Unit V

Electronic Commerce

1.1           E-Commerce Meaning

E-commerce is a combination of two words “e” and “commerce” where “e” stands for electronic and “commerce” stands for carrying out economic activities(buy or sell goods and services).Thus, e-commerce simply means doing transactions (buying or selling)of goods and services electronically over the internet.

In a normal commercial activity transactions are usually carried out by physically going to the shop, selecting the product and paying for it. There are also a lot of paperwork involved to carry out a single transaction but with e-commerce all of this has been changed, a buyer need not to leave his place to carry out a transaction, he can simply sit at his home and with his comfort can browse through a various products at different e-commerce websites and can also transact online through various digital payment modes in few simple steps.

A simple and easiest example of e-commerce is Amazon shopping website through which buyers can choose their favourite products easily and can transact through various available payment modes whenever and wherever they want.

TRADITIONAL COMMERCE V/S E-COMMERCE

Features of E-Commerce

E-Commerce provides the following features −

• Non-Cash Payment – With E-commerce a user always has multiple payment options rather than just sticking to the regular paying in cash mode. A user can always use his cards (credit, debit, smart) or do electronic fund transfer through bank’s app or website or can use Unified Payments Interface (UPI) method to make payments.

• 24x7 Service availability –As we know that e-commerce is an electronic way of carrying out the commercial activity through use of a website which is always accessible by the buyer with an internet from anywhere and anytime.

• Advertising / Marketing – E-commerce has changed the ways of doing advertising and marketing. A business can use on their website some promotional ads, banners, newsletters, subscription services etc.for better advertising and marketing of products and services.

• Improved Sales – Through the use of e-commerce websites the reach of local businesses has increased globally and with various new advertisement and marketing programmes the customers are getting attracted towards these sellers. As the buyers can freely transact from anywhere and anytime the sale has improved very sharply and the sales volume has also been boosted.

• Support – There are various pre and post sales assistance available for the buyers over e-commerce websites which helps a customer to get the best in class service from these e-businesses. The dispute resolution and order queries are handled very professionally and the assistance is provided in a fast timely manner through specialised teams.

• Inventory Management – The inventory is an essential part of any business if the inventory is not managed properly and efficiently the company will bear huge losses. With various specialised apps, tools and automated inventory management through electronic systems this complicated task can be performed very easily and with minimal mistakes.

• Communication improvement – With e-commerce the communication between buyers, partners and other businesses has become more reliable, faster and efficient. Communication is the key to manage any business, without proper communication no business can survive. Through proper modes and channels of communication a business can deliver the best service and good without any complaints and can resolve any disputes with customers quickly and easily.

Models/Types of E-Commerce

E-commerce business models can generally be categorized into the following:

• Business – to – Business (B2B): In this type of business model an intermediate buyer first buys the product from the main source business and then sells the product to the final customer. One of the best examples of such a model is a wholesaler who purchases a product from an e-commerce website with an intention of selling it to the final consumer from its retail outlet after receiving the product. For example, websites like Alibaba (Online Wholesaler & Manufacturer), Slack (Remote communication platform for businesses) are B2B model.

• Business – to – Consumer (B2C): As the name suggest and the simplest form of all models is a B2C model whereby the business directly sells their products to the consumers. On an e-commerce website of a business a list of multiple products are shown to the customer to choose and order from. On placing an order the business organisation receives a notification to dispatch the goods to the customer. For example, websites like Nike (Online store), Amazon (Online purchasing & movie streaming) areB2C model.

• Consumer – to – Consumer (C2C): Under a C2C model the e-commerce website is created in order to facilitate a transaction between two customers whereby one is willing to sell or rent his assets such as car, bike, mobile phone, property, room etc. by creating a post or an advertisement and informing the same to other customers who are in search of these assets. The charges of these e-commerce websites are flexible i.e., charges may or may not be imposed on to the customer for the service provided. For example, websites like OLX (Online buying and selling store), eBay (Online buying and selling store) are C2C model.

• Consumer – to – Business (C2B): Under this model an e-commerce website is created whereby the consumers who are in search of particular services or goods are introduced with the businesses who are selling such goods or services.

A consumer also quotes an estimate price for the desired services or goods and if a business organisation finds the estimated price suitable for them they can contact the consumer directly and then can enter into a transaction of exchanging goods or services. The e-commerce website can also charge a specific percentage of charge or fees from both the parties for introducing them to each other. For example, blogging websites and freelancing websites are based on C2B model.

• Business – to – Government (B2G): It is similar to that of a B2B model but instead of business transacting with another business in here the business interacts with the government to offer its products, services or information online. These websites are officially authorized by the government. This model is also called Business to Administration (B2A) as the businesses engage either directly with the government or the public sector units to carry out transactions or provide information. For example, when business bids online for government project tenders.

• Government – to – Business (G2B):Previous model gives a platform for businesses to interact with the government likewise if government needs to interact with the businesses for auctions, tenders and application submission facilities then this G2B model is used. For example, GST website or e-Way Bill website is aG2B model whereby government asks businesses to provide information and pay taxes on the basis of their financial transactions.

• Government – to – Citizen (G2C): The G2B model is used by the government to approach only the businesses but if the government wants to interact with the general citizen they can’t do it in the same manner as they do with businesses. In order for government to provide certain facilities to its citizens such as auctioning of vehicles and other materials or providing services such as registering and issuing certificates of birth, marriage or death this model is used to process the requests of citizens in more efficient and timely manner.

For example, government websites for paying college fees, driving license renewal websites, Aadhar card website, voting card website, ration card website, municipal corporation websites etc. are all based on G2C model.

• Peer to Peer (P2P): It is more of a technology which helps the users to directly share their computer files and resources with other users without actually accessing the central web server. This technology is based on a common software platform which is required to be present on both sides. It is mostly free to use and does not generates much revenue for businesses engaged in e-commerce.

• M-Commerce: With advancement in technology this model has emerged, it is based on easing the transactions by carrying them out through user’s mobile phones. The consumers with access to mobile phones can now easily transact with sellers in few simple touches on their phones. They can interact and transact with the seller instantly through their specially optimized apps and websites and thus provides a convenient, easy to use and user friendly interface.

E-Business

E-business is a broader term then e-commerce and includes e-commerce as one of its activity. The e-commerce is simply the process of buying and selling of goods or services electronically while e-business is not just limited to that it also includes after sales services to customers and connecting various business processes directly to its customers, vendors and suppliers. This helps in boosting the performance of the business and thus creates value for business through establishing new relations between and among the businesses and customers.

DIFFERENCE BETWEEN E-COMMERCE AND E-BUSINESS

SN.	E-BUSINESS	E-COMMERCE
1.   2.   3.   4.   5.

E-Business enables an organization to accomplish the following goals:-

• Exploring new markets
• Creating newer products and services
• Building loyalty among customers
• Optimum utilization of existing and emerging technology
• Achieving market leadership and gain competitive advantage
• Enriching human capital

Activities of e-Business

As we already know that e-Business is not just limited to buying and selling of goods and services online but it also includes many other online activities which together constitutes e-business, such as:

• Business Intelligence Reports
• Customer Relationship Management
• Supply Chain Management
• Enterprise Resource Management
• E-Commerce Activities
• Online Transaction and other activities between businesses
• Collaboration of businesses
• Electronic transfer of Information within and outside of the firm

1.2           Advantages and Limitations of E-Commerce

E-Commerce Advantages

E-Commerce provides various advantages to its users. On the basis of users these advantages are divided into three categories:

• Organizational Advantages

      Easy Market Expansion: business can be easily expanded within national and international boundaries and that too with a minimum capital investment-commerce websites has far more reach ability then normal sales channels and can easily target more customers, suppliers and business partners all around the world.

      Cost Reduction: Using e-commerce the organizations can reduce its costs of operations as most of the minor work is processed through online system and the organization just has to handle the main processes

      Digitized Information for faster work: The e-commerce website digitizes all the information and makes that information readily available wherever and whenever concerned person requires it in just a few simple clicks.

      Less Paper dependency: As most of the work is carried out digitally the paperwork dependency has been marginally reduced thus improving the overall speed and time taken in order receiving, processing and delivering.

      Brand Image Improvement: With the availability of better advertisement and marketing techniques e-commerce websites helps an organization to target the customers much easier and effectively and thus can improve their brand image.

      Improved Customer Care: With options such as call centres, instant chat, email etc. the organizations are able to provide its consumers with much faster and instant solution to queries and thus improves the overall customer care and after sales services experience.

      Simplification of Processes: The e-commerce websites automates and simplifies the complex business processes and helps in improving the efficiency and effectiveness of the organization.

      Increases Overall Productivity: The e-commerce websites helps an organization to easily manage and automate their customer orders, inventory management, delivery mechanism etc. all at one place and reduces the time consumed in performing all these activities individually thus increases the overall productivity of the organization.

• Consumer Advantages

      24x7 Availability: Anyone with the internet connection cans access-commerce websites to enquire and place orders of required products or services anytime and from anywhere.

      Faster Delivery: The organizations are adapting to faster and newer delivery channels for buyers which help in delivering the products quickly and easily.

      Availability of multiple options: There are a lot of e-commerce websites available selling identical products and increasing the competition thus giving buyers multiple options to compare and purchase the best and the cheapest product.

      Ease of Access: With time the user interface of e-commerce websites is being more and more user friendly. This improves the ease of accessing a product and purchasing it faster and easy.

      Access to Feedbacks: Whenever a customer purchases a product the websites compel them to write an honest and true review or feedback regarding the product or the service so that it can be used by other customers to decide the better product from the options available.

      Global reach and Availability’s-commerce website is globally accessible thus making it available to all the potential buyers who are in search of a better and cheap product to buy.

      Readily available Information: The information on e-commerce website is readily available to be accessed anytime and from anywhere within seconds instead of waiting for days to get response for their small queries.

      Access to Huge Discounts: As there are multiple e-commerce websites available nowadays the competition among organizations has increased a lot thus in order to stand out from the crowd many organisations provide huge discounts to its customers in way of coupon codes or gift vouchers so they can target more customers and can push up their sales.

• Societal Advantages

      Low Traffic and Air pollution: Nowadays user need not to actually leave their house to shop for a product or service instead they can shop online using these e-commerce sites. This helps in lowering the air pollution as vehicles roaming on streets for small shopping needs can now stay home and helps in reducing the traffic on the streets.

      Affordable products: There are many options and huge discounts available for products on e-commerce website which helps the mid and low income households to afford products which they were not available to buy earlier.

      Access to Rural Areas: Many e-commerce websites has increased their delivery base and started delivering to areas where these services and products were undeliverable earlier which gives rural areas access tone options of necessary products and services and thus helps in the development of rural areas.

      Government help: With e-commerce the government is now able to provide and deliver healthcare, education and social services at a reduced cost which was earlier not possible in such low margins.

E-Commerce Limitations

Despite providing so many advantages there are certain difficulties faced by e-commerce in accurate and timely execution of transactions which can be divided into two major types of limitations:

• Technical limitations

      Lack of Security and Reliability of Data: Every user must watch their privacy and security of data while using an e-commerce website. Many e-commerce websites are not reliable and their standard of security is very low due to poor implementation of security measures as a cost reduction technique.

      Rapidly Changing Industry: The e-commerce industry is changing very rapidly newer developments are happening every day, these changes are hard and a bit costly to implement in an already established system again and again.

      Limited Network Bandwidth: A network is the key to access any e-commerce website, without proper network speed user will not be able to transact correctly over these websites. A small network drop while making payment will cause a user to lose his money from bank account and such issues are persistent in many areas, these unreliable network acts as a hindrance for both users and businesses.

      Special Hardware and Software Requirements: With advancement in technology the website creators are making newer and attractive contents for the users which require additional software to present the way they are meant. Also, special servers and e-commerce environment is sometimes required for different people to access business related particular information.

      Integration Difficulties: Every e-commerce software and website is created to work together with existing application and database thus providing users with seamless transacting experience but many a times this integration becomes difficult as the specific requirements of these websites and software’s gets different from each other which results in failure of providing better experience to the users.

      Hidden Costs: Many websites show users less price for a particular product which looks lucrative but while making payments higher amount is charged then the original quoted price from the users. These charges are mostly taken by the websites in the name of shipping cost or handling charges or payment processing fees etc. and are hidden costs which are a wrongful practice by some-commerce websites.

