of any electronic
record by a subscriber by means of an electronic method or procedures in accordance with the provision of
concerned section of the Act.

TCS, Safescrypt and MTNL are some of the digital signature certifying authorities in India licensed by the
Controller of Certifying Authorities, Government of India.

There are four types of certificates available:

 Server Certificates: These types of certificates are used by web servers to identify the company
running the server and allow encrypted SSL sessions and SET (Secure Electronic Transaction)
processing.
 Personal Certificates: These certificates are for individuals who want to send S/MIME message
and access web servers using SSL and SET.
 Publisher Certificates: These are used by software authors to sign and identify their realise code
so that users will know of tampering, if it happens.
 Certificate Information: All digital certificates include information about its owner and the CA
who issued it.
A digital certificate includes the following information:
- Name of the certificate holder and other identifying information unique to the holder
such as URL or e-mail address,
- Holder’s public key
- Name of the CA who issued the certificate,
- serial number of certificate and validity period of the certificate (start and end date)

the following are the various steps in the working of a digital signature:
i. sender creates the message (electronic record).
ii. Electronic record is converted into message digest by using a mathematical function known as hash
function (which freezes the message).
iii. The message digest is encrypted with the sender’s private key.
iv. Sender sends the message.
v. Receiver receives the message.
vi. Receiver decrypts the message by the sender’s public key.
vii. Receiver verifies the message.

5. What is Firewall? What are the mechanism of firewall? Explain each mechanism in details.
Answer:
Firewall: Firewall is a hardware or software based security that filters the packets and prevents some packets from
entering the network based on a security policy.
Hardware firewalls can be found in broadband routers and is an important part of network setup. It protects
Computer on the local network. Software firewalls are installed on the computer and can be customized to
incorporate protection features.

The following are four mechanisms used by firewalls:

 Packet filters firewalls
 Stateful inspection firewalls
 Proxy server firewalls, and
 Application level firewalls.

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Basis Packet Filter Stateful Inspection Proxy Server Application Level

Firewalls Firewalls Firewalls Firewalls
Evaluation Evaluates the Evaluates the state Acts as Include filtering
headers of incoming of TCP connection. intermediary capabilities and
and outgoing between internal additional validation
packets. and external IP of packet content
addresses & blocks based on the
direct access to application.
internal network.
Usage Used in small Inbound network Domain name TELNET, FTP, and
office/home office traffic. servers, mail servers HTTP.
(SOHO) and and web servers.
operating systems.
Advantages Faster performance Faster performance Effectively hides Packets are
than application than application true network evaluated
firewalls. firewalls. addresses. completely.

Effective and
transparent to users.
Disadvantages Does not support More complex than Incompatible with Time taken for
advanced user other firewalls, and all network evaluating each
authentication. incompatible with protocols, and packet slows
some protocols. configuring these network traffic, and
proxies is difficult. limited support for
new network
applications is
provided.
Table: Mechanism used by Firewall

6. What is IT Act 2000? Write the objectives of IT Act. What are the issues dealt by IT Act? Explain.
Answer:
Information Technology generates information by processing data. It gives rise to a variety of legal problems. For
dealing with legal problems, some countries have enacted specific legislation.
In India, the IT Act was passed on 17th October 2000. it was amended on 27th October 2009.

The following are some of the objectives of IP Act:

i. To provide legal recognition to transactions carried out by means of EDI and other means of electronic
communication.
ii. To facilitate electronic filing of documents with government agencies.
iii. To amend Indian Penal Code, Indian Evidence Act, 1872, etc. to bring electronic documentation within the
purview of the respective enactments.

The following are some of the issues dealt by the IT Act:

 Recognition to Electronic Records: Electronic record practically equates with the manual or typed record
and e-mail is a valid legal form of communication in our country that can be duly produced and approved
in a court of law.

 Legal Recognition of Digital Signatures: As per IP Act, whenever any law requires that information or
any other matter shall be authenticated by affixing the signature of any person, then such requirement shall
be satisfied if it is authenticated by means of digital signatures affixed in such manner as may be prescribed
by the Central Government.

