Unit 1
Introduction
Electronic commerce or e-commerce refers to buying and selling of products and services over the internet or electronic platform. It facilitates the buyers and sellers from different geographical locations to connect with each other for purchase and sale of goods and services without physical interactions. For example purchase of products from online shopping site, purchase of railway tickets etc. E-commerce can be classified into four segments:
1. Business to business (B2B): It refers to buying and selling of goods or services electronically between the companies. Such transactions are bulk in nature. For example, Alibaba.
2. Business to consumer (B2C): It refers to buying and selling of goods and services electronically between businesses and final consumers. It is also termed as retail section of e-commerce. For example, Netflix, Amazon etc.
3. Consumer to consumer (C2C): It refers to buying and selling of goods and services electronically between consumers. Generally, these transactions are conducted through a third party. For example, eBay and Craigslist are online marketplaces where individuals buy and sell products to each other.
4. Consumer to business (C2B): In this type of e-commerce model, individuals make their services or products available for purchase for companies. Here, paintings, images, photos etc. are purchased and sold. For example, Freelancer connects workers and companies.
Key Takeaways-
1) E-Commerce refers to buying and selling of products through internet
The major functions of ecommerce are-
1. The marketing of ecommerce:
Different marketing activities of ecommerce are mentioned below-
• Conduct market research that helps to identify and validate the opportunity as part of the e-Commerce planning process.
• Creation of brand by managing the marketing mix i.e. product, price, place, promotion, process and physical evidence of goods/services.
• Formulate communication and digital marketing plans to create a network with the potential target customer group.
2. The finances of e-commerce:
In e-commerce exchange of money is taken place through online mode. Hence, the business organizations must manage their finances effectively by considering the following elements-
• Establish a payment gateway to guide the order to delivery process.
• Charge system is designed to protect shoppers and businesses. Payment gateway handle the transfer of money back from your bank account to the buyer’s card when there needs to be a refund. These refund transfers are called chargebacks.
• Tracking of financial performance by considering profit and loss on sales, delivery charge, profit and loss on cost, transaction cost, delivery cost etc.
3. The Supply chain of e-commerce:
It is the system that stores and delivers products from producers to the end buyer. Decisions are taken regarding where to store, how to store and who will store the e-commerce products. The business also estimates the cost associated with storage and delivery of e-commerce products.
It also provides services to customers for the scenarios like-
1) If products never arrives with the customer.
2) If the product arrives damaged.
3) If wrong product or quantity is delivered.
4) If the product is stolen.
Key Takeaways-
1) E-Commerce activities includes marketing, finance and supply chain management.
The significant objectives of e-commerce are highlighted under the following points-
a) To reduce management cost:
It reduces cost of management on marketing and communication because ecommerce uses digital marketing tools and social media platforms for communication.
b) To develop business relations:
The e-commerce able to develop better relation between customer and business because of direct communication between them. All issues can be solved within a short period to provide them better satisfaction.
c) To increase customer base:
Digital marketing and communication helps to reach greater customer. Better customer service also helps to retain the customer.
d) To provide variety in choice:
E-commerce able to provide wide choices on product and service because the customers able to access different sellers from wide geographical locations.
e) To increase sales:
The aggressive marketing plans, variety of products, differentiation in products of e-commerce helps to attract more customers and increase its sales accordingly.
f) To boost efficiency in services:
It demands innovations and efficiency in services like delivery process, payment gateway, after sale service etc. It ultimately boosts the efficiency in services and customer satisfaction.
g) To improve brand image:
It improves brand image of the business by planning the marketing mix like product, price, place, promotion, process and physical evidence of e-commerce products and services.
h) To provide customer services:
It is one of the important objectives of ecommerce to provide innovative and better customer service to satisfy their needs.
i) To conduct market research:
It conducts market research to identify the customer needs and preferences, market competition, market opportunity for development of plans for start-up or expansion and diversification business.
Key takeaways-
1) Different objectives of ecommerce includes reduce management cost, develop business relations, increase customer base, provide variety in choice, increase sales, boost efficiency in services, improve brand image, provide customer services, conduct market research etc.
The technical components of ecommerce facilitate to execute the transactions smoothly. Such components are-
1. Web server: It is used to host an ecommerce website.
2. Web browser: It is a software application that facilitates the customers to access the internet.
3. Web server software: It manages access attempts to a website.
4. Web authorized tools: it is used to create HTML & CSS files that connect to integrated database.
5. Database system: It is used to store information about the ecommerce products and services.
6. Technologies: it is used to communicate between the website and database management system.
Key takeaways-
1) Web server, Web browser, Web server software, Web authorised tools, Database system and Technologies.
The popularity of ecommerce is increasing day by day because it is beneficial for customers, business and society as a whole. Some of the benefits of ecommerce are-
1. It provides variety in choices to the customers for products and services.
2. It provides better after sale services to customers increase their brand loyalty.
3. It provides quick and safe delivery of products and services at the provided address.
4. It uses digital platform for marketing and communication which helps to access the target customer group in a convenient way.
5. It reduces the cost of storage, production, business operation, raw material cost etc.
6. It provides 24/7 buying & selling of products and services unlike traditional one.
7. There is no need for physical interaction between buyers and sellers. Thus buyers and sellers from far-away places can buy and sell products and services over internet.
8. It helps to establish and grow ancillary businesses like logistic, marketing firms, packaging material suppliers, internet service provider etc.