      Compatibility Issues: Newly created websites are mostly compatible with the latest software/hardware technologies but the websites which are older faces certain compatibility issues while displaying contents over a browser such websites also have lower security as latest security developments are not properly implemented on them.

• Non-Technical limitations

      Preliminary Cost: Every business incurs certain expenses while starting a new business which is also known as start-up cost, the same is true for e-commerce also. This cost can either be of creating website or management of inventory or to buy a domain name etc. without this one cannot proceed further.

      Resisted by Users: This e-commerce trend is latest and can easily attract newer generation but there are certain people who face issues in trusting unknown faceless sellers. Such users often resist these kinds of online e-commerce sites and prefer buying from physical stores instead.

      Privacy and Security Concern: There are multiple users who face security and privacy issues with their online transactions. With an increase in hackers and spammers it is becoming difficult for e-commerce websites to protect the users private financial data.

      Lack of Personal Touch or Feel: There are many buyers who get confused while buying online products by just watching at photos and videos. Such buyer prefers a physical touch, feel or sight of the product they are buying and is the major drawback of any online shopping.

      High Internet Access Cost: The internet access plans are not that cheap and many remote area users are not able to afford such cost thus e-commerce is still not able to reach many potential consumers due to high internet access cost.

1.3           Role of Strategy in E-Commerce

In simple words, a strategy can be defined as a summary of your plans in order to achieve your desired set goals and targets. Strategy is formulated by considering the goals, the uncertainty of events, and the actual behaviour of buyers. The main constituents of every strategy are:

• Strategic Intent: The purpose of existence and priorities of the business.
• Mission: It defines what an organization does, whom it serves and what gives it a unique identification.
• Vision: The place where the business intends to see it in the near future.
• Goals: General guidelines to fulfil the long term mission and vision of the business.
• Objectives: These are actions or steps taken by the organization to achieve their predefined goals in a fixed time period.

Every business either offline or online is based on proper plans and strategy to make sure that every step they are taking is to achieve their long term objectives. A business needs to devise a working strategy to achieve the targets they have in mind. A proper planning and strategy is must for any type of business without which there is a risk of failure and deviating from predefined goals and targets.

Strategy acts as a general guideline which guides business to make sure their end result is efficiently and effectively achieved. An effective and thoughtful strategy helps the business stay on the tracks, achieve their set goals and also improve their market position. The strategy for a business is also dependent on its goals. There are multiple strategies available but the business must focus on those which help them to achieve their targeted goals faster.

Strategy plays a very vital role in the success of a company. A company will not be able to proceed further as per prior plans without a proper strategy. The role of strategy in success of any-commerce website can be understood through the following:

• Sustainability and Competitive Advantage: Any organization must know its market position in comparison to its competitors so as to know where they are lacking and correct these gaps with appropriate actions. Once the business knows better about themselves it can have a better competitive edge against others. A good planned strategy helps a business to beat its competitors and stay ahead of the competition so it is important to invest some time in strategy formulation rather than just acting on the current market situation.

It is simple logic that if your competitor is providing better product or service at a much competitive price then for sure he will take away your customers and your business. Thus, it becomes necessary for any business to know the market and competitors in into become much better, faster and fresher than others.

Only if business knows its strengths and weaknesses, work towards correcting them and stay focused on their vision and mission they will have both sustainability and competitive edge in the market.

• Customer Conversion: Conversion is simply pushing a customer to that point where he actually decides to purchase the offered product or services. There are many customers who comes to your site, browse through various products but they actually don’t buy anything this happens because of certain holes or gaps in your website through which the customers leaks out. In order to push a customer to purchase a product or service you have to fill in these gaps.

Now these holes or gaps could be anything they could be slow loading of your site, high price of the product, product search issues, bad feedbacks, unavailability of stock etc. These are the weaknesses of your e-commerce website which a business should overcome through proper strategies. These may look like small gaps but may cost you a lot in the long run. In order to stay in the market the business must formulate proper strategy to fill in the holes and convert these potential customers to actual customers.

• Guide: A strategy acts as a guideline to implement the long-term plans of your business. Without proper strategy a business will never know how well they are doing in the market in comparison to its competitors. These strategies keep the business on tracks and let the customers flow in. Thus, proper strategy is a guideline for businesses to make them succeed in the long-run.

• Identification of Opportunities: With proper strategies a business can easily adaptor the upcoming trends and opportunities and make their organisation ready for the change. The trend and market keeps on changing due to various political, social and technological factors moreover the customers, their taste& preferences also keeps on fluctuating thus it becomes important for businesses to devise strategies and tactics to modify and develop themselves to identify and tap future opportunities.

• Vision: Strategy gives vision and direction and helps the individuals within an organization to work collectively towards the attainment of organizational goals. With strategy the employees doesn’t lose sight of their aim. These strategies are formulated by the top management and are then implemented through mid-level managers so as to align the whole organisation towards attainment of one motive.

The formulation of strategy is not a difficult task but implementation of these strategies within the whole organisation is harder as proper and filtered communication is must for adhering to these strategies. Implementing these strategies within an organisation is a very crucial step as it gives everyone an excellent vision and also helps managers of each department in decision making.

• Building Brand Recognition: The creation of business strategy not only gives a competitive advantage to the organization but it also creates a brand image in the mind of the customers. Whenever a customer decides to purchase a product or service he will think of your brand name and will lean towards purchasing your product. These strategies will make your business survive in the long run and helps you to create a better and stronger brand image into the market which will always give the business a competitive advantage against its competitors.

• Optimum Utilization of Scarce Resources: Every organisation has limited resources and these limited resources have multiple uses. These resources have to be used optimally which means that the business has to make and implement such strategies which minimises the wastage and maximises the production through proper usage of these scarce resources. Thus it is necessary for every organisation to formulate strategies so that they can utilize these resources in activities which increases the output of the organization.

• Protects against sudden change in external environment: Every business organisation has to interact with both internal and external environment in order to operate effectively. The internal environment includes employees, machinery, stock etc. of the organisation which is a controllable factor but the external environment which includes the customers, creditors, political parties, latest trends etc. are beyond the control of any business thus it is very much necessary for a business unit to formulate strategies which helps them in the ups and downs caused by the sudden change in these external environmental factors. With proper strategies a business can anticipate early about these changes and can prepare their organization to adapt to them through proper action plans.

• Supports Long term planning: The main task of every strategy is to formulate tactics for implementation and success of long term planning. Without proper strategy no plan can survive for long. Here with long term planning we are not just focused on some 1 year or 2 year plans these long term planning’s are done for 5 years or 10 years and in such a long time it is normal for any business to divert from their main plans so in order to help the business stay focused and stay on the tracks a strategy plays very vital role. It makes you ready for any situation which might be favourable or unfavourable for any business organization.

• Helps to capture newer and larger markets: With proper implementation of strategy it becomes easier for any organisation to capture any market whether it is new or of any size. Whenever a company tries to enters into a new market the already existing business units always tries to outrun them and won’t let them capture their market share but if the business before entering into a new market formulates proper marketing, sales and production strategies by understanding their competitors, customers, products and prices, they can give tough competition to the existing firms and also can get a competitive edge. This is the main reason why any business should formulate strategy before entering a new market or if they want to capture a larger market.

• Optimizing and Increasing Profits: Strategy always keeps an eye on the near future which helps the businesses to prepare themselves for the unforeseen and unavoidable changes in the market. If the business timely prepares itself they can easily optimize their profits and losses. Strategy can help tighten up the complete process and operations within an organization and thus contributes to increased profits.

• Improving Marketing Communications: Since a business is already analysing the markets, its latest trends, the customer’s needs and preferences they can easily design strategies to improve their communications. There are various marketing, promotional and communication strategies which can be used to cover the communication gaps and target the customers much easily creating a brand equity which is of much use for any business in the long run.

• Helps with gap analysis: The main hindrances in the growth of any business are the various gaps such as service gaps, expectation gaps, communication gaps etc. which happens most of the times. If proper strategies are not formulated to analyse these gaps they will affect the current performance of the firm and the organization will incur huge losses in near future. Thus, a proper effective gap analysis is important which can only be possible if proper strategy and action plans are formulated and the current performance of the firm is analysed from time to time through them.

1.4           Value Chains in E-Commerce

This concept was first described and formulated by Michael Porter in 1985 which specifies a series of activities performed within a firm of a specific industry. This model states that whenever a product is passed through a chain of activities within a specific order the product gains some value. Every activity in this chain adds certain value to the total sum value of the product.

The main base of value chain model was the various processes performed within an organisation, this idea emerged to Porter after carefully examining the operations performed in a manufacturing organization. These operations are performed in a series of systematic activities such as input, transformation, processing and output with various resources (money, labour, material, equipment’s, machinery etc.).

A person can easily determine the cost of the product by examining the ways all these value chain activities are carried out. This value chain framework was the most powerful analysis tool used by the management for strategic planning activity.

We can use a diamond cutting profession as an example to easily understand this concept. A raw diamond has lesser value when it is first bought by a diamond seller. When the seller passes the diamond through various cutting and polishing activities then every activity adds up to a certain value to the total valuation of the diamond. Here, the diamond polishing and cutting activities has lower cost than the value they have added to the final diamond piece.

Porter’s Value Chain Model

According to Portal, most of the organizations involves into hundreds or even thousands of activities in order to convert the raw inputs to final outputs. So, he divided the activities into two groups i.e., primary activities and support activities that all businesses must commence in some way or the other.

Primary activity includes:

• Inbound Logistics: It includes activities related to maintain relations with suppliers and receiving, storing and circulating of raw material inputs.
• Operations: The activities of performing operations on raw inputs so as to process and transform them into finished final goods.
• Outbound Logistics: All the activities of warehousing (collecting and storing), fulfilling customer orders, transportation and distribution of goods are performed under this.
• Marketing & Sales: Activities which facilitates sale of a product such as advertising, promoting and other marketing tactics are performed here.
• Service: Those after sales activities (customer support) which help in solving and providing appropriate solution to the customer’s queries or issues related to their orders or products.

Support activity includes:

• Procurement: The activities involved in purchasing or procuring inputs or resources for the organization are performed under this.
• Human Resource Management: Activities related to recruiting, training, retaining, compensating etc. of human manpower and treating them as resources is a task of HRM.
• Technological Development: All the implementation and development of latest technology, machinery, equipment, product, and service etc. for better and faster conversion of inputs to outputs are maintained under this head.
• Infrastructure: It is the main part or body which ties all other parts of the organization together and involves various functions or departments such as general management, planning committee, legal department, finance department etc.

These value chain activities are all linked with each other and are non-separable thus they affects the cost or performance of one another. Both primary and secondary support activities are interlinked and acts as one to produce better production and working within an organisation.

Inbound Logistic are from Supplier and Outbound Logistic are from Customer

Impact of Value Chains on e-Commerce

The Value chains have the following impact one-Commerce activities:

• Role of Intermediaries: Nowadays, intermediaries play a vital role in e-commerce business as most of the rapidly growing business requires middlemen to boost up their sales. These intermediaries provide customers with a wide range of selection among products, a specialized distribution system for faster delivery and expertise in services with faster customer cares. They add better value to the business than many useless sales staff and also provides boost in sales and profit volumes for the business.

• Value Pricing: With Value chain analysis the businesses can redefine their pricing strategies they can either offer heavy discounts on products to attract customers or they can quote the offline store prices and transfer the website customers to their offline stores. But these are less effective methods as they do not maximize the value of their product so the best alternative approach is to trace the buying habits of customers and adjust the prices accordingly over the internet so as to capture newer market areas.

• Brand Differentiation/Loyalty: Every company uses different tactics to differentiate themselves from their competitors such as, different pricing, different packaging, coupon codes, etc. Another way is promoting brand loyalty with which customers can be targeted to remain as a repeated customer for longer period so that the profitability is stabilized and also these loyal customers will attracts or refer new customers to the suppliers.

• E-Procurement: The purchase and sale of supplies, work and services through the internet between different organizations is termed as e-procurement. This technology is used by different organizations to outsource various activities such as delivery, logistics, purchasing functions etc. This helps the organizations to reduce cost, time and afford better services for their customers.