 Use of Electronic records in Government and Its agencies: As per IT Act, whenever any law provides
for filing of any form, supplication, issue of any license permit, etc. or receipt or payment of money, then,
notwithstanding anything in that law, the information provided in electronic form shall be deemed to be
lawful.

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 Retention of electronic Records: As per IT Act, records can be retained in electronic form so as it remains
accessible for subsequent use, in the format which it was originally generated and provide for the
identification origin, destination, date and time of dispatch or receipt of that record.

7. Explain Cyber Crime on the following basis:

i. Cyber Crime Against Person
ii. Cyber Crime Against Property
iii. Cyber Crime Against Government/Corporate Entities
iv. Cyber Crime Against Society at Large
Answer:
i. Cyber Crime Against Person:
 Harassment via e-mails: Repeatedly sending abusive message via email.
 Cyber stalking: Use of Internet to stalk someone like online harassment and online abuse.
 Email spoofing: Emailing messages with a forged sender address.
 Unauthorized control/access over computer system.
 Publishing/transmitting of obscene material.
 Cyber defamation: Causing injury to the reputation of a person with the help of Internet by
floating/publicizing negative messages.

ii. Cyber Crime Against Property:

 Transmitting virus.
 Computer vandalism: Malicious attack on the software, stealing information, hacking or
destroying the Computer.
 Unauthorized control/access of computer system.
 Intellectual property crimes: Patent violations, copyright infringement, trademark violation, etc.

iii. Cyber Crime Against Government/Corporate Entities:

 Possession of information in an unauthorized manner.
 Cyber terrorism: Use of Internet for terror activities.
 Distribution of pirated software.

iv. Cyber Crime Against Society at Large:

 Pornography.
 Polluting the youth through indecent exposure.
 Financial crimes.
 Sale of illegal articles like narcotics, weapons, etc.
 Online gambling.

8. Explain the Cyber Offences and Penalties.

Answer:

Cyber offences and Related Section under Related Penalties under

contraventions the IT Act, 2000 (as the IT Act, 2000 (as
Amended till Date) Amended till Date)
a. Tampering with Section 65 Imprisonment up-to three
Computer source years or fine up-to 2 lakh
documents. rupees, or both
b. Hacking the computer Section 66 Imprisonment up-to three
system years or with fine which
may extend up-to 5 lakh
rupees, or both
c. Sending offensive or false Section 66A Imprisonment up-to three
messages through years and with fine.
communication service,
etc. it is also known as
cyber stalking.
d. Dishonestly receiving Section 66B Imprisonment up-to three
stolen computer resource years or fine up-to rupees
or communication device. one lakh or both.

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e. Identity theft Section 66C Imprisonment up-to three

years or fine up-to rupees
one lakh.
f. Cheating by Section 66D Imprisonment up-to three
impersonation by using years and fine up-to
computer resource. rupees one lakh.
g. Violation of privacy Section 66E Imprisonment up-to three
years or fine up-to two
lakh or both.
h. Cyber terrorism Section 66F Imprisonment which may
extend to life
imprisonment.
i. Publishing or transmitting Section 67 First conviction:
obscene Imprisonment up-to three
years and with fine up-to
five lakh rupees.

Subsequent conviction:
Imprisonment up-to five
years and with fine up-to
ten lakh rupees.
j. Publishing or transmitting Section 67A First conviction:
of material containing Imprisonment up-to five
sexually explicit act, etc. years and with fine up-to
in electronic form ten lakh rupees.

Subsequent conviction:
Imprisonment up-to seven
years and with fine up-to
ten lakh rupees.

