E-Commerce
Q.1 What is e-commerce?
E-Commerce is an electronic communication among enterprises, including customers, suppliers, business partners, government organizations and financial institutions. Electronic commerce is the process of searching, choosing, buying and selling of products or services on the electronic network.
Q.2 Name any two difference between traditional commerce and e-commerce.
The two difference between traditional commerce and e-commerce are:
| Traditional commerce | E-Commerce |
| 1. It is face-to-face, telephone lines or mail systems.
2. 2. It has manual processing of traditional business transactions. |
1. It using Internet or other network communication technology.
2. 2. It has automated processing of business transactions. |
Q.3 Expand: B2B; B2C, C2C, C2B and P2P.
B2B: Business to Business
B2C: Business to Consumer
C2C: Consumer to Consumer
C2B: Consumer to Business
P2P: Peer to Peer
Q.4 Discuss the history of e-commerce.
The first step came from the development of the Electronic Data Interchange (EDI). EDI is a set of standards developed in the 1960’s to exchange business information and do electronic transactions. At first there was several different EDI formats that business could use, so companies still might not be able to interact with each other. However. in 1984 the ASC X12 standard became stable and reliable in transferring large amounts of transactions.
The next major step occurred in 1992 when the Mosaic web-browser was made available, it was the first ‘point and click’ browser. The Mosaic browser was quickly adapted into a downloadable browser, Netscape, which allowed easier access to electronic commerce.
The development of DSL was another key moment in the development to of e-commerce. DSL allowed quicker access and a persistent connection to the Internet. The development of Red Hat Linux was also another major. step in electronic commerce growth. Linux gave users another choice in a platform other than Windows that was reliable and open-source.
Napster was an online application used to share music files for free. This application was yet another major step in e-commerce. Many consumers used the site and were dictating what they wanted from the industry.
Today the largest electronic commerce is Business-to-Business (B2B). Businesses involved in B2B sell their goods to other businesses. In 2001, this form of e-commerce had around $700 billion in transactions. Other varieties growing today include Consumer-to-Consumer (C2C) where consumers sell to each other, for example through auction sites. Peer-to-Peer (P2P) is another form of e-commerce that allows users to share resources and files directly.
Q.5 Describe the function of electronic commerce.
Functions of e-commerce: E- Commerce applications enable various business functions and transactions to be done electronically. These including:
(1) E-advertising: Advertising and dissemination of information are currently the largest commercial activities on the web. There are several ways of e-advertising such as organization’s own website, clickable banners, e-commerce portals like www.yahoo.com. newsgroups etc.
(2) E-catalogs: e-catalogs are web pages offering information about the products or services offered by the company. An e-catalogs have information about product attributes and characteristics, packaging, availability, ways of payment, price etc.
(3) E-publishing: Successful e-commerce efforts to e-publishing online newspapers and independent publication through the internet.
(4) E-banking: e-banking offers, remote banking, facility electronically. It provides the web users several services such as account information, funds transfer, bill payment, requests and intimation for cheque books, stock payment instructions etc.
(5) E-travelling: e-Travelling plans are made by consumers as they have the choice of checking the availability of tickets for the dates of travel ahead of time and make hotel bookings so that, their entire itinerary is pre-booked and saves time and strain and makes holidays and business travel pleasurable.
Q.6 Explain briefly the basic components of e-commerce.
The basic components of e-commerce are:
(i) EDI: Electronic Data Interchange (EDI) is the computer-to-computer exchange of structured information, by agreed message standards, from one computer application to another by electronic means and with a minimum of human intervention. In common usage, EDI is understood to mean specific interchange methods agreed upon by national or international standards bodies for the transfer of business transaction data, with one typical application being the automated purchase of goods and services.
(ii) ERP: Enterprise Resource Planning (ERP) is an integrated cross functional software that reengineers manufacturing, distribution, finance, human resources and other basic business processes of a company to improve its efficiency, agility and profitability.