• E-Fulfillment: These services help a supplier to reduce the time taken in order fulfillment activities. Through internet now the orders are instantly accepted and information of the order is directly sent to the order processing system which has shorten the expected and actual lead time taken in a traditional fulfillment system.

• Value Nets: This method helps in transferring information and establishing cooperative and productive relations among the four direct influencers of any business i.e., customers, suppliers and competitors on a regular basis. This gives a competitive edge to all the participating businesses of a value net and also helps in resolving and addressing the problems and queries of a customer instead of just selling the products.

1.5           Infrastructure of E-Commerce

When multiple components of business and technology are combined together they form an infrastructure of e-commerce. Each component in the infrastructure is of utmost importance, as there is a continuous interaction going on between each part all the time and a small failure in any of the component will result in issues for implementation of e-commerce.

The infrastructure begins with basic technology layer and goes all the way back to service layer. The following figure gives a better view at the basic infrastructure and its various layers in e-commerce environment:

1. The First Layer - Network Infrastructure:

It is an interconnection of all the resources of a network which connects together to form a network connection. Only through this network infrastructure it is possible to communicate and perform all the business operations online. It comprises of different hardware’s, software’s, systems and devices all combined together to establish communication between different users, services, applications and processes. This involves:

      Network Connection Types: Intranet, Extranet, LAN, WAN and MAN.

      Network Communication Channels: Twisted Pair, DSL Line, Optical Fiber, Wireless, Satellite, Micro Wave.

      Hardware’s: Servers, Proxy servers, Firewalls, Encryption devices, Interactive voice response (IVR’s).

      Software’s: Content management systems, Web analytics, Text analytics, Application programming interfaces (API), Database servers.

II.     The Second Layer - Multimedia & Network Publishing Infrastructure:

This layer provides an architecture which allows multimedia contents such as text, sound, images and videos to be developed and displayed with the help of various markup languages. This layer acts as a medium to create and exhibit all the electronic data and multimedia contents over the network. It consists of the following contents:

      Network Publishers: WWW, VRML.

      Multimedia Contents: Text, Video, Audio, e-books, computer games.

      Multimedia Content Languages: HTML, XML, JAVA.

III.     The Third Layer -Messaging and Information Distribution Infrastructure:

All the data and contents in an e-commerce infrastructure are transported around the whole network through this layer. A medium is required to send and receive the created multimedia content which is provided by this layer and includes:

      EDI: Electronic Data Interchange can be defined as a process to transfer and communicate confidential business information without any human involvement.

      E-mail: Electronic mail is used to communicate non-formatted data and acts as a formal medium to communicate with others.

      HTTP:Hyper-Text Transfer Protocol is a protocol used to distribute, collaborate, and display the non-formatted multimedia in a formatted way so that users can easily communicate over various platforms.

      URL: Uniform Resource Locator is used to locate the various multimedia contents or websites over the network. It is the address of the web items.

IV.     The Fourth Layer -Common Business Services or Security Protection Infrastructure:

The most essential layer is the security protection layer which is necessary for doing business and provides security, safety and reliability in every transaction. The main aim of any transaction is to securely process the payments for sellers and provide sold products to the buyers. In order to ensure secure transactions there must be reliability, integrity, relevance, privacy and non-repudiation of data which is the responsibility of this layer. The following facilities are included in this layer:

      Standardized Product Catalogues and Price Lists

      Electronic Payment Methods

      Secure Transmission of Information

      Identity Authentication of both parties involved

      Privacy & Security of Data

V.     The Fifth and Final Layer -Interfacing Infrastructure:

The final layer is the top most layer or interface which the user sees and interacts with. This layer is the main output of applications and options which users can watch and which facilitate them with better browsing, selection and transactions of the products they wants to purchase. This layer includes:

      Databases

      Applications

      Feedbacks

      Reviews etc.

VI.     Other Components:

There are many other components built on the foundation of above mentioned infrastructure which enables seamless working of e-commerce:

• People, includes all the external and internal parties which directly or indirectly influences the work of an e-commerce. These parties are extremely important for any e-commerce and include all the buyers, sellers, intermediaries, service providers, peoples and management related to the business units.

• Public policy, are all those rules and regulations under which every e-commerce business has to operate. These laws are created to protect the consumers and sellers with privacy and security of their personal data during electronic transactions. It includes taxes, legal issues, privacy concerns and security measures.

• Technical standards are the universal agreement or format within which the electronic data is transmitted within the network. If stored data and data transmitted over the internet both are in different formats then it will cause data discrepancies and issues. With technical standards data can be seamlessly transmitted over various networks and standardized information can be maintained. It includes, network protocols, electronic payment systems, document security etc.

• Organizations includes all the business partners, competitors, associations and government services which directly affects the working of the business and must be given appropriate and timely information regarding the business.

All the above mentioned components continuously interact with each other at the back to provide its user a much faster and seamless visual experience through various applications of e-commerce. These e-commerce websites can be used to facilitate banking, procurement and purchasing, m-commerce, marketing and advertising, home shopping, publishing, travelling and many other activities.

1.6           Web based tools for E-Commerce

Web Servers are basically a combination of software and hardware used to fulfill the requests of client computer on a WWW. It contains one or multiple websites which is retrieved on the request of clients over HTTP or other protocols. Apache HTTP Server, Microsoft Internet Information Server, Netscape Enterprise Server, O’Reilly’s Website Professional are some of the popular web servers.

There are three elements in every web server:

Web Server Hardware and Performance Evaluation

• Web server hardware’s are physical and tangible components which are responsible for storage and retrieval of data of websites for smoother and accurate flow of transactions.

• Performance evaluation is assessing and finding out the best combination of hardware and software which can handle the desired user requests as planned by the business unit.

• In order to choose the best performing web server benchmarking index is used. Benchmarking is testing and measuring the performance of web servers and ensure that the server is capable of handling high request loads from users.

• Benchmarking helps a business to decide:

• The actual performance of a website can be determined with the following tools:

• Benchmarking tools: A variety of online tools are available to perform stress test and check the performance of a web server. Some of the widely used tools are:

Server Operating System

Just like a normal operating system server operating system or server OS manages all the hardware, software resources and delivers a common platform for execution and running of applications on to the servers. With the help of OS the server can perform various roles of Web server, Mail server, File server, Database server etc.

There are various operating systems available in the market but the most widely used includes Windows Server (2000, 2003, 2008, and 2012), Mac OS X Server and many Linux variants such as Red Hat Enterprise Linus and SUSE Linux Enterprise Server.

Web Server Software

The web server software helps a normal computer to perform and act as a server over the network. They are usually available behind the Firewalls on the network. Their duties and features are dependent on the software package used and the place where they are publicly accessible. Earlier web server software’s only supports the static files (HTML) but the today’s latest servers are capable of running server side applications very smoothly. The web server software’s have the following features:

Web Server Tools

There are multiple tools and techniques available to support a web server to work effectively and efficiently. These tools include:

• Web Portals

These are specially designed and customizable single source of all information for its users. These portals collect all the information from various varied sources such as emails, search engines etc. and displays the most relevant one sin a convenient single user interface. Every piece of information has a dedicated area on the page to display which can be easily customized. This helps a user to conveniently search, navigate and perform other activities in a single click. Amazon, Yahoo, Excite, Microsoft Start are common examples of portals.

There are multiple types of portals such as:

• Web Protocols

Protocols are simply rules and regulations which are predefined and have to be followed in order to communicate properly and correctly. In order to understand and communicate each other both the devices and networks must follow the same protocols. A web is based on three protocols:

There are various other protocols available that are used for different types of communication:

• Search Engines

It is an internet tool used to find meaningful information from a whole bunch of websites over the internet. This tool shows the users searched content in a search result page which has a wide variety of list including WebPages, images, videos and other file types. A typical search engine includes the following three parts:

• Push and Pull Technologies

This is an automated delivery mechanism for specific or newer information where the transmission or communication is pushed/provided by the central server or sender and the same is pulled/cached by the client server or receiver upon requests. A classic example of pull technology is search engines and hyperlinks while that of a push technology are banner ads and e-mails. A push technology can be used for various latest updates, changes in policies, awards information and providing other relevant information’s.

• Intelligent Agents

It is a combination of both hardware and software that is autonomous and can act as per user’s request. Intelligent agents can be directed towards achieving a particular objective. They can observe or take inputs through their sensors and act upon them with the help of consequent actuators.

These intelligent agents can automatically collect data and information of its environment through the internet without anyone’s help. It acts as an agent for the user and completes the task through their artificial intelligence. The most common examples of these intelligent agents are AI assistants like Alexa and Siri. These intelligent agents can be used to achieve multiple objectives some of these include:

• Web Hosting

Web hosting is a process to upload your whole website, its codes, media, and all relevant files to an online server. Web hosting site provides space to your website to store its contents on an online web server. These hosting services have their own servers, high rate of connectivity and various other services associated for better hosting of a website. These services are divided into various hosting plans which can be purchased as per your business needs.

This process is similar to that of renting or buying a space but you are doing this on web and that for your website’s contents (HTML and CSS codes, media files, links etc.) so that they can be accessed anytime from online servers. The reliability and costing are two important factors which must be considered before purchasing a hosting plan as there are many hosts available but which are more reliable and cheap is the main deciding factor.

As soon as a user types in the URL of your website in address brand hit enter the browser requests the web server which is hosting your website files and in response loads your website. Thus, a good hosting site and better plan will give you the benefits of fast website loading and reliability for you visitors.

There are basically five types of web hosting servers differentiated on the basis of the level of management available, additional services offered and the technology used for the hosting server. These are as follows:

Website creation and management tools

In order to create and maintain a website a user is required to learn many code languages such as HTML, C++, and Java etc. which is not possible for a small business owner but there is a solution for this in the name of website management tools. With the help of these tools anyone can easily build, update and maintain a website by themselves over time. Some of the easy to use tools include: Wordpress, Gator Website Builder, cPanel, Google Analytics, Joomla, Magento etc.

Website Validation tools

These tools are used to ensure that all the pages within a website are under the norms or standards as specified by various organizations. This helps to ensure that the website pages are interpreted by various components, search engines, users and visitors in the same way the user wanted it to be. The website code is strictly required to be set as per the W3C Organization and passes various CSS and XHTML validations.

Validation ensures that your website is accessible to more people, browsers and operating systems as validated websites has better web designs and is seen as a plus point among the visitors.W3C Markup Validation Service, W3C Internationalization Checker, GTmetrix, Nibbler, Screenfly, Uptrends, Dead Link Checker etc. are some of the validation tools.

Website Development tools

Website development is simply working with the website codes in order to maintain and develop the already created website. These tools ensure that website works faster, loads quickly, performs well and provide users with a seamless browsing experience. Websites are usually developed by developers who use variety of coding languages to develop websites but since these tools are readily available for users to make changes to the website so it becomes easy for non-coders to also develop better websites much faster and at a lower cost. Some of the common website development tools include: Chrome DevTools, Sass, Grunt, CodePen, TypeScript, GitHub, JQuery, Bootstrap, Visual Studio Code etc.

Cost Analysis while building a new website

While building a new website there are various factors which needs to be considered so as to calculate the overall cost and usability of the website. These factors can be divided into:

• Web hosting Cost
• Domain Name Cost
• Content creator Cost
• Graphic designer Cost
• Website developer Cost
• Marketing and other related cost

1.7           E-Commerce Software

E-commerce software are specialised applications that facilitates an online store to manage all the processes and activities involved in carrying out a normal business such as inventory management, addition and removal of products, processing payments, computing taxes, fulfilling orders etc. much faster and effectively.

Every online website includes a series of complicated processes which are executed in a sequence. The e-commerce software helps in the smooth flow and execution of these processes through its user friendly interface and quicker speed. These software’s can easily be integrated within other platforms and services such as CRM, ERP, DBMS, payment gateways, accounting applications, social media services etc.

Types of Ecommerce Software’s

E-commerce software’s can be divided into two basic categories:

• Software On-Premise: Such type of software’s are installed on to a local server or a computer and are fully managed by a team of on-site users. This team handles all the manual updates, troubleshooting and problem fixing. At the beginning most of the e-commerce websites were based over this on-premise software as it allows greater management.

