3. E-Commerce


Lesson No. 3 E-Commerce
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Online Exam   (Weight-age: 10 marks)
  • Short/Long Answers  -  1 or 2 questions
  • MCQ1 Select one Answer - 2 or 3 questions
  • Fill in the blanks -  1 or 2 questions
  • True or False - 1 or 2 questions
  • MCQ2 Select two Answers   - 1 question   (may come)
  • MCQ3 Select three Answers -  1 question  (may come)
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What is Commerce
  • According to Dictionary.com
  • Commerce is a division of trade or production which deals with the exchange of goods and services from producer to final consumer
  • It comprises the trading of something of economic value such as goods, services, information, or money between two or more entities.
Q. What is E-Commerce? Define E-Commerce or Write a note on E-Commerce.
What is E-Commerce
  • Commonly known as Electronic Marketing.
  • “It consist of buying and selling goods and services over an electronic systems Such as the internet and other computer networks.”
  • “E-commerce is the purchasing, selling and exchanging goods and services over computer networks (internet) through which transaction or terms of sale are performed Electronically.
E-Commerce includes:
  • Electronic trading of physical goods and of intangibles such as information.
  • All the steps involved in trade, such as on-line marketing, ordering. Payment and support for delivery
  • The electronic provision of services such as after sales support or on-line legal advice.
  • Electronic support for collaboration between companies such as collaborative on-line design and engineering or virtual business consultancy teams

  • E-Commerce is more than just buying and selling products online.
  • Instead, it encompasses the entire online processes of developing, marketing, selling, delivering, and paying for products and services purchased on internet.
E-Commerce definition (textbook)
  • Electronic Commerce (e-Commerce) is a general concept covering any form or information exchange executed using information and communication technologies.
  • E-Commerce takes place between companies, between companies and their customers, or between companies and public administrations. Electronic Commerce includes electronic trading of goods, services and electronic material.

Why Use E-Commerce
  • Low Entry Cost
  • Reduces Transaction Costs
  • Access to the global market
  •  Secure market share
Q. Give the Classification of E-Commerce? Explain Classification of E-Commerce.
Classification of E-Commerce
It is based on:
  • Who orders, the goods and services to be sold.
  • Who sold those goods and services and the nature of transactions.
Based on above two criteria, e-commerce can be further classified as:
a. Business-to-Business (B2B) model
b. Business-to-Consumer (B2C) model
c. Consumer-to-Business (C2B) model
d. Consumer-to-Consumer (C2C) model

Q. Explain the types of E-Commerce?   Write  a note on B2B,  C2B, C2C, B2C
Business-to-business (B2B)
·        B2B stands for Business to Business.
·        This model describes commerce transactions between businesses, such as between a manufacturer and a wholesaler, or between a wholesaler and a retailer.
·        It consists of largest form of E-commerce.
·        This model defines that Buyer and seller are both business entities.
·        It is commonly known as EDI (Electronic Data Interchange).
·        The two businesses pass information electronically to each other
·        E.g.:-Dell deals computers and other associated accessories online but it is does not make up all those products. So, in govern to deal those products, first step is to purchases them from unlike businesses i.e. the producers of those products.

Business-to-consumer (B2C):
·        It is the model taking businesses and consumers interaction. The basic concept of this model is to sell the product online to the consumers.
·        B2c is the direct trade between the company and consumers. It provides direct selling through online. For example: if you want to sell goods and services to customer so that anybody can purchase any products directly from supplier’s website.
·        Business sells to the public typically through catalogs utilizing shopping cart software. (i.e. typical online buying)
·        Customer identifies a need.  Searches for the product or services to satisfy the need.
·        Selects a vendor and negotiates a price.
·        Receives the product or services (delivery logistics, inspection and acceptance) makes payment. Gets service and warranty claims.
·        Example websites like Amazon.com. Flipkart, etc.

Consumer to Business (C2B)
  • In this model, the customer requests a specific service from the business.
  • Consumer to Business is a growing arena where the consumer requests a specific service from the business.
  • It enables buyers to name their own price, often binding, for a specific good or services generating demand.
  • A consumer posts his project with a set budget online and within outs; companies review the customers requirements and bids out the project
  • Examples: online trading, tenders freelancing with website like Bazee.com.

Consumer-to-consumer (C2C)
  • It facilitates the online transaction of goods or services between two people.
  • Consumer-to-consumer (C2C) (or citizen-to-citizen) model involves the electronically facilitated transactions between consumers through some third party.
  • A common example is the online auction, in which a consumer posts an item for sale and other consumers bid to purchase it.
  • The sites are only intermediaries, just there to match consumers Example: OLX, eBay.
Q. State advantages of E-Commerce. or List any 3 advantages of E-Commerce.
Q. List the advantages and disadvantages of E-Commerce
  • No checkout queues
  • Easy access 24 hours a day
  • Better Deals for Customers
  • Global Reach: You can shop anywhere in the world
  • Wide selection to cater for all consumers
  • Lower operating costs for business
  • Unable to examine products personally
  • There is the possibility of credit card number theft
  • Authenticity and Security
  • Consumers have to wait for Delivery
  • Not everyone is connected to the Internet
  • For business - Competitive price