(iii) CRM: Customer Relationship Management (CRM), a well defined business strategy, is a fusion of a series of functions, skills, processes and technologies which together allows companies to more profitably manage (acquire and retain) customers as tangible assets.
(iV) EFT: EFT (Electronic Fund Transfer) is the new facility provided to the Exporters for submitting the licence fee through the Internet without visiting the Bank for the payment.
This procedure is being proposed to facilitate payments through electronic means. The facility shall be available only for electronically filed applications.
Q.7 Explain unique features of E-commerce technology.
Unique features of e-Commerce Technology
1. Ubiquity: In traditional commerce, a marketplace is a physical place we visit in order to transact. For example, television and radio are typically directed to motivating the customer to go someplace to make a purchase. E-commerce is ubiquitous, meaning that it is available just about everywhere at all times. It liberates the market from being restricted to a physical space and makes it possible to shop from our desktop. The result is called a market space. From consumer point of view, ubiquity reduces transaction costs the cost of participating in a market. To transact, it is no longer necessary that we spend time and money traveling to a market. At a broader level, the ubiquity of e-commerce lowers the cognitive energy required to complete a task.
2. Global Reach: The E-commerce technology permits commercial transactions to cross cultural and national boundaries far more conveniently and effectively as compared to traditional commerce. As a result, the potential market size for e-commerce merchants is roughly equal to the size of world’s online population.
3. Universal Standards: One strikingly unusual feature of e-commerce technologies is that the technical standards of the Internet and therefore the technical standards for conducting e-commerce are universal standards they are shared by all the nations around the world.
4. Interactivity: Unlike any of the commercial technologies of the twentieth century, with the possible exception of the telephone, e-commerce technologies are interactive, meaning they allow for two-way communication between merchants and consumer.
5. Information Density and Richness: The Internet vastly increase information density. It is the total amount and quality of information available to all market participants, consumers and merchants. E-commerce technologies reduce information collection, storage, communication and processing costs. At the same time, these technologies increase greatly the accuracy and timeliness of information, making information more useful and important than ever. As a result, information becomes plentiful, cheaper and of higher quality. Information richness refers to the complexity and content of a message.
6. Personalization: The E-commerce technologies permit personalization. Merchants can target their marketing messages to specific individuals by adjusting the message to a person’s name, interests and past purchases. The technology also permits customization. Merchants can change the product or service based on user’s preferences or prior behavior. The E-commerce technologies make it possible for merchants to know much more about consumers and use this information more effectively than ever before. Online merchants can use this information to develop new information asymmetries, enhance their ability to brand products, charge premium prices for high quality service and segment the market into an endless number of subgroups, each receiving a different price.
Q.8 Discuss nature of E-Commerce.
Nature of e-commerce
E-commerce is the buying and selling of products and services by businesses and consumers over the Internet and through other electronic media. E-business is when a company e-enables its processes to do business in a more efficient way using Web technologies. This might include procuring goods and services, dealing with customers as well as selling products.
Revolution
E-commerce brings revolution to the concept of market segmentation. We can think that the importance of this concept, in its traditional sense, diminishes, since individualization, in its perfect mode, means the treatment of each customer as a different account. It is the evolution of niche marketing. The need for individualization has been identified within the context of recent change in the theory of value chain management.
Interactivity and low cost
E-commerce is a very valuable weapon. Its most important characteristic is interactivity which keeps the customer involved in the company’s processes. Interactivity is the mean to individualization. Furthermore, it is cheap as long as you use Internet or reform already installed EDI (Electronic Data Interchange).
Q:9 Critically examine the advantages and disadvantages of e-commerce.
Advantages of e-commerce:
1) Since distances do not matter, companies can have a cheap and effective way of communication with suppliers on one side and with customers on the other.
2) An on-line store works 24×7×365
3) The cost of setting up an e-commerce website is very low.