• Software as a Service (SaaS): Also known as hosted solutions are based on one click integrations and are hands off approach where all the updates, patches, new features etc. are integrated automatically through a single click. This provides better customizability and flexibility over on-premise software’s and is also affordable.

Functions of Ecommerce Software

E-commerce software integrates itself with other apps and services to provide users with ability to perform many other important relevant tasks such as:

• Managing customers and their orders: Whenever a customer visits an e-commerce website he browses through various products, selecting them by adding to their shopping cart and finally proceeds with the payment. Thus, it is essential for every website to manage this whole order cycle from product selection to delivery for each and every individual customer so that these transactions can be efficiently and conveniently carried out. This whole process will be taken care of by this e-commerce software either with the help of some other third party services or on its own. This software is capable of recording transactions, managing customer information, creating and updating billing and invoicing activities, undertaking all the accounting and providing the analytics and reports to its users.

• Management of products and inventory: With the help of this software it becomes easy for a business to manage both the products displayed on the websites and the inventories they have at the backend. These software’s are capable of sorting out of stock products, filter the searches as per customer’s needs, organize the catalogue items (names, images etc.); notifying the low stock inventory, reordering of products and many other such tasks can be managed.

• Marketing: There is a built in feature of SEO (Search Engine Optimization) which helps an online store to make their website rank higher in various search engine rankings which in return helps the store to get more visitors and thus lowering the overall marketing cost of the business.

• Automated taxes and shipping bills: Calculating the various taxes involved in selling and delivering a product to customer’s location, sending notifications to customers through e-mails, printing shipping bill labels and many other such tasks is a cumbersome and tiring work but with e-commerce software it becomes quite easy and fast as all of this is done automatically and accurately once an order from the customer is received.

• Enhancing customer experience: This software is so user friendly and customizes the whole experience of the user as per his needs and preferences. A customer can easily and efficiently find the product of his choice with 100% uptime and simple website management system which is meant to provide the best shopping experience to its users.

Process of Ecommerce Software

Whenever a seller transact over an e-commerce website there are a lot of steps and processes involves which are taken care at the back by such software’s. The smooth flow of any website is ensured by the software’s by taking these following steps:

• A website includes database which stores different information related to the various products, categories and customer personal information which is retrieved by the software’s on arrival of a shopper.
• There is a virtual shopping cart available to the customers thus whenever a customer likes a product and wishes to purchase it they can transfer that particular product and to the shopping cart which is also stored within databases and is retrieved through software’s.
• On reaching the checkout stage the software takes the customer to a secure area which is identified through a lock symbol denoting SSL certificate.
• At the time of checkout e-commerce website uses a third party software or services so as to provide its customers with much better payment options, shipping rates, delivery tracking facilities etc.
• In order to process the payments of the customers a third party payment gateway such as PayPal is used so as to make the whole payment experience much easier and smoother. The user just has to enter his card details and click to pay the rest is taken care by these payment gateways.
• Once the payment is processed the payment gateways stores all the sensitive financial information with them and redirects back the user to the seller’s website where he receives a confirmation of his order. The user’s sensitive information is kept by the payment processor only and is not shared with the e-commerce website thus ensuring safety and security for the user.
• This process ensures that the payment for the order has been deposited with the merchants account and if in case of failed transactions deducted amount is safely deposited back to your account.

All the above steps are performed through efficient e-commerce software which only takes a minute or so from ordering to processing your payment and are the most convenient and secure way. With these software’s the users can transact worry free and the sellers gets the advantage of operating their stores flawlessly and in the most responsive ways.

Advantages of Ecommerce Software

Here are certain advantages of using ecommerce software:

• Easy set-up of an e-commerce website: There are various e-commerce software’s which provide it’s users with store builder option which is an easy to use and more user friendly method to build an e-commerce website. It has pre-defined templates, themes and drag-and-drop facility using which a user can easily add, edit, delete or change product and websites images, description and other media contents.

• Always open and automated store: The e-commerce software is always up and ready which makes your e-commerce site running 24x7 irrespective of geographical boundaries. Once the store is set up the e-commerce software automatically starts taking care of all your transactions you don’t have to manually keep monitoring it which is one of the biggest advantages of using-commerce software.

• Sell to anyone, anywhere: These online websites can be accessed by anyone and at any time through an internet connection which helps businesses to gain access to many potential customers from various locations around the globe. The products of a business have global reach and newer market can be easily discovered increasing the sales and revenue for the business.

• Saving time, money, and resources: Any business operating in an offline form costs more in comparison to online businesses as in brick and mortar stores the business has to bear the rent expenses, staff salaries, utility bills and other unwanted cost. Also, these offline stores demands expensive resources and time to set up and operate them efficiently. While in online stores, businesses bear very minimal charges and most of the activities are automated which helps in saving the cost, resources and time of the business.

• Able to sell more products: Every offline retail store has limited storage capacity due to which the display and selling of most of the products are also limited. The taste and preference of every customer is different and covering every customer’s needs is almost impossible but with e-commerce website a large number of products can be displayed and sold. The customers now have the option to search and view a huge catalogue of products and purchase them easily which results in higher returns with lower costs.

• Easy to use online payment and shipping: The shopping cart combined with e-commerce software facilitates users with smooth and easy transactions facility. The e-commerce websites uses a payment gateway services which guarantees safe and secure transactions to its users through various security measures. A customer can also select preferred delivery channel, time and cost.
• Built-in marketing tools: E-commerce software’s provide many useful marketing tools using which higher ranks in search engine results can be achieved and attract newer potential customers. Not just limited to SEO tools there are many other tools available such as analytics tools and statistical tools that gives real-time analytics data and helps a business to target users with special deals, offers, discounts, marketing campaigns, and many other small tweaks in your marketing strategy.

• Improved Online Customer Service: With e-commerce software the quality of customer service can be improved as many small queries and other general questions can easily and quickly be solved through newer software technologies like chatbots etc. The shopping experience of a customer whether it is related to order selection, checkout, payment, shipping and delivery everything is made keeping in view a customer’s ease and convenience.

1.8           Security Threats to E-Commerce

A security threat can be defined as usage of internet and its resources to carry out unfair practices with an intention to steal, do frauds and breaching security. Every business invests a lot of resources to create, develop and boost their e-commerce website, being so advanced they are not fully prone to security threats. Just as technology is developing the misuse of it is also increasing and so are the threats to the security of an e-commerce websites.

Every security should ensure the following factors:

      Authentication

      Non-Repudiation

      Availability

      Confidentiality

      Privacy

      Integrity

Whenever there is a small gap in any of the above factors it can be considered as a security threat and has to be addressed as soon as possible. Every website has to keep updating its security measures at regular intervals so as to safeguard them through various newly developed threats. In order to secure their website a person must understand the various types of threats so as to find the best possible method for protection against them.

There are so many e-commerce threats available out of which many are accidental, many are done purposefully and some happens due to human errors. These security threats can be divided into following three categories:

• Passive Attack: These attacks are done by unauthorized persons or intruders to intercept the confidential data communicated through the network. These attacks are done to learn and misuse the gathered information but are not meant to affect the system resources and include traffic analysing, monitoring unprotected communications, capturing user’s authentication information etc. These type of attacks are mainly focused on monitoring and gathering the information transmitted and redivided into:

      Snooping: When an intruder intercepts and monitors the private confidential information of the user without their consent whether it is a telephonic conversation or internet communication it is often known as Snooping.

      Traffic Analysis: This attack includes interpreting the traffic or requests that clients made to the server and use this information to anticipate the location and identity of the host and also observing the frequency and length of the messages exchanged. With this information intruders can easily guess the nature and type of the communications happened between the client and the server.

• Active Attack: Attacks that are initiated on commands received from intruders in order to disrupt and alter the normal operations of system resources within a network. These attacks involves actively breaking or bypassing the security of a user and entering the protected area with an aim to inject the malicious codes and steal or modify user’s private information. These attacks can be classified as follows:

      Modifying Attack: This type of attack simply changes and alters some or all part of the communication with an aim to change the whole context and meaning of the communication. The communication is sometimes delayed or reordered to produce an unauthorized effect. For example if a message is transmitted saying “Allow A to read confidential file” this message can be altered to “Allow X to read the confidential file” and in many other forms.

      Masquerading attack: This word simply means pretending to be someone else. Thus, this attack happens when an intruder pretends to be someone else on the network and receives and misuses the confidential information of original user. Suppose X communicated a confidential message meant only for A and an intruder Y in between pretends to be A and receives this message and misuse it.

      Replaying attack: Under this attack an unauthorized intruder intercepts a secure communication and later resends or reuses this information and makes it look authenticated message for misdirecting the original sender and make them into doing as the intruder wants. The message is reused and resends back multiple times to the original sender thus it is termed as replay attack. Suppose A communicated private key to B in between X interpreted this and later uses this key to communicate with A.

      Repudiation attack: Simply stating it is an act of denying the truth or validity of a communication. This attack can be originated from either sender’s or receiver’s side where anyone of them can deny later regarding the message that has been communicated between them. Suppose A communicates his bank to transfer certain amount to Y but later A denies from happening of any such communication.

      Denial-of-service attack (Dos): These attacks are done to shut down an entire network or machine in order to make them unavailable or inaccessible to the intended users. This is achieved by flooding the target machine or server with so much traffic requests that makes it to overload and crash. With this attack the services and activities of user is temporarily or indefinitely interrupted or suspended. This attack can also be used to avert normal usage of communication facilities.

• Other Security Threats: Irrespective of the above mentioned categories there are many more security threats that are faced by an e-commerce structure. These security threats can be summarized as follows:

      Malware: It is a short term for Malicious Software that are specially programmed software’s designed by hackers with an intention to gain access or cause damage to the computers connected within a network. There are different types of malware’s available all differentiated by their goals but are working towards a common objective of sneaking and working against your best interest. These are divided as:

ADWARE	BOTS	BUGS	RANSOMWARE

SPYWARE	TROJAN HORSE	VIRUS	WORMS

      Botnets: These are a group of interconnected malware infected computers that are controlled by hackers without the knowledge of the owner in order to spread virus and perform malicious activities within the network. These malicious activities involve leaking credentials, unauthorized access, data theft and DDoS attacks.

      Hacking: To exploit and use someone else’s computer system or private network without the knowledge of the owner is termed as hacking. People usually think hacking is illegal but the same is not true if the owner willingly and knowingly grants access to his system.

Hackers are usually cybercriminals whose intention is to exploit the data and computer system of others or to corrupt the whole system and its data. There are three different types of hackers namely,

• Black Hat (Unethical hackers, who creates malwares and take unauthorized access to someone’s computer with an aim to steal, manipulate and destroy system data which is illegal),
• White Hat (Ethical hackers employed by companies and government entities to secure and resolve vulnerabilities and usually access someone’s computer with permission or authorization which is legal)
• Grey Hat (A combination of both black and white hat whereby they gains access to the owner’s system without authorization but they do so to resolve vulnerabilities and seeks compensation or incentive for their work this is mostly illegal activity but is done for the benefit of the owner only)

The motive and legality of action of a hacker determines what kind of hacker a person is.

      Phishing: This attack is usually done with an intention to steal confidential and private data of users which includes their login credentials and credit card numbers. In phishing attack fake websites, fake emails, instant messages, text messages, fake links and even fake forms are created to masquerade as a trusted source and make users open links which may lead to malware installation, system freeze with ransom ware attack and leak of sensitive information.

      Spam: It is a very common type of attack which is received by almost every person every day in their mailbox. These are unrequested or irrelevant messages which are received by a large number of users as a part of advertisement, phishing and malware spreading. These are also named as junk mails and are unavoidable and repetitive.

      Sniffing attack: Under sniffing attacks a device called sniffer is used to capture the network packets and intercept the user’s confidential data within a network. These attacks are mostly done over such data and networks where the communication data or data packets are not encrypted and thus can be easily intercepted using a sniffer.

      Pharming: In pharming attacks cybercriminals implant malicious codes onto the computer or network server and when user browses a website they are automatically redirected towards fake WebPages without their knowledge or consent where other malicious software’s can be uploaded on to a user’s computer.