9. It saves time of customers by delivering the products at their provided address and convenient time.
10. It provides reliable and valid information to potential consumers to attract towards their products and services.
Ecommerce also suffers from some disadvantages. Some of them are-
1. Sometimes issues related to financial transaction arises due to poor internet connectivity or poor payment gateway.
2. Customers may suffer from theft of money if the payment gateway is not highly secured.
3. Access to ecommerce website is not possible if there is no internet connectivity.
4. Delay in deliver issues arises if the logistic and supply system is not efficient.
5. Due to lack of physical contact sometimes the customers choose wrong products or services.
Key takeaways-
1) It is beneficial for customers, business and society as a whole but it has some limitation regarding security and internet connectivity.
Ecommerce has great potential in developed and developing markets globally. With the advancement of information technology, busy schedule of households, innovations in financial sector and service sector the demand for ecommerce has increased tremendously. Ecommerce has great scope in the sectors like-
• Banking: Internet banking, mobile banking, SMS banking etc. services are provided by banks to the consumers through online.
• Financial service: Financial services like insurance, stock trading, depositories, mutual fund services are provided through their websites.
• Telecommunication: Different telecom companies widely use the ecommerce services for delivering their services to the consumers.
• Transportation: Transport companies like railway, buses, airlines companies etc. provides e-ticket, travel information in mail, phone etc. for the convenient of customers.
• Communication: Ecommerce facilitates quick communication through G-mail, Fax, Wats up, Skype, Google meet, Zoom platform etc.
• OTT: Ecommerce facilitates different OTT flatforms like Netflix, Amazon pime, Disney hot star, Zee premium, sony liv etc. provide entertainment services to the customers.
• Online shopping: Ecommerce facilitates online shopping websites like Amazon, Flipkart, Myntra, Ajio, Snapdeal etc. to sells variety of products and services to the target group.
• Tourism: Ecommerce also extends to tourism sector. Travel tickets booking, hotel booking, travel insurance etc. services are provided online by different ecommerce sites like Trivago, Make my trip, Red bus, Oyo, Goibibo etc. provide tourism services to the customers.
• Real estate: Real estate sector also use the services of ecommerce to sell and purchase flats, apartments, houses, property, rented house etc.
Key takeaways-
1) It has scope in banking, financial service, transportation and communication, tourism, OTT, online shopping, real estate etc.
Different types of e-commerce models are applicable in businesses of different sectors of the economy and its application is growing rapidly. Some of its applications in different sectors are-
1. Retail and Wholesale:
It is successfully applicable in retail and wholesale sector through e-retailing karts or virtual or online shopping websites. Varieties of goods and services are purchased and sold by business to consumers or business to business through convenient models of ecommerce.
2. Finance:
Ecommerce is widely applicable in financial sector. Banks, nonbanks, insurance companies, stock market and other financial companies purchase and sale their financial instruments and services through the online platform with their respective websites.
3. Manufacturing:
In manufacturing, e-commerce forms a medium for companies to execute the electronic exchange. Combined buying and selling, sharing market status, inventory check information, etc. enables groups of companies to smoothly carry out their operations.
4. Auctioning:
It is also applicable in auctioning of products. E-auction facilitates people from different geographical locations to bid for the auctioned products and the owner able to get better price for the same due wide scale participation.
5. Marketing:
Ecommerce and marketing sector is closely connected to each other. Now a days businesses resort to digital marketing to access the target market. Digital marketing is impactful on consumers because it conveys the information in a better way.
6. Online Shopping:
The users of online shopping apps are growing day by day because of its quick delivery, wide choices, variety in payment options, discount and rebates, customer service etc.
Key takeaways-
1) Widely applicable in retail and whole sale, finance, marketing, auctioning, online shopping, manufacturing etc.
Supply chain management means the management of flow of goods and services and it includes the process of transforming of raw material to final goods and then sale it to the final consumers. It helps the producers to reduce cost by managing production, logistic, marketing and sales. The fig 1 shows the supply chain management flow-
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Fig 1: Supply chain management flow
Source: jyler.com
The supply chain management consist of the elements like-
1. Purchasing: The producer purchases raw materials from different sources at competitive prices at right time.
2. Production: The produces manufactures final goods form the raw materials which is offered to the public for sale.
3. Market and sales: Before sale the produces must promote the product in the market with the help of different marketing tools and techniques to attract consumers towards the products.
4. Logistics: It is one of the crucial elements of supply chain management that facilitates transfer of products from the place of producers to consumers. Logistic services are provided by currier service companies, airlines, railways, roadway transport companies etc.
5. Finance: There is huge requirement of funds to manage the supply chain of a company. Such finances are managed from shareholders, banks and other investors.
6. Research and development: The research and development is necessary to identify the need for supply chain managements, improvements and developments for the same.
Key takeaways-
1) Supply Chain Management includes the process of transforming of raw material to final goods and then sale it to the final consumers.
The difference between e-commerce and e-business are -
Sl no. | E-business | Ecommerce |
1. | It indicates running of business using internet. | It indicates trading of merchandise using internet. |
2. | It is a border concept and superset of ecommerce. | It is subset of e-business. |
3. | It carried out business transactions. | It carried out commercial transactions. |
4. | It is of two types-online only and blender of online and offline. | It is of four types- B2B, B2C, C2C and C2B. |
5. | Its approach is ambiverted. | Its approach is extroverted. |
Key takeaways-
1) E-business is a border concept and superset of ecommerce.
References-
1. Kotlar, P. (2019). Marketing management (4th edition.). New Delhi, Pearson Education India.