4) There is more flexibility in a website to add or remove a product’s than in catalogues or brochures.
5) By being online, it potentially gives exposure to previously untapped market segments.
6) There are reduced errors because orders do not have to be rekeyed into order entry systems and increased efficiencies through the automation of the business processes.
7) It provides wider choice and no wastage of time. Turning on the computer and selecting an online store takes few minutes only.
8) It can avail of different services such as financial legal, medical, etc from appropriate portals.
9) A website helps the business to reach out to a worldwide customer base at a very low cost.
10) Inventory size is reduced because of reduction in transaction time.
11) Fund transfer is faster.
12) Large number of potential business partners can be quickly found and contacted using appropriate search enquiries and e-mail correspondences.
13) It facilitates elimination of middleman in many cases, since the manufacturer can reach out directly to a customer.
Disadvantages of Ecommerce:
1) Any one, good or bad, can easily start a business. And there are many bad sites which eat up customers’ money.
2) There is no guarantee of product quality.
3) Mechanical failures can cause unpredictable effects on the total
processes.
4) As there is minimum chance of direct customer to company interactions, customer loyalty is always on a check.
5) There are many hackers who look for opportunities, and thus an ecommerce site, service, payment gateways, all are always prone to attack.
6) There are some products that people will not buy online. For some high-cost and unique item businesses such as those involved with jewelry or antiques which have difficulties in offering the items in the e-commerce mode.
7) For some customers, it is hard to change their habit of viewing merchandise online; those customers resist traditional ways of purchasing physical goods in actual shops and have difficulties in changing from a real to a virtual store:
8) The lack of trust is one of the main reason why customers are unwilling to accept E-commerce due to privacy and security concerns.
Q.10 Explain various reasons for transaction online.
Online transaction covers both computer and mobile transaction. Allows to view recent transactions, print out statements, transfer funds between account and to make payments. Provides 24 hours access to bank account. It is also known as online _banking or internet banking.
1. User in control
A user control is a kind of composite control that works much like an Web page you can add existing Web server controls and markup to a user control and define properties and methods for the control. In addition to using Web server controls in the Web pages, you can create your own custom; reusable controls using the same techniques you use for creating Web pages. These controls are called user controls.
2. Can log on from almost anywher
3. Makes all payment electronicall
4. Transaction spee
5. Saves time
6. Convenient Flexible
Q.11 What is B-to-B e-commerce? Explain its advantages, and disadvantages.
B2B e-commerce is simply defined as e-commerce between companies. This is the type of e-commerce that deals with relationships between and among businesses. About 80% of e-commerce is of this type, and most experts predict that B2B ecommerce will continue to grow faster than the B2C segment. The B2B market has two primary components: e-infrastructure and e-markets.
Advantages of B to B model
The various advantages of B to B model are as follows:
i) Provides a B2B company with a new way to increase revenue within its existing client base through expanded purchases or introduction to new items using up-selling and cross-selling techniques.
ii) Reaches out to new potential customers, tapping into new streams of revenue and developing new relationships.
iii) Increases revenues via 24/7 online ordering and significantly lowers the operational costs associated with those orders.
iv) Provides the opportunity to revive relationships with inactive customers through targeted marketing campaigns.
v) Frees up internal resources, such as Customer Service, to work with customers that prefer not to place orders online.
Disadvantages of B to B Model
The various disadvantages of B to B model are as follows:
i) E-commerce is not suitable for every business.
ii) Electronic public bidding itself may lead to dubious price signals.
iii) B to B process has often happened in the newspaper, telephone and face to face meetings.
iv) Most sites charge a small fee per transaction as a percentage of revenue. Reason is competition.
Q.12 Write short note on B-to-C e-commerce. Explain its advantages and disadvantages.
Business-to-consumer e-commerce, or commerce between companies and consumers, involves customers gathering information; purchasing physical goods, tangibles such as books or consumer products or information goods or goods of electronic material or digitized content, such as software, or e-books; and, for information goods, receiving products over an electronic network.