      SQL injection: These are certain malicious SQL codes or statements which are injected or inserted into the personal database files of users. Upon execution of these codes the entire database will be corrupted.

      Credit card fraud: This is an old and widely used fraud technique faced by e-commerce websites due to lose security implementation by them. This type of fraud is difficult to trace and is often done by making payments online for purchased goods and services through the card details of someone else who is unaware of this transaction and has not authorized the payment.

      Digital Skimming: Often known as e-skimming is online card information stealing technique whereby the identity thieves capture card details of the user as soon as they enter their details on an online shopping website or through skimming devices while making a purchase.

      Poor implementation of Server and Client Security is also a serious threat to e-commerce.

DIFFERENCE BETWEEN ACTIVE ATTACKS AND PASSIVE ATTACKS

1.9           Implementing Security for E-Commerce

While transmitting valuable information over the network it is very much important for any business to take strict security measures in order to deal with latest security threats generated every day. A dedicated team must be established in order to regularly check for security flaws within the network and timely mitigate the risks if any.

The security team must ensure that the whole system and data within the network is safe and secure by keeping a check on the following factors:

DIMENSIONSCONSIDERED WHILE IMPLEMENTING SECURITY

Security within an e-commerce structure can be implemented at different levels by following these tools and techniques:

• Protecting Internet communication: In order to protect the confidential information communicated through internet following measures can be adopted:

• Encryption: The most effective technique for safeguarding the data transmitted over the network. Sender of the information encrypts the data using a secret key and only the specified receiver can decrypt the data using the same or a different secret key.

The technique used in encryption is termed as cryptography which converts ordinary plain text into unintelligible text and vice versa. Using this method data can be stored and transmitted in a particular form and only the receiver can read and process this data.

Through encryption 4 (Integrity, Non-Repudiation, Authentication and Confidentiality) out of the 6 dimensions of e-commerce security can be achieved.

There are basically three methods for successfully implementing encryption on a data file: Symmetric Key Encryption (Secret/Private Key Encryption), Asymmetric Key Encryption (Public Key Encryption) and Hash Coding.

Under Symmetric Key Encryption the same confidential key is used by the sender and receiver to perform both encryption and decryption of the data while under Asymmetric Key Encryption two different keys i.e., Public Key and Private Key are used one to encrypt the data and other to decrypt the data.

Public Key is sent to the receiver only for the encryption of data and the Private Key is kept by the sender only for decryption of the message. Both keys cannot be used interchangeably; they only perform the task they are specifically meant for.

Hash Coding uses an algorithm to produce a hash value (fixed-length number) which is sent along with the message to verify data integrity.

a. Hash Coding  b. Private Key  c.Public Key

• Digital Signature: These are used for verifying the authenticity of the information and maintaining the data integrity of digital signatures that are being used. The documents or software’s can be digitally signed by the owner which proves the genuineness and authenticity of the data. These are authenticated using password or encryption.

• Digital Envelope: Under this data is stored within an electronic container which protects the data by way of encryption and authentication. Digital Envelope uses features of both symmetric and asymmetric key encryption to encrypt and send the data which provides speed, convenience and security of data.

• Digital Security Certificate: These are digital files which are issued by the Certifying Authority (CA) certifying that the website is secured using an encrypted connection. It is a digitally stamped approval from the industry-trusted third party known as certificate authority. It serves the same purpose as driving license or a passport serves for you.

This can be seen as a shopper’s assurance that the e-commerce site is genuine and acts as a high level authentication. These certificates protect users from unwanted attacks which includes Man in Middle attack. A digital certificate includes the following information:

• Public Key Infrastructure (PKI): It is a combination of software, encryption technology and services which help enterprises in establishing secure business communications over the network. The main purpose of Public Key Infrastructure is to manage all the keys and certificates while communicating with the users.

Thus, it integrates: Certifying Authorities (issuer of the certificate), Subscribers (those who are identified by the certificate), Relying Parties (those who rely on the certificate), Digital Certificates, Public Key Encryption and the whole security architecture of the enterprise.

• Secure Electronic Transaction (SET): It is a set of security protocols that ensures privacy, security, authenticity and integrity while carrying out debit and credit card payment transactions via electronic portals over the network. It includes: Card Holder’s Digital Wallet Software, Merchant Software, Payment Gateway Server Software and Certificate Authority Software.

• Securing channels of communication: The medium of communication are also not prone to the attacks of outside intruders. Thus, the following measures can be adopted to secure these channels:

• Multi-Layer Security: It is always beneficial for a business to integrate multi-level security system within their websites so as to block various incoming hacking attacks and DDoS threats. This security is based on machine learning technology which prevents the malicious traffic to enter the system. A two-factor authentication is a common example of such security whereby a user gets an SMS or an email for any logins they are attempting to make. This prevents hackers and intruders from accessing other user’s login information.

• Secure Socket Layer (SSL): An SSL encrypts sensitive user data which is being shared over the internet.SSL ensures that whatever information is shared with the receiver reaches to the intended person only as whenever the information is shared over the network it passes through multiple clients before reaching its destination. Thus, if SSL certificate encryption is not present the sender’s confidential information can be accessed by anyone.

This layer uses cryptographic system with both public and private key to encrypt the user data which results in end-to-end secure data transmission between the server and the client.SSL performs two main functions i.e., authenticating the websites and ensuring secure data transmission between client and the server. It meets the Authenticity, Encryption, Integrity and Non-reputability security requirements

• Secure Hyper Text Transfer Protocol (SHTTP): It is a multiple security HTTP internet protocol with public key encryption, authentication and digital signature embedded in it ensuring secure and encrypted web communications over HTTP. SHTTP is used to securely communicate between two clients.

• Virtual Private Network (VPN): This allows remote users to securely access the internal network of an organisation over the internet using a Point to Point Tunnelling Protocol (PPTP). Tunnelling is the process of connecting one protocol with the other.

With VPN’s a host computer can send and receive data across various shared or public networks. It works basically as a local area network (WAN) which is connected to another network over the internet. We can also call it as a temporary secure line which can be used to reduce the cost of secure connections.

• Protecting the Network: Network protection is always the most difficult task as there are so much incoming and outgoing requests all the time interacting with the website. Thus, few tools to increase network security are:

• Firewall: It is software which is installed at the entry point of a network system which monitors the entire incoming and outgoing network traffic. Using firewall one can filter, block and permit only the selective inflow and outflow of the traffic. It acts as a first line of defence to the network. Firewalls can be categorised as, Packet filter firewalls, Gateway servers and Proxy servers.

• Antivirus: An antivirus software is very much essential software tool which detects and blocks all the malicious codes and software’s from executing and stealing a user’s confidential and private information from the website databases. A regular scan with an updated antivirus is recommended so as to ensure data safety and security for every e-commerce website.

• Protecting clients and servers: The protection of a client and server computer is very much essential for the survival and smooth operation of a website which can be ensured through the following:

• Intrusion Detection System: It is a device or software application which is programmed to monitor the network or system activities for malicious attacks or violations of policies so as to record and provide a report of the same to the management. The main focus is on the identification of possible incidents, logging information about such incidents and reporting attempts.

• Access control and authentication: It simply refers to controlling and authenticating users to access the e-commerce website server. Authentication is achieved by means of digital certificate while controlling can be done easily through web server tools which provide Access Control List (ACL) security feature so as to restrict or allow access of certain users over server files.

• Server OS controls: Many server OS provides username and password protection measure which can be accessed from access control lists and without a username and password user cannot be authenticated to use the system which is a very useful server OS security feature.

• Protecting Intellectual Property: All the private logos, art, music, documents etc. posted on the e-commerce sites should be protected by laws. An organisation named World Intellectual Property Organisation (WIPO) is established in order to take care of such digital issues occurring worldwide. Moreover in order to protect certain digital works following methods can be adopted:

• Software Metering: This is a technique used to track, monitor and maintain the proper usage of a particular software license. Through software metering system admin can track that only the allowed number of users under a license are using the software and also monitors that there are enough licenses available for all users to use the software.

• Digital Watermark: It is a digital mark (logo, text, sound, video etc.) embedded within a digital media in order to protect and identify the original copyright content of the owner.

• Digital Envelopes: As explained earlier these are digital containers which can contain important data with faster speed and more secure encryption method.

• Protecting Privacy of User: Whenever a user visits a website certain element of the website is stored within his computer which is termed as cookies. These cookies are stored in user’s computer to speedily load and surf the website every time the user visits that particular site. These cookies sometimes contain private user information such as credit card data, passwords, login information etc.

If data privacy measures are not adopted and there is an attack on this information one can lose so much sensitive data in the hands of attackers. Thus, the easiest way to stay safe under this is to clear all your cookies time to time and also to disable them whenever they are not required.

1.10     Electronic Payment Systems

The emergence of electronic shopping has also made changes to the ways payment for a transaction is processed. A whole new system of electronic payment system also known as paperless monetary transaction has made it much easier and faster for buyers and sellers to send and receive payments within seconds.

This electronic system of payment has significantly reduced the paperwork, transaction, labour and other costs involved in carrying out a single transaction. Also, these have proven to be the most secure, safe, user friendly and less time-consuming process with which a business can expand its market reach.

There are various electronic payment methods available for users to choose from. The users must choose their mode of payment wisely as the working and functionality of each method is different from each other and without understanding the way it operates might lead the user into a lot of trouble.

There is a four step common system followed in order to process any payment and complete the financial transaction:

• Payment instructions are the information contained in a wire transfer or check. The payer gives instructions to his own bank for transferring the value into the beneficiary’s bank account.
• Payment generation happens after instructions are inserted within the system—e.g. a cheque is printed or wire transfer of money is processed.
• Clearing denotes the whole process starting from the time of committing a payment until the payment is fully processed. It involves actual transfer of money from the payer’s account to the receiver’s account.
• Settlement is the last step in this process which happens as soon as the beneficiary’s (payee’s) bank account is credited and the payer’s bank account is debited.

The actual payment process depends on the type of payment method which payer and payee have chosen at the time of transaction. The operating principle is the main differentiating factor between various payment methods but the payment form is either credit or debit based.

• Credit based payment system: This system is based on the term “Pay later” which simply gives the power to its holder for doing transactions at a certain specified limit set by the financial institution or card issuer. The prepaid card has already some stored-value in it which can be used by the holder to purchase goods or services and the whole liability is borne by the financial institution in lieu of certain charges over the credit amount both borne by the cardholder.

      Credit Card: This card is issued by the financial institution and allows its holder to make payments up to a certain limit (set at the time of issuing the card) online or through some electronic payment processing machine, without involvement of cash.

      E-wallet: This is also a prepaid form of payment system which is linked to the individual’s bank account so as to make the transactions much easier and smoother for the user. A user can load his money from the bank account to these wallets and can use it to transact in simply one click.

      Smart card: These are simply plastic cards which have a microprocessor chip that stores information in digital form related to the users funds and can be used to transact with much ease.

CREDIT-BASED PAYMENT SYSTEM

• Debit based payment system: This system is based on “Pay First” basis which means the user first has to have that much amount in order to process the transaction. In this system the user can only involve in a transaction if he has that much amount in his bank account in real time, there is no credit facility, and the transaction amount must be present in real within the users account to make him able to transact.

      Debit Card: These are plastic cards issued by the financial institutions on opening of savings account with them. The limit of these cards are dependent on the amount user has deposited in his account with these financial institutions. These cards can be used to withdraw money from the ATM’s and to transact anywhere around the world.

      E-cheques: This is a digital form of old paper cheques used in banks to transfer amount from one person’s account to others. This is also a form of electronic money transfer from the financial institution after opening a specific account with them. The cheque offers a digital mode of transaction without usage of paper.

      E-cash: In this option some amount of money is generated by the user on his device by performing certain tasks which can later be used in order to pay for online transactions up to its available unit. This is different from paper and coin based currency which is converted into electronic form to pay for transactions. This money is anonymous kind of money and can be used to make micropayments by the individuals. A basic example is Crypto-currencies.

      Stored-value card: These cards are stored with some amount of money which can later be used by the user to perform transactions only within the issuer’s store. Amazon gift cards are an example of this.

      Direct Deposits: The user has an option to directly deposit the transaction amount into the seller’s account by physically visiting their bank’s branch where seller has an account and providing the account information of the seller and depositing the amount directly into their account.