9. Explain the various Cyber Laws.

Answer:
i. The Indian Penal Code, 1860: Relevant sections dealing with records and documents with strong
legislation covering substantive criminal law was amended with the introduction of IT Act, 2000. The word
“electronic” was inserted thereby treating the electronic records at par with physical records.

ii. The Indian Evidence Act, 1872: Another legislation amended by the IT Act was Indian Evidence Act.
Prior to IT Act, all evidences in the courts were in physical form only. Now, evidence can be presented in
electronic form also.

iii. The Bankers’ Books Evidence (BBE) Act, 1891: With the passing of IT Act, the provisions of Banker’s
Books Evidence Act were also amended to include printout from a computer system or disc as a valid
document and evidence, provided, it is accompanied by a certificate stating that it is a true extract from the
official records of the bank and that such entries or records are from a computerised with data integration.

iv. The Reserve Bank of India Act, 1934: The Reserve Bank of India Act, 1934 was amended to insert a
clause relating to the regulation of funds transfer through electronic means between banks (i.e. transactions
like RTGS and NEFT and other fund transfers) to facilitate EFT and ensure legal admissibility of
documents and records therein.

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CHAPTER-7: M-COMMERCE

1. What is M-Commerce? Write the benefits of M-Commerce.

Answer:
M-Commerce: M-Commerce stands for Mobile Commerce. Its transactions are basically electronic transactions
conducted using a mobile terminal and a wireless network.

Benefits of M-Commerce:
i. Enables purchase of products any time anywhere.
ii. Availability of location based promotions and sales offers.
iii. Opportunity to use mobile device for instant payments.
iv. Mobile technology covers wider distance and enhances the reach of potential customers.
v. Reduces overall transaction cost through streamlined business processes and offers competitive price to
customers.

The four main categories of benefits of m-commerce:

Media (Books,
Movies, Games

Finance Data services

(Shopping, (News, Stock,
Auction, M-Commerce Maps,
Booking, Weather,
Banking) Traffic)

Collaboration
(Email, chat,
messaging)

Fig: Benefits of M-Commerce

2. What are the key-drivers for M-Commerce? Explain.

Answer:
Key Drivers for M-Commerce:
i. Popularity of mobile devices: Hand held devices are quickly overtaking the traditional desktops and
laptops and are becoming the primary channel for access.

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ii. Wireless bandwidth advancements: Mobile devices can now leverage enhanced bandwidths offered by
3G and 4G networks in addition to WiFi and Wi-Max.
iii. Local based services: M-Commerce also offers unique ability to get the offers and promotions based on
the current location of the subscriber.
iv. Convenience and affordability: Convenience and affordability of mobile devices.

3. What are the main technologies help to perform commerce transactions using mobile devices?
Answer:
The following are the main technology components which help perform the commerce transactions using mobile
devices:
i. GPRS (General Packet Radio Service): GRPS offers bandwidth between 9.6 kbps and 115 kbps via GSM
network and enables simultaneous receiving and transmission. It is essentially a packet switching wireless
protocol which enables continuous connectivity for mobile devices.

ii. WAP (Wireless Application Protocol): WAP is a protocol that involves Wireless Markup Language
(WML). Like HTML, it provides support for text and image presentation, etc. for mobile devices.

iii. W-CDMA (Wideband Code Division Multiple Access): W-CDMA offers 2 Mbps bandwidth
approximately.

iv. UMTS (Universal Mobile Telecommunications System): UTMS also knowns as 3G network which
offers 2 Mbps approximately for both up-linking and down-linking.

v. Satellite based communication: Satellite based communication provides wide coverage over various geo
locations.

4. What are the attributes of M-Commerce? Explain.

Answer:
The following are the attributes of M-Commerce:
i. Ubiquity: Transaction service access from anywhere in real-time. Whether and stock updates are example.
ii. Convenience: Mobile devices enable access from anywhere and anytime.
iii. Interactivity: Interactivity achieved through responsive user experience.
iv. Personalization: Possible to personalize the experience based on user identification and preference as well
location.
v. Context-aware localization: Using GPS and triangulation techniques it is possible to identify the location
of the user and push relevant promotions and offers.