It is the second largest and the earliest form of e-commerce. Its origins can be traced to online retailing. Thus, the more common B2C business models are the online retailing companies such as Amazon.com, Drugstore.com, Beyond.com, Barnes and Noble and Toys Rus.
Advantages of B to C model
The various advantages of B2C E-Commerce are as follows
i) B2C model helps to reach worldwide market with unlimited volume of customers.
ii) This assists to display information, pictures and prices of products or services without spending a fortune on colorful advertisements.
iii) Many buy on a regular basis which is good for cash flow.
iv) Can be very rewarding if the company has a large market share.
v) This can do some marketing for the company just from general conversation.
vi) Customer can shop at any time of day, from the privacy of their own home. The internet has been called “the mall that never sleeps”.
vii) Customer can shop for basically any item they can think of Airline tickets, groceries, clothing and even medicine.
Disadvantages of B to C model
The various disadvantages of B2C E-Commerce are as follows:
i) High Marketing / Advertising Expenses: Reduced marketing/ advertising expenses compete on equal footing with much bigger companies; easily compete on quality, price, and availability of products.
ii) High Sales Cycle: Usually, a lot of phone calls and mailings are needed.
iii) Required Higher Cost of Doing Business: Cost regarding inventory, employees, purchasing costs, and order-processing costs associated with faxing, phone calls, and data entry, and even physical stores. Subsequently, increase transaction costs.
iv) Require Middlemen: Some sales or transaction may take part indirectly or gone through third party to your customers.
v) Need to employ number of staff: Need staffs that give customer service and sales support service.
Q.13 What is C-to-C e-commerce. Explain its advantages and disadvantages.
Consumer-to-consumer e-commerce or C2C is simply commerce between private individuals or consumers. This type of e-commerce is characterized by the growth of electronic marketplaces and online auctions, particularly in vertical industries where firms/businesses can bid for what they want from among multiple suppliers. It perhaps has the greatest potential for developing new markets.
Advantages and disadvantages of C to C model
Advantages:
1. Direct Contact: Customer to Customer marketing has become very popular in the recent years as customers can directly contact sellers and eliminate the middle man.
2. Ease to start business: Anyone can now sell and advertise a product in the convenience of one’s home – enabling one to easily start a business. Therefore, a wide variety of products can often be found on auction sites such as eBay, including second-hand goods.
3. Global Customers: Since majority of the sales occur over the internet, sellers can reach both national and international customers and greatly increase their market.
4. Feedback: Feedback on the purchased product is often requested to aid both the seller and potential customers
5. Cost reduction: The actual buying and searching process is simplified and search costs, distribution costs, and inventory costs are all reduced.
6. Faster speed: The transactions occur at a swift rate with the use of online payment systems such as PayPal.
Disadvantages:
1. Fees: Online auctions allow one to display his or her products, there is often a fee associated with such exhibitions. Other times,
2. Commissions: Websites may charge a commission when products are sold.
3. Frauds: With the growing use of online auctions, the number of internet-related auction frauds have also increased. For instance, a seller may create two accounts on an auction site. When an interested buyer bids for an item, the seller will use another account to bid on the same item and thus, increasing the price.
4. Identity Theft: Scam artists often create sites with popular domain names such as “ebay” in order to attract unknowing eBay customers. These sites will ask for personal information including credit card numbers. Numerous cases have been documented in which users find unknown charges on their credit card statements and withdrawals in their bank statements after purchasing something online.
5. Liability Statement: Websites often have a liability statement claiming that they are not responsible for any losses or damages.
6. Illegal Products: Furthermore, illegal or restricted products and services have been found on auction sites. Anything from illegal drugs, pirated works, prayers, and even sex have appeared on such sites.
Q.14 Write short note on C-to-B e-commerce. Explain its advantages.