      Electronic Fund Transfer: This is another facility provided by banks in order to transfer money from one bank account to some other bank account so that user can transact easily irrespective of having seller’s account in the same bank. This option can be opted through Net Banking and is a card less option which does not involves any card.

The same transaction amount limitation is there as that in Debit cards that you can only pay what you have in your savings account. There are different methods to do the transfer such as RTGS (Real Time Gross Settlement), NEFT (National Electronic Fund Transfer), IMPS (Immediate Payment Service) and UPI (Unified Payment Interface). These options differ from each other in the following terms:

DEBIT-BASED PAYMENT SYSTEM

1.11     Strategies for Marketing

There is a lot of competition in the e-commerce market and knowing the correct market strategies gives a competitive edge to businesses engaging in buying and selling products or services on this online platform. There are many marketing strategies available but the most essential ones are as follows:

• Optimizing Website for Searches

In order to pop up your website on first top pages a user has to use SEO (Search Engine Optimization) technique so that your website is cached by the search engines and is displayed on top results. SEO’s fully optimizes your website pages with exact keywords the users are searching for as a result your website gets more frequent visitors and in response to which your sales increases.

• Product Reviews

One of the main reason customer purchases a particular product or service is due to their trust on the seller which was increased by the positive reviews of the buyers. Just like you trust your friends advice about a particular product or service and then would like to try it out likewise customers read the reviews of other buyers and then tries a certain product or service. A product or service with more positive reviews is likely to get purchased more. Reviews with pictures and videos are more effective than a normal text review.

• Content Marketing

It is a systematic marketing technique whereby the main concern is to create, publish and distribute certain valuable, relevant and consistent content to attract and retain a specific group of users with an aim to convert these customers to profitable sales. Content Marketing is not just limited to blogging but it can also be used to attract customers for signing up to e-mail content list or generating leads to sell e-books and other contents online. It is free of cost and anyone can do it with just basic knowledge.

• Social Media Marketing

When social media platforms are used to connect and target a large group of users so as to increase sales and build brand. There are many social tools available online some of these include Facebook, Instagram, Telegram, Snapchat, Twitter, LinkedIn, YouTube etc. It is advisable to focus more on customer relationship and faster resolution of customer queries rather just promoting your products.

• Using Influencers

Influencers are those people who have the ability, authority, knowledge or position with which they can affect the purchasing decision of other users. Due to their famous reputation and dedicated social media followers they are viewed as experts within their field. This is a type of investment where the more the influencer is regularly engaged with its audience the more visitors on your site you are likely to get.

• Email Marketing

Nowadays businesses use emails to deliver commercial messages to a large group of audience in a single click. These e-mails can consist suggestions for products, new product launches, discount offers, coupon codes etc. The more the business customizes and personalizes an e-mail the better impression and response it gets. In short every email sent by a business to either a potential customer or current customer can be termed as email marketing.

• Pay Per Click(PPC) Marketing

It is an online advertising cum marketing strategy whereby an advertiser pays a certain fees every time the displayed ads are clicked by the visitors of the website. There are various types of PPC advertising available out of which search engine ads are widely used.

• Retargeting Ads

Whenever a user searches for a particular product over search engines or through an online shopping website but gets diverted from their purchase due to any reason these retargeting ads are used as an advertising strategy to remind them of their previous searches and display visual or text ads. It can be used to send target ads to some specific users who have already searched or purchased products earlier but are not actively purchasing currently.

• Creating an App with Push Notifications

Most of the online websites are making their presence on different operating platforms, earlier they were only limited to computer platforms but nowadays with an increase in mobile usage they are targeting customers through mobile platform as well. Thus, another classic but a bit costly marketing strategy is to create a mobile app for your online selling business. With these mobile apps customers can be provided with better shopping experience, one-click purchases, customizable experience and recommendations, push notifications and many more facilities which prove to be the best customer attraction and retention strategy so far.

• Targeting VR Technologies

Augmented Reality (AR) and Virtual Reality (VR) are the latest technologies available so far which is used to target those groups of consumers who have doubts in purchasing online products by just looking at product’s images or videos. Using these technologies a customer can see the virtual 3D view of the product an online store has to offer. These products can be rotated into 360 degree angle and can be seen in a live virtual environment through your mobile phones or through VR glasses which is meant for such technology only. These newer technologies are a better marketing medium to target newer customers and increase sales.

• Optimize Website for voice search

In order to provide customers with comfort and ease in online shopping Voice Search feature is readily available in the hands of e-commerce websites. With this feature the customers can use their own voice to speak and search for the desired product they want. This option can be easily embedded within the search box of the website. The only flaw with voice search is correct speech recognition which is the main tool of this feature, if user’s voice is not correctly recognized it will give a negative impression to the users. Thus, an accurate and correct speech recognition tool is very much necessary for successful implementation of voice search and target a large group of customers.

• Using customer data to automate recommendations

Every customer likes to be treated as special and providing them with customized products and personalized recommendations is a very classic move to make them feel special. Every e-commerce website can maintain a database for its customer which might include their shopping patterns and product search history which can later be used to communicate with the customers in a more customized and personalized manner and has the potential to turn normal visitors into customers.

• Using Newsletters and Blogs

Newsletters and blogs are used to communicate with the customers whether new or old in order to promote latest products and their features, discounts and offers, company information and policy changes which keep customers both informed and attract them to shop through lucrative offers and deals. These newsletters and blogs plays a very crucial role in building the brand image and increasing a company’s sales as they have the power to easily target the potential customers.

• Using filters and QR codes

Social media filters and QR codes can also be used to provide a unique shopping experience to e-commerce products. QR codes when combined with VR technology can be a real game changer. A customer can easily scan the QR code of the product and try it virtually through VR technology. These QR codes are easy to scan from your mobile camera using which a customer can quickly open the link to the advertiser’s website.  The filter options available at various social media platforms is also of utmost importance using them one can fine tune a normal looking image of a product to some real eye catching item and has the potential to easily attract customers to purchase it.

• Creating videos of products or services

Products with just name and description are not going to sell by itself, as every user first like to get a look at the visual presentation and the operational working of the product. For this every e-commerce websites posts as many images and videos of the product as possible and tries to give all the useful information of the product to the customer so that they can decide which products are worth purchasing. E-commerce websites sometimes hire famous bloggers so as to introduce their products to the customers and provide their initial comments about the product. There are YouTube, Snapchat, Facebook and many other website bloggers who makes videos and even post text and images giving an in depth review with personal comments on the product which in turn help customers to get a clear look at every single detail of the product with all of its pros and cons.

1.12     Strategies for Sales and Promotion

In order to survive the market every business has to increase its revenue and that can be done by increasing sales. In order to boost sale for a product or service general awareness must be created among buyers which is done through various promotional strategies. From targeting a larger audience to increasing the sales of the business both strategies plays a very crucial role and goes side by side. There are many such strategies available out of which some of the popular ones are discussed below:

• Cross-Selling with a purpose

A cross selling is a sales strategy within which the customers are targeted with related or complementary additional purchase of a product or service who is already ready to make a purchase. Through cross selling the business can target on secondary products. This provides convenience and ease to buyers by providing most of the products at same place. Through side selling or cross selling additional cash flow can be flushed into the business.

• Micro-targeting Customers

Micro targeting is basically concerned with acquiring the smallest fraction of a user’s data such as their likes, their friend’s connection, their demographic data, their purchase patterns etc. and then segmenting all this information into smaller groups so as to target users with most appropriate contents. This helps in segmenting the customers into smaller groups and then targeting the right group with right promotional content. Whenever customized content is targeted to users it pleases them the most and catches their attention thus the possibility of user visiting your website also increases.

• Creating Hype

Hype in simple terms is creating excitement and attention among customers towards the launch of a new product or service. Businesses can create hype and draw attention through various sales promotional activities via social media and email campaigns. This in turn creates eagerness among customers and will greatly influence your sales figure. A business can take the following steps to create hype among its customers:

• Identify market segment and outline a strategy
• Get the product tested through testers
• Blogging about the product
• Teasing the targeted audience
• Promote and demonstrate through launch event and videos
• Use proper marketing channels
• Take pre-orders and create limited quantity sale events

• Creating Customer Loyalty and Retaining them

A retained customer is more valuable than a newer customer as once a customer becomes loyal to your product or service he will automatically recommend these to other customers which is a free promotion for you. Moreover loyal customers would not hesitate to spend more once your product has gained their trust. This in turn increases your revenue and rep up your sales. A business can retain their customers through various techniques the most common one’s includes making customers signup for weekly newsletters or creating loyalty rewards program.

• Gaining customer trust through testimonials

Testimonials in its simpler form are recommendations that are posted by verified buyers who have purchased and used your products and found it to be satisfying. These testimonials are used to gain trust of newer customers through confirmation of old buyers that the value of the product or service was good and found satisfactory as it is mentioned at the website. It is more influential than any sales document you might present to your customer. These trust signals play a very crucial role in increasing sales as only through this a positive perception can be created within the mind of potential customers and thus one can overcome the fear of purchasing from a new website. These can be paid recommendations from influencers or can be given by happy customers voluntarily on request.

• Creating Urgency

Urgency about a particular product or service can be used as a great factor to convert potential customer and increase sales. A business through various mode of promotions can make people feel that they are going to miss a great deal or can lose a great opportunity to purchase a particular product or service. A sense of anxiety or an idea is implanted among the users that a particular product or service might be unavailable to purchase in the future which drives people to make purchase. Businesses can sell their products under the name of a time-sensitive special offer, limited-edition product, and special seasonal sale, stock clearance sale excusing all these methods a business tries to create an effect of urgency among users and is a proven technique to easily push products among customers for purchase.

• Offering Money-Back Guarantee

This is used as a risk aversion technique among users. The more a business lowers the risk factor in an online purchase the better it is for them to increase the sales and overall profitability. While making a purchase many questions might come within the mind of a customer such as if the product doesn’t works fine or if it is not as per the expectations or if there is a defect in the product. Which generates a sense of fear and risk among the buyers and ultimately stops them from purchasing through new website? Money-back guarantee tries to mitigate this risk and fear by providing full money refund if the product is not up to the satisfaction and expectation of the customer. Thus, it creates a sense of confidence among buyers and motivates them to purchase the desired product or service from some newer website.

• Daily Partner Offers and Cash backs

This is another great sales strategy under which the more a customer pays the more benefits they get. There is a wide variety of offers and cash back schemes available for the customer that can be availed at the time of making a purchase or paying periodical bills. These cash backs and offer benefits are provided either in the user’s wallet or at other partner websites in form of coupon codes.

• Providing discounts through Coupons and Promo Codes

Giving discounts by the means of coupons and promo codes is another great strategy and can be used to increase your sales and promote your website side by side. Every day a lot of users searches for promo codes and coupon codes which gives instant extra discount to the users applying these codes at the time of purchasing a product or service. There are minimum purchase conditions or several other criteria which are required to be fulfilled in order to avail this discount which can be used to increases the sale quantity and profits of the business.

• Offering Fewer Choices

Instead of focusing on a wide variety or long range of products or services a business can increase their sales by just focusing on a limited range. As wide variety of choice sometimes confuses the buyer and they cannot decide which product they want to purchase which results in loss of sale. If businesses restructure their long list of products as per the usage and purchase patterns of different users than this will benefit both the buyer and the seller. The more choices a business provide the more likely a customer will get confused and delay their purchase.

• Simplifying the Checkout Process

There are million customers every year who are not able to complete their purchase and their selected items just keep on lying within the shopping cart of the website. This is due to friction that happens mainly due to lengthy or complicated checkout processes. These processes sometimes are so tiring and complicated that potential customer drops the thought of buying the product or service. Nowadays, customers require fast, secure and less complicated way to complete their purchases. The more user friendly and less time consuming the process will be the more easily sales can be generated for the business.

• Using Newer and Advanced Payment Options

As more and more payment mediums are evolving over time the more a business has to optimise their websites to make available the most secure and advanced payments options for its customers. It is not possible that every user has access to a certain common payment option. Some prefer paying through debit or credit cards, some likes to pay through wallets while some prefers cash on delivery option thus it’s always better to provide customers with more choices to pay for their purchases. If newer and advanced payment options are included customers will deliberately be able to make instant payments and complete their payments and thus increases the sales for the business.