Scope of E-Commerce
E-Commerce uses three technologies:

  • Electronic Markets
  • Electronic Data Interchange (EDI)
  • Internet Commerce:
Q. Write a note on Electronic Market.What is E-Market?
Electronic Market
  • An electronic market is an information system (virtual market) that provides facilities for buyers and sellers to exchange information about price and product offerings.
  • Electronic market also tends to be available only to the intermediaries.
  • Electronic Market brings together product, price and service information from many suppliers
  • Electronic Market can thus act as database or catalogue. Electronic market is the virtual representation of physical market.
  • Electronic markets are used for passenger ticket reservations, an airline booking system and in various financial and commodity markets.
  • These markets give the customer (or the customer's intermediary) easy access to comparative data on price, and other attributes, of the goods or services on offer.
  • Access to this information is advantageous for the consumer but making the information available is not necessarily beneficial to the supplier.
  • Usage of Electronic Markets

Application has been limited to specific sectors
  • Airline Booking Systems
  • Financial and Commodity Markets
  • Study of Share and stock market

Q. Explain the advantages and disadvantages of Electronic Market.
Advantages of Electronic Market
  • Customer Advantage: Easy access to comparative price/service information. These markets give the customer (or the customer's intermediary) easy access to comparative data on price, and other attributes, of the goods or services on offer.
  • Supplier: For supplier it facilitates easy access to market
  • Lower Search cost: An effective E.-Market increases the efficiency of market. it reduces the search cost for buyers.
  • Assistance to buyers: E-Market is most effective in assisting the buyers
  • Awareness of market: The use of information and communication technologies to provide geographically dispersed traders with the information necessary for the fair operation of the market.
  • Best negotiations: Easy access to information on a range of competing product offerings reduces the search cost of finding the supplier that best meets the purchase requirement.
Disadvantages of Electronic Market

Use of technology for setting up an electronic market would be expensive cost of hardware and software.
Customers need to be aware of new technology.
The seller may not provide the complete information about the product.
Technical problem can bring the E-market to virtual halt.
It becomes difficult for sellers to maintain high price levels, because due to the introduction of an electronic market search cost is reduced for the buyer.
And also second disadvantage for seller is buyer can make easy price comparison

Q. Explain the term EDI. What is EDI?
EDI stands for Electronic Data Interchange.
IT is the exhange of documents in standardized electronic form between organization in an automated manner directly from a computer application of one organization to the application in another organization.
EDI is used to electronically transmit documetns, such as purchase orders, invoices, inquiries, planning receiving advices and other standard business correspondence between trading partners.
EDI can also be used to transmit financial information and payments to electronic form.

Q. What are the advantages of EDI? Give the benefits of EDI.
a. Shortened Delay : EDI orders are sent straight into network and the only delay is the supplier retrieves messages from the system.
b. Reduction in cost: The cost on stationary and postage also on supporting staff is saved.
c. Reduction in errors: Since data is not repeatedly keyed, the chances of errors are reduced.
d. Fast Response : With EDI, customers can get fast response regarding delivery or supply difficulty.
e. EDI payment : EDI payment electronically matched against the relevant invoices.
f. Accurate Invoicing : With EDI, invoices can be sent electronically and can be automatically matched with orders and cleared for payment.
g. Business opportunities : Number of customers get increased with EDI

Q. Explain Firewall or Write a note on Firewall.
Firewall is the most commonly accepted network protection.
Firewall is barrier between two networks used to control and monitor all traffic between external network and local network.
It allows full access to insiders for services of the external world, while it grants access to the external network based on log-on name, password, IP address, etc..
Firewall is a system containing a router, a personal computer and a host.
It examines incoming and outgoing packets as per the set rules.

Q. Explain Encryption.
Encryption is the conversion of data into a coded format so that it cannot be read by unauthorized third party users.
The data is converted into the code by the sender and then decoded by the receiver.
Only sender and receiver know the rules for encoding and decoding.
The encryption process consists of an algorithm and a key. Key controls the algorithm.
Only the sender and receiver of the message know the key.
Original message referred to as plain text is converted into random text called cipher text.
It is transmitted to the receiving end and at this end the cipher text can be transformed back to the original plain text by using a decryption algorithm.

Q. What are the security threats of E-Commerce?
Security threats which directly affect the security of E-Commerce are as follows:

  • Corruption of data: Data gets corrupted during transmission on the network by unauthorized user or by external hackers.
  • Loss of data: Data gets lost or disclosure of data when data is in transit on the network.
  • Unauthorized use of Data: Unauthorized person can alter the content of data and may change user names, steal credit/debit card numbers.

Q. Explain Internet and Trade cycle.
Explain parts of Trade cycle.

Q. Explain phases of Trade Cycle or Explain seven steps of trade cycle of E-Commerce.

Q. Explain 3 type of version or transactions in trade cycle. or Explain  generic t Trade cycle.

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