5. Write the services of M-commerce.

Answer:
The following are the lists of services od M-Commerce:
 Mobile money transfer
 Mobile ticket delivery
 Mobile coupons
 Mobile banking
 Mobile auctions
 Mobile shopping, and
 Mobile marketing

6. Explain the Impediments of M-Commerce.

Answer:
Some of the prominent impediments of M-Commerce are:
i. Mobile security: This is one of the prime concerns which is further increased due to the transactions
happening over wireless networks. Similarly, the security issues related to mobile payment systems is
another limitation.

ii. Mobile network coverage and bandwidth: Wireless networks offering high bandwidths are not available
in all areas posing challenges to commerce transactions.

iii. Mobile experience: Due to the wide variety of mobile devices, operating systems and device form factors,
it requires a design that leads to robust user experience that caters to consumers of all these devices.

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iv. Screen size: Screen size is limiting user experience.

v. Interoperability: Interoperability across multiple networks, protocols and devices also pose challenges.

vi. Web page performance: Web page performance is not optimized for mobile devices resulting in slower
page loads on mobile platforms.

7. Explain the M-commerce Framework with a suitable diagram.

Answer:

Mobile Commerce Application (Payment gateway integrators, Inventory

management etc.)

Mobile Infrastructure

Specialized devices Enterprise-Grade Devices Consumer Devices

Middleware & Application Suppliers

Legal and
Enterprise Platform Consumer Apps
industry
regulation
and
governance
Service Providers process

Content creation & Aggregation

Mobile Infrastructure [Wireless stations, Satellites]

Fig: M-Commerce Framework

 Mobile infrastructure: It includes sufficient cell towers to provide wide coverage and sufficient network
bandwidth for users to have smooth e-commerce transaction.

 Content creation and aggregation: This layer is responsible for generating the content used for m-
commerce transactions.

 Mobile middleware: Lot of enterprises vendors such as SAP, Microsoft provide middleware software for
m-commerce. This layer consists of various tools and technologies to perform following functions:

- Maintaining a device repository of all mobile devices.

- Using device repository for providing most optimal experience and navigation experience.
- Enforce device specific policies.

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 Service providers: These operators are responsible for maintaining the quality of mobile service such as
bandwidth, coverage, availability, reliability and scalability. Some of the popular service providers include
Vodaphone, Idea, Airtel, Jio etc.

 M-Commerce applications: These are the applications running on mobile devices. The applications can
be of two types: Native applications for targeted mobile platforms or browser based applications.

 Legal and industry regulation and governance process; This layer consists of various processes to
comply with regulations at both national and international levels.

8. Explain M-Commerce Application Flow with the help of suitable diagram.

Answer:
Backend System

Wireless Device
Network repository &
Provider Policies Database

HTTP/SSL
Mobile
devices
Middle E-
ware Commerce
Firewall

Firewall
Stores
Product
HTTP/SSL Catalog

Certificate ERP
handling (Pricing/
Inventory)

Payment Bank/Credit
Gateway cards

Fig: M-Commerce Application Flow

1) End user uses one of the mobile devices to perform a e-commerce transaction such as buying the product.
2) The transaction is supported by the wireless network provider by providing wireless network bandwidth
and single coverage.
3) The mobile request will then be intercepted by mobile middleware. The mobile middleware authenticates
the user and the website through validation of certificate.
4) The request reaches the e-commerce store which does a variety of tasks:
 Get the inventory and pricing information from internal ERP ystems.
 Gets the product metadata from product database.
 Gets product attributes from product catalogue.
 User payment gateway to execute the financial transaction.

9. What are the emerging trends in M-Commerce? Explain.

Answer:
The following are some of the emerging trends in M-Commerce:
i. M-Wallet: Using mobile devices for various ranges of financial transactions.
ii. Near Filed Communication (NFC): NFS enable radio communication between smart phones and other
similar devices.

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iii. Mobile coupons: Mobile coupons are expected to become popular at retail stores.
iv. Mobile shopping: Mobile shopping is going to play a major role in the shopping space.
v. In-store personalization: In-store personalization based on mobile app which indicates the available sales
and act as a smart store guide.
vi. Social commerce: Social commerce enablement though mobile devices.
vii. Mobile inventory management: Mobile inventory management using RFID on products and track the
inventory in real time.

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