• Give Away Free Samples

The best promotional strategy of all time is to provide free samples of your product or service. Once the customer tries your product and likes it they will ultimately buy it at the price you will offer. Everyone loves free sample which in turn creates a positive image of the business in front of the customers. The businesses can provide free offers, trial software, buy two get one free offers, reward based incentives, trial-based membership etc. All these prove to be a great strategy to introduce your product or service to the customer and create a positive image of it.

• Implementing Tiered Pricing

Tier pricing strategy is basically a pricing strategy to divide products between different price ranges i.e., cheap, mid and high price. This is done to divide attention of the customer and use psychological factor to push people mostly to the mid ranged products as major customers mostly avoid cheap products and high cost products and will greatly focus on purchasing the mid ranged products. These mid ranged products are smartly planned by the businesses and are mostly those products which businesses really want to push towards customers and will greatly impact the sales.

• Using Follow-Up Email for Newer Purchases

Many businesses just forget the customer once the transaction is completed, they fails to perform the most important task which is customer’s feedback. In order to increase the sales it is important to take proper feedbacks of customers through follow up emails or other mediums. The more attention a business focuses on to its customers the more loyal they become and thus will prove to be beneficial for your business one way or the other.

1.13     Strategies for Purchasing Activities and Supporting Logistics

Strategies for Purchasing Activities

When goods and services are acquired on behalf of a buyer it is termed as purchasing. Purchasing activities are required so as to ensure that all those items which are required in regular working are obtained at a reasonable rate and in timely manner. All the activities of purchasing are performed through a purchasing department whose main goals include:

• Identifying and Evaluating Vendors: Locating a supplier of goods and services as per buyer’s requirements.
• Selection of Required Products: Buying items only as per buyer’s quality specifications.

• Order Placement: Creating free flow of deliveries by ensuring availability of resources and keeping inventory investment at minimum.
• Issue resolution: Issues arising after receiving ordered goods and services

Procurements a combination of purchasing activities and monitoring of purchase transaction elements. It is also concerned with managing and developing better relations with suppliers.

The main aim of a purchasing strategy is to establish a system with free flow of materials and keeping the inventory cost at minimum. There are certain purchasing strategies which have proved beneficial in achieving above aims:

• Analyse organizational spend:

Every organisation must first analyse the cost they are currently incurring to purchase goods. This can be done by obtaining information and data from internal stakeholders, suppliers and all the parties involved in the purchasing process. Using this data purchasing strategies can be formulated and with the help of tools like total cost of ownership the identification and analysis of any additional costs incurred to purchase a product can be easily located and eliminated.

• Determine business needs:

Every specific and beneficial procurement strategy can be devised only after having a clear understanding of all the needs and requirements of the organisation. This will help to integrate and prioritize the procurement strategy with other functional and business goals and by using tools like category positioning matrix (cpm) identification of key requirement areas within a business becomes easy and thus proper purchasing strategy can be easily formulated.

• Assess market conditions:

The internal analysis in prior steps will help the organisation to overcome difficulties from within the organisation but business also needs to focus over external factors such as supply market and its conditions so that important data from the suppliers and potential suppliers can be timely collected. This data should be up to date and checked for relevancy as only after knowing your market and suppliers better an effective purchasing strategy can be formulated.

• Set clear objectives:

After identification of business needs and requirements a clear vision and mission has to be established. All the data collected in previous steps can be used to perform SWOT analysis to identify the current status of your purchasing function and the places where your organisation is lacking so as to take appropriate corrective actions.

• Define Purchasing Policies:

Once all the issues and processes are known a list of purchasing practices can be established which would be beneficial for removing current existing flaws in your system. These policies would be much helpful to reduce the risks identified in earlier SWOT analysis. The policy would be much effective and efficient if any flaws in the system are identified and removed at the starting of the policy formulation.

• Implement purchasing software:

If purchasing process is carried out manually the risk of errors, delays and late payments increases as there is human involvement in the entire process. In order to improve productivity and reduce errors and inefficiencies a purchasing management system would be much beneficial. This system will help you in tracking errors and carry out most of the processes automatically thereby reducing errors and increasing efficiency. These systems should be flexible enough so that they can be modified and used as per the organisations policy and procedures.

• Outline a procurement strategy:

With the help of data and information in your hand a proper procurement strategy can be easily outlined or drafted. This strategy should list all the desired goals and targets which an organisation wants to achieve within set time duration. Moreover tactical plans can be created in order to keep a check on the completion of such goals. These goals and targets must be measurable, time-sensitive, and realistic.

• Develop a digital purchasing strategy:

In digital purchasing strategy all the methods, technology, strategies, processes, talents, skill sets and supporting systems which the organization is currently using are modernized or updated. A digital purchasing strategy is a priority and is always recommended as this helps the organization to focus more over their suppliers and strategic part of procurement instead of just focusing over administrative tasks and transactions. These digital strategies will help organization to make effective and efficient utilization of resources thereby maximizing the gains.

• Execute, manage, and refine the strategy:

Just after the formulation of a digital strategy the final step is timely and appropriate execution of strategies. These strategies cannot function on their own they requires constant active involvement and participation from all the other business departments which includes HR, Sales, Finance, Admin etc. Once the strategy is executed it must be properly tracked and its progress must be actively measured so as to ensure the successful implementation of these digital strategies.

Strategies for Supporting Logistics

Logistics activities are mostly related to evaluating cost effective methods for distribution of goods within the market as well as achieving certain servicing objectives. The main objective of any logistic strategy is to provide the right goods in right quantity in right place at right time and businesses are using Information Technology to achieve this objective. Following are certain logistics activities performed within an organisation:

• Managing Inventory
• Transportation of Goods
• Storage and Materials Handling
• Packaging of Goods
• Information Processing
• Demand Forecasting
• Purchasing of Raw materials
• Facility Location
• Production Planning
• Customer Service

There are various support activities performed so as to provide help and support to the organisation and logistics activities. These include:

• Finance and Administration: The main aim of every F&A department is to check and maintain the overall financial aspect of the organisation. They help in coordinating financial activities so as to ensure that business is carried out as per all the rules and regulations laid down by the government. They are responsible for using all the enterprise resources efficiently and effectively. Their activities include Budgeting, Financial Analysis and Forecasting, Accounts Payable, Accounts Receivable, Purchasing, Payroll, Fleet Management, Facility Management etc.

• Human Resources: This department is responsible for forming and managing the entire workforce within an organization. They manages the most important resource of any enterprise i.e., Human Resource. They ensure that proper and capable workforce is available every time within the organisation and also regulate and maintain employee benefits.

• Technology development: This department is mostly concerned with processes (invention, innovation and diffusion) involved in developing newer technology so as to ensure that all the working within the organisation becomes faster and cost effective and the business remains updated in terms of technology.

In order to support logistics and ensure a smooth flow and cost effective logistics activities following strategies are available which can be altered and implemented as per your business requirements and needs:

• Getting Your KPIs in Order:

Key Performance Indicators (KPI’s) are a type of performance measurement indicators using which the business can evaluate the success of a particular activity. These indicators can be used to measure the customer order cycles, dock-to-stock cycles, pick-to-ship cycles, in-hand inventory etc. These activities needs to be timely tracked so as to know exactly how well your inventory management is working.

• Automate Everything Possible:

Maintaining logistics and inventory is a complicated task and if humans are involved in these processes there are high chances of getting errors which will cost a lot. The businesses needs to continually invest in automation and research to carry out such tasks as single small mistake will be very much harmful for the business. Similarly, for smaller businesses there are many other tools with low investment are available which helps them to automate such processes in logistics management.

• Scale Accordingly:

When businesses are small they cannot invest in almost everything thus it is always advisable to take baby steps first and when the right time arrives create proper logistics strategy and then invest into expanding the logistics accordingly. Once the business grows, one can always make additions in tools and systems so as to streamline the entire process.

• Keep Everything Portable:

A business can be relocated to some other place or move around frequently in starting as with changing environment the business also has to change and adapt and for this keeping things portable in a business will always give more flexibility. It will take less time and hassle to relocate anywhere without affecting much on the part of efficiency and operations of the business.

• Utilize Outsourcing to Boost Efficiency:

Most of the businesses hesitate to outsource their logistics operations and in this process they incur huge costs and wastes a lot of crucial time which can be utilized in some other important tasks. At many times the demand increases and companies has to necessarily increase their production capacity with efficiency which is not possible through in-house logistics. Thus, it is advisable for large businesses to outsource their logistics in long term partnerships to some third party logistics provider which will handle the inventory for the business in a more effective and efficient way.

• Optimize Freight Spend:

While using transportation to manage your inventory budgeting plays a very crucial role. With budget one can find the most effective and cheapest way to move the inventory from one place to the other. The other thing while moving inventory to consider is packaging as these are the places where most of your expenses are incurred and if these activities are properly planned and managed these expenses can be easily controlled.

• Choose the Best Shipping Partners:

The customers do not differentiate between the business and the shipping partner they always think of the product they are getting and any delay or issues in delivery has to be addressed by the business itself. Thus, while choosing a delivery partner business should always be very careful as wrong delivery partners will cost the business only. The effectiveness in delivering the package on time without damages, customer satisfaction rate and cost of the delivery are the important factors to be considered while choosing your delivery partner.

• Be Transparent on Shipping Prices and Conditions:

A business must be transparent with its customers in terms of delivery charges or conditions for delivery as if customers are shown lesser prices at the time of placing the order and some extra charges are charged from them at the time of checkout that would be really frustrating for them and it would cost the business with their valuable sale. Thus, it is advisable to always be transparent and show all the costs incurred to deliver the product to customer that can include cost price, all taxes, payment method charges, delivery charges and all the other charges if any.

• Choosing a Warehouse Management System:

Every business must first understand their needs and goals so as to select the best appropriate method to store their inventory. The warehouse space requirements can only be known only after proper understanding of the business and its products. Too large warehouse will cost more and too less warehouse will result in lower inventory storage.

• Focus on Customer Satisfaction:

Customer is the most important part of any business and keeping them satisfied with your product and service is the prime duty of every business. If customer is happy and satisfied he will purchase more of your product and thus increases your sales and can also recommend you to others which itself is a free form of advertising. Thus, every business strategy must be created keeping the customers in mind. Also, whatever strategy a business creates it must be flexible enough to be adjusted according to the demands of the customers that are ever changing.

Software’s for Purchasing and Supporting Logistics

With implementation of technology there are various software’s that are available to achieve the purchasing and supporting logistics activities which are as follows:

• Enterprise Resource Planning (ERP) Software: This software is used to integrate all manufacturing, finance, distribution, and other internal business functions within single information system software.
• B2B Commerce software: Used to design and develop company websites to host catalogues and other commercial sales activities.
• Supply Chain Management Software: This software includes demand forecasting tools and planning capabilities so that all supply chain members can coordinate their activities and adjust their production accordingly.

1.14     Electronic Markets and Communities

E-Market

Internet is such a place which brings buyers and sellers together at one virtual space to meet and carry out transactions. This virtual space can be termed as electronic markets. E-markets or E-commerce sites solves the very basic problem of finding a potential buyer or seller for your product or service. These huge e-markets also provide various additional activities and services such as logistic service, online payment service, online discussion activity, research on customer’s demand, industry forecast etc.

It provides an ideal environment for commercial exchange of goods and services as the relations between buyers and sellers are automated and tightened with full transparency to achieve efficiency in transactions. Also, by providing the best price for products and services e-markets facilitates both buyers and sellers to purchase or sell at the best price possible thus maximising the satisfaction of both.

From the viewpoint of buyers, if more suppliers of a particular product are available in the market the more alternative options and benefits they will get. This reduces the involvement of intermediaries and thus lowers the cost of the product.