In C-to-B, the companies typically pay for the product or the service. However, it may be in the form of an idea or a new business innovation that the companies may implement and use for gaining profits. Similarly, there could be an imminent need for a specific product and the companies thrive to compete or bid to fulfil that need.
For eg: a consumer provides a business with a fee based opportunity to market a product or service on the consumer’s website or blog
Another eg: facebook.com makes use of their wide user networks and databases offering prime locations for advertising and provide links as the consumers use their site.
Advantages of Consumer-to-Business Model
The various advantages of Consumer-to-Business Model are:
i) Consumer-to-business (C2B) is a business model where an end
user or consumer makes a product or service that an organization uses to complete a business process or gain competitive advantage.
ii) The C2B approach evolved from the growth of popular consumer-generated media and content across different consumer segments, such as websites, blogs, podcasts, videos and social networks.
iii) In this type of relationship, a website owner is paid to review the product or service through blog posts, videos or podcasts.
iv) In most cases, paid advertisement space is also available on the consumer website.
Q.15 What is P2P e-commerce? What are the advantages and disadvantages of P2P e commerce?
It is a discipline that deal itself which assists people to instantly shares related computer files and computer sources without having to interact with central web server. This kind of e-commerce has very low revenue propagation as from the starting it has been tended to the release of use due to which it sometimes caught involved in cyber laws.
Though it is an e-commerce model but it is more than that. It is a technology in itself which helps people to directly share computer files and computer resources without having to go through a central web server. To use this, both sides need to install the required software so that they can communicate on the common platform.
Advantages of Peer to Peer
i) Peer-to-peer (P2P) e-Commerce communities are often established dynamically with peers that are unrelated and unknown to each other.
ii) Peers of such communities have to manage the risk involved with the transactions without prior experience and knowledge about each other.
iii) Reputation systems provide a way for building trust through social control without trusted third parties.
Disadvantages of Peer to Peer
i) Peers can misbehave in a number of ways, such as providing false feedback on other peers.
ii) The challenge of building a reputation based trust mechanism is how to effectively cope with such malicious behavior of peers.
iii) Another challenge is that trust context varies from community to community and from transaction to transactions.
Q.16 What are the characteristics of CRM?
The characteristics of CRM are as follows:
1. It helps to identify the customer needs.
2. It helps to know customer response
3. It enhances customer satisfaction.
4. It enhances customer loyalty.
5. It ensures customer complaints.
6. It ensures customer service.
Q.17 Explain process of CRM.
The CRM process is the most influential customer oriented strategy of the decade. The essentials of a CRM program include focus, commitment to CRM goals and above all a desire to be customer focused. The CRM process works in an organization the following steps:
Step1- Establishing CRM goals.
Step2- Educating other departments.
Step3- Assembling customer information.
Step4- Designing the data model.
Step5- Vendor study & Selecting the CRM solution.
Step6- Establishing authority & responsibility.
Step7- Pilot projects.
Step8- Communication with customers through direct mail, electronic mail etc.
Step9- Customer surveys and Customer satisfaction program.
Step10- Feedback.
Step11- Documenting a new process.
Step12- Implementing final methodology.
Q.18 What are the advantages of CRM? OR Briefly explain the importance of CRM.
The advantages of CRM are:
i) Provide product information, product use information, and technical assistance on web sites that are accessible 24 hours a day, 7days a week.
ii) Identify how each individual customer defines quality; and then design a service strategy for each customer based on these individual requirements and expectations.
iii) Provide a fast mechanism for managing and scheduling follow-up sales calls to assess post-purchase cognitive dissonance, repurchase probabilities, repurchase times, and repurchase frequencies.
iv) Provide a mechanism to track all points of contact between a customer and the company, and do it in an integrated way so that all sources and types of contact are included, and all users of the system see the same view of the customer (reduces confusion).
v) Help to identify potential problems quickly, before they occur.