Functions of E-Market

Most of the E-Markets are meant to perform the following basic functions:

Matching of Buyers and Sellers	Facilitation of Transactions	Institutional Infrastructure

Types of E-Market

We can structure E-Markets as:

• Electronic Storefront: This is usually a company website created to sell products or services directly to the buyers.
• E-Mall (Online Mall): It acts just like a shopping centre which is online whereby many stores of different brands can be located at one place.
• E-marketplaces: It is an online market (B2B mostly) where buyers and sellers meets to exchange goods and services. It can also be divided into:
  • Public Marketplace: A B2B market whereby the market is not managed by either the buyer or the seller but some other neutral independent third party. There are a large number of buyers and sellers in this type of market.
  • Private Marketplace: When a single large company owns the entire online marketplace for their personal sell-side or buy-side and acts as the market maker is termed as Private E-Market.

      Sell-side e-marketplace: A private e-marketplace whereby the company sells either standard or customized products to qualified companies only.

      Buy-side e-marketplace: A private e-marketplace whereby the company purchases products from invited or qualified suppliers only.

• Consortia: Under this type of e-market a small group of many vendors usually of single industry owns the entire marketplace. They collectively manage the entire market and with their combined power they efficiently sell their products to the buyers.
• Portals: In simple words a portal is a gateway to access informational resources and services. Information portal is used access business related information using a web browser inside and/or outside an organization. There are different types of portals differentiated by their type of usage such as Commercial (public), Corporate Portal, Publishing Portal, Personal Portal, Mobile Portal, Voice Portal, Knowledge Portal etc.

We can classify a website into the above mentioned e-markets on the basis of the following measures:

• The openness of a website to multiple buyers and sellers
• The type of other functions provided by the website (forward or reverse auction, trading exchange function, bulletin board, fixed price ordering, vendor catalogues etc.)

Components and Participants of E-Market

• Customers: The buyers of products and services.
• Sellers: The sellers of product or services.
• Products and Services: The goods that are transformed into digital form and sold virtually over the internet.
• Infrastructure: It is a combination of both physical hardware’s and virtual software’s that facilitates a website to operate and function properly.
• Front-end: The main interface or process of an e-commerce site using which a customer interacts with the website and carries out their transactions. This includes: e-catalogues, search engines, payment gateways, shopping cart, seller’s portal etc.
• Back-end: A group of activities which are meant to support the front end activities. They provide support in online order processing and fulfilment, inventory management, supplier’s purchase, payment processing, packaging and delivery.
• Intermediaries: Third party operating between buyers and sellers in order to facilitate transactions.
• Other business partners: Those partners who facilitates in day to day operating of an online business such as creditors, suppliers, investors, shareholders etc.
• Support Services: It includes various services such as logistic service, online payment service, online discussion activity, research on customer’s demand, industry forecast etc.

Advantages of E-Market

• With digitalized products it becomes easy to distribute products and with low cost.
• Directly able to match buyers and sellers
• Reduces search cost and allows buyers find sellers offering products at lower prices.
• Helps consumer to compare and analyse before buying a product.
• Improves Direct Marketing Methods
• Helps in Technology Improvement and Organisational Learning
• Provides new and improved Products
• Introduces newer Business Models
• Improves Supply Chain Functions
• Positive Impact on Manufacturing
• Facilitates Finance and accounting Activities

Issues with E-Market

• Many companies run out of cash and gets liquidated before actually achieving proper response from buyers and sellers.
• There is always an uncertainty involved with the quality of the product especially of unknown vendors.
• Even a small digital product can cost a lot to the business if not properly handled and delivered.
• Not every customer or seller has the reach and availability in all or most of the marketplaces as many of them are private and entry in these is very costly.

E-Communities

It is a type of social gathering of random people in large masses over the internet that engages in public discussions, interactions and exchanges their information and feelings over matters which are of common interest to each other. These communities are growing rapidly out of which many of them are initiated, organized and controlled by:

• Community member themselves
• Third party acting as intermediaries between members and
• Other interest groups (marketers, advertisers etc.)

The above mentioned initiator helps in building constant, self-dynamic, trustful communication and interaction community members. There are two types of tools used to communicate with community members i.e., asynchronous tools (discussion lists, bulletin boards, e-mails etc.) and synchronous tools (chat rooms, video conference, conference calls etc.)

Types of E-Communities

• Moderated: This type of community is based on sharing appropriate knowledge and contents via a well-informed moderator who controls the communication and content among the community members. The community is aimed at benefitting the members by deriving value through participation.
• Open: This community is open to the members and there is a free flow or exchange of ideas and solutions to usual problems. This community is not moderated or controlled by someone and anyone can post and share their valuable thoughts with all other people within the community.

ONLINE COMMUNITY V/S SOCIAL NETWORK

Essential Components of E-Community

Every online community must have the following components so as to make it work well and for the benefit of the participants.

• Community must have a well-defined purpose or objective
• A group of willing participants is must
• Proper IT Support is very much needed
• There must be clarification on basics/background content must be available
• Communication Structure or Protocols should be well defined
• The outcome of the community must be meaningful and beneficial for all

Purpose of E-Community

Every e-community is prepared with a specific purpose or objective. There can be many reasons for creating an e-community some of them includes:

• To provide wide range of services to users.
• Engage in social interactions with different group of people around the globe to share different cultures, race, caste, religion etc.
• To access and exchange knowledge and information.
• To use in conflicts or emergencies so as to alert citizens of impending attacks.

Benefits of E-Communities

E-communities have multiple benefits both for the individual members and organizations who organizes the community. They help in promoting positive qualities such as knowing other’s view points, getting to know other people qualities, building relations with others irrespective of their race, religion, cast, gender or geography etc. Other benefits which e-communities impart among individuals and organisations are as follows:

• A chance of social collaboration with others
• Helps in building reputation
• Provides solutions and gives chance to become a trusted advisor
• Helps in saving cost
• Helps in Market Research
• Through e-communities better customer support can be provided
• Helps in getting ideas for better product development
• Provides feedbacks for future references

Issues with E-Communities

These e-communities are new and unexplored regions which were not available before internet which may also lead to multiple issues such as:

• Trolling and harassment of members on their views and comments
• Members of elite community uses hazing so as to show their power produce inequality and instil loyalty among new members.
• Lack of Privacy due to unclear distinction between Public and Private Information.
• Untrusting or Unreliable Information
• There is a huge imbalance among participants and non-participants as among huge list of members very less stays active and participates in the community others just ignores the discussion
• There are many legal issues arising due to increasing crimes on such online communities including harassment, identity theft, copyright infringement, etc.

1.15     Business Plans for Implementing e-Commerce

Business plan can be defined as a formal written document which states the goals of the business and methods to achieve these goals within a predefined set time frame.

While implementing e-commerce business plans always keep in mind that:

• E-commerce platform is not for all type of products and services.
• A Clicks-&-Mortar approach is the best strategy for e-commerce implementation which is a combination of both online and traditional retail resources.
• Creating and Managing an e-commerce store is a bit complicated and costlier affair.

An e-commerce website can be successfully established only if business plans are properly implemented and adopted. Thus, in order to successfully implement these business plans there is a seven step strategy that can be followed. These steps are dependent on each other and execution of these steps in a phased manner and right priority is very crucial. These steps are as follows:

• Market Research:

The first preliminary step a business takes before implementing a business plan is doing market research which includes gathering information of target market for business and the availability of potential customer within the market. With this information a business can devise strategies and can also get competitive advantage while entering the new market. A business must be well aware of the demands and supplies within the market so as to act accordingly and succeed else it will incur huge losses.

• Preparing Strategic Business Plan:

Strategic business planning is all about creation of business strategies, properly implementing them and evaluating the overall final result obtained through execution of business plans. A strategic plan is mostly focused on achieving the long term objectives of the business which can only be achieved by having a clear vision, mission and objectives. These strategic plans answers the most crucial questions that a business faces in order to achieve its objectives such as time requirements, budget constraints, resources required, strategies to implement, customers to target etc. These plans must be properly prepared and implemented at early stages so as to make the business prepare for the upcoming challenges and hurdles.

• Proper Selection of Technology:

A business can only be benefitted if the technology implemented in e-commerce website is fully customizable, complement to the business model, follows best practices in offline retail and is capable of attracting the audience. For businesses entering for the first time in the e-commerce practice they should carefully design and include the top most functionalities within their website so as to stand out of the crowd and target a large set of customers. These technologies must be properly selected and implemented keeping in mind the needs and ease of shopping for the customers in order to do so a complete assessment of website performance, customer’s interaction with website, competitor’s website analysis etc. must be done. It would also be beneficial to measure and monitor the whole process so as to implement the suggested changes properly.

• Planning for Retail Fundamentals:

There are various basic fundamental elements which have to be taken care of before introducing your online store to the customers as these elements are equally important and adds complications to your site which needs to be timely addressed. These include:

• Content: The product or content of an e-commerce website must be frequently updated as it is the first thing for which the customer visits your store.
• Pricing: There are always issues related to pricing of a product as if you are a direct seller there may be resistance from the distributors and retailers as they will not let you under-price the product and if you want to sell a manufacture’s brand then there will be issues in selling that product in foreign markets etc. so one has to choose the pricing strategy accordingly.
• Inventory: The distribution channel is very much important so as the storage, management and proper maintenance of your product’s stock. A proper distribution channel and stock management system must be installed to do these tasks.
• Fulfilment: Timely and correct order fulfilment creates trust among the customer. A customer places his order over trust on the website and with precise tracking information and delivery status generating trusting becomes easy. Moreover if delivery has to be done overseas then the customer must be provided with proper tracking information and expected delivery time.
• Payment: The main aim of any transaction is to exchange product or service for payment. There are various electronic payment modes available nowadays which we have discussed earlier. The most fastest, secure and latest payment modes provide customers with ease of doing business and also safeguard them against fraud and gives confidence to carry out transactions.
• Returns: The major cost in any e-commerce model is the return cost of the product. The return policy must be properly stated and proper arrangements must be made to carry out return shipping.
• Support: A proper support channel and team must be set up so as to answer the basic customer queries in an appropriate and timely manner. For this a business can opt for either telephone or e-mail support and must take proper follow ups with customers.
• Security: Every customer trusts the website owner with their personal, financial and account information thus it becomes vital for every e-commerce website to establish a safe and secure environment by selecting and implementing the most advanced security system on their sites.

• Customer Acquisition, Engagement and Retention:

With availability of latest technology there are various newer marketing tools and technologies available to easily acquire, engage and retain customers and that too for multiple platforms. There are multiple options such asset’s, Paid Advertising, Social Media Marketing, e-mail campaigns, advertisement display, referral programs, re-targeting campaigns etc. available to acquire customers. With better customer support, faster response to customer queries, easy returns and exchanges, new user offers, seasonal discounts, coupon codes etc. engagement and retention of customers has also become very easy for the businesses.

• Optimizing the Website:

Once the website is created and up for running it is very much essential for a business to optimise their website time to time so as to provide visitors with faster and accurate: page loads, checkout process, shopping cart management, stock information, updated websites content etc. It is also very much essential to provide customers with certain features and newer options such as multilingual website if you are planning to expand your business overseas, ratings and review system, voice and image search, bot query resolution etc. All these optimizations will make your website stand out of the crowd and give you a competitive edge in the market.

• Business Analysis and Customer Insights:

Every business from time to time must do a proper analysis of their overall business activities which includes estimation of overall cost to run online operations, revenue generated, gross margins, conversion rates, customer loyalty and retention rates, repeatedly purchased items, cart abandoned items etc. These factors provide an in-depth review of overall business and website performance so that one can easily focus on the weaker areas and take corrective course of actions to maximise the sales output. A small negligence in this part will make your customer divert from your shopping site to some other site and you will kept wondering what went wrong.

Reference Books:

1. Dave Shaffey, Tanya Hemphill, David Edmundson-Bird― “Digital Business and E-Commerce Management”, Pearsons Seventh Edition.
2. Janice Reynolds― “The Complete E-Commerce Book”―CRC Press.
3. Gary P Schneider ―“E-Business International Edition” CENAGE Learning
4. Tanner Larsson― “E-Commerce Evolved”, BGS Publications
5. David Whiteley – “E - Commerce: Strategy, Technologies and Applications”, Mc Graw Hill Education Publications.
6. P.T. Joseph, S.J. – “E-Commerce: An Indian Perspective - Fifth Edition”, PHI Publications.
7. Kenneth C. Laudon, Carol Guercio Traver – “E-Commerce, Global Edition Thirteenth Edition”, Pearson Publications.