vi) Provide a user-friendly mechanism for registering customer complaints
(complaints that are not registered with the company cannot be resolved, and are a major source of customer dissatisfaction).
vii) Provide a fast mechanism for handling problems and complaints
(complaints that are resolved quickly can increase customer satisfaction).
viii) Provide a fast mechanism for correcting service deficiencies
(correct the problem before other customers experience the same dissatisfaction).
ix) Use internet cookies to track customer interests and personalize product offerings accordingly.
x) Use the Internet to engage in collaborative customization or real-time customization.
xi) Provide a fast mechanism for managing and scheduling maintenance, repair, and on-going support (improve efficiency and effectiveness).
xii) The CRM program can be integrated into other cross-functional systems and thereby provide accounting and production information to customers when they want it.
Q.19 Explain the Role of CRM.
1. Finance
(i) Increase revenue: CRM solutions can identify which of the current customers provide the most profit and where the business can gain more revenue by cross or up-selling. This presents a highly efficient means of increasing revenue from the sales and marketing department.
(ii) Lower costs and increase efficiencies: Making better use of existing customer data and sharing it more effectively across the organization allows for a number of cost savings. The unit cost of each customer contact can be lowered through more efficient use and scheduling of customer agent activities.
(iii) Gain a single holistic financial view: CRM can provide accurate, real-time data from across the organization, overcoming the issue of spreadsheet manipulation and reducing dependency on individual departments for operational numbers.
2. Operations
(i) Deliver an improved customer service: Making the same information available for use across different communication channels enables the customer to contact the way they want, when they want – with common access to information and facilities most pertinent to their needs.
(ii) Monitor activity and gain greater control: Effective CRM not only improves customer interaction, it also provides accurate data relating to these operations. This reporting allows to develop departments and processes accordingly.
(iii) Decrease people attrition: Retaining high caliber talent calls for a challenging and rewarding working environment, where the right information is constantly at hand and motivation is set by clearly defined, realistic goals. CR can provide these facilities and metrics, helping to reduce churn whilst empowering the workforce to achieve more.
(iv) Meet regulatory and legal commitments: There are a number of ways in which CRM can help to comply with regulatory and legal issues. For example, with very few exceptions, the Data Protection Act demands that people have access to electronic information held about them. With the correct CRM solution in place, one can produce customized reports quickly and accurately.
3. Information technology
i) Integrate with existing systems: One can leverage existing investments in tele or web systems by integrating them with new CRM solutions- for example, by implementing a multimedia contact Centre.
ii) Consolidation and integration can present complex implementation issues, but IT can help through the use of tried and tested data migration methodologies, data integration software and consultancy services.
iii) Get ahead of business change: The business faces many daunting challenges when it comes to enhancing the customer experience. CRM deployment can be complex and has huge implications for everyone throughout the organization. The IT function is often viewed as the catalyst for this change.
4. Sales and marketing
i) Increase sales and extend customer reach: CRM can provide a greater insight into customer activity that allows one to take advantage of more revenue opportunities. In the short term, immediate gains can be made through more accurate targeting of customers ripe for cross or up-selling. And because CRM revolves around a greater understanding of the customers’ needs, one can develop better sales propositions and confidently enter new markets based on accurate and timely information.
ii) Improve customer experience and loyalty: Improving customer experience increases loyalty, which in turn improves the chances of customers spending more on a regular basis. CRM helps in a number of ways. Integrated channels, personalized content and self-service solutions improve the customer experience and build loyalty.
iii) Increase productivity: CRM helps to make better use of customer data by sharing it more effectively across all the departments. This means that everyone have the right information constantly at hand, enabling them to deal with customer enquiries and proactively manage sales more efficiently.
iv) Improve forecasting and deliver on targets: CRM can provide with effective customer intelligence for more proactive management. It helps to identify which customers are the most profitable, spot trends, and accordingly one can plan the resources and deliver on targets using accurate and timely data.