DR. AJAY KUMAR PATHAK
ASSISTANT PROFESSOR
Copyright ©
by Dr. Ajay kumar pathak
B. Sc IT SEMESTER 5 NOTES BASED ON NEP
SUBJECT : MN–1C (Minor From Discipline–1
(To be selected by the students from)
MN-1C: E-COMMERCE AND DIGITAL MARKETING
|
MN-1C: E-Commerce and Digital
Marketing |
||
|
4 Credits |
60 Class Hours |
Semester V. |
Course
Objectives:
·
To understand the increasing
significance of E-Commerce and its applications in Business.
·
To provide an insight into Digital
Marketing activities on various Social Media platforms and its emerging
significance in Business
·
To understand Latest Trends, Practices
in E-Commerce and Digital Marketing,
COURSE
CONTENTS:
|
Unit-1 (10 Classes) |
An overview
of E-Business, Models,
Types ·
Conceptual Framework of E-Commerce, General
Model of Business; Defining E-commerce, Characteristics, advantages and
disadvantages, adoption and impact of E- Business., Electronic Data
Interchange (EDI); Types of e-Transactions – B2B, B2C, C2C, C2B etc., Electronic Storefronts, E-Marketplace |
|
Unit-2 (12 Classes) |
E-Business Technology and E Security ·
Web Presence – domain registration, website
development, developing static and dynamic webpages and hosting, registering
the Website with Search Engines. ·
Web server hardware
and software; Data centre services. ·
Security – service providers, digital
certificates, encryption, SSL, Digital signatures. |
|
Unit-3 (10 Classes) |
Electronic Payment
Systems: ·
Overview of electronic Payment Technology, Online
payment mechanism; Electronic Payment systems, payment Gateway, EFT,
NEFT, RTGS, SWIFT, NFC, Green Channel. ·
Legal
issues: Laws for E-Commerce, Issues of Trademarks & Domain Names |
|
Unit-4 (14 Classes) |
Digital Marketing – I ·
Introduction to Digital Marketing, Advantages
and Limitations of Digital Marketing. Keyword research, Competitor analysis
in digital marketing. ·
Various Activities of Digital Marketing: Search Engine Algorithm, Search Engine Optimization and stages, Search
Engine Marketing, Content
Marketing and Content Influencer Marketing, Remarketing, Campaign Marketing, E-mail Marketing, Display Advertising, Blog Marketing, Viral Marketing, Podcasts
and Vodcasts. |
|
Unit-5 (14 Classes) |
Digital Marketing – II ·
The P.O.E.M. framework. ·
Digital Marketing on Various Social Media Platforms. ·
Online Advertisement, Online
Marketing Research, Online
PR. ·
Web Analytics. ·
Promoting Web Traffic. ·
Latest Developments and Strategies in Digital Marketing. |
REFERENCE BOOK:
1)
Agarwala & Agarwala, E-Commerce
2) Bajaj & Nag, E-Business (TMH: New Delhi)
3) E-Commerce: An Indian Perspective Paperback – Import, 30 Nov 2015-by P. T. Joseph
4) Gupta, Seema (2018). Digital Marketing.McGraw Hill Education (India)
Private Ltd.
5) Frost, Raymond D., Alexa Fox, and Judy Strauss
(2018). E- Marketing.
Routledge
6) Agarwal anita, Kotian Vasant
Rahul, Agarwal Tushar, Kannan Vijayalaxmi. 2016, E-Commerce and Digital
Marketing, Himalaya Publishing House Pvt. Ltd.,
**** NOTES *****
UNIT-1 :- AN OVERVIEW OF E-BUSINESS, MODELS, TYPES
NOTE:-
MEANING OF E-COMMERCE:- E-commerce refers to
performing online commercial transactions and activities over the internet. It
includes activities like making monetary transactions, selling and buying
products, etc., over the internet. Applications (Apps) and websites are
required for e-commerce. Some of the e-commerce activities include the
following:
A
ü Paying
different taxes
Examples of e-commerce are online
retailers like Flipkart, Amazon, Paytm mall, and Myntra, sellers of digital
goods like online services, ebooks, etc.
Meaning of E-Business
E-BUSINESS :- E-business
refers to performing all types of business activities through the internet. It
includes activities like customer education, procurement of goods/raw
materials, supply activities, selling and buying products, making monetary
transactions, etc., over the internet. Websites, Apps, Enterprise Resource Planning
(ERP), Customer Relationship Management (CRM), etc., are required for
e-business. The e-business activities include the following:
ü Supply
chain management
Online commercial transactions
(selling and buying products):- Examples of e-business are e-commerce companies
and their different internal business activities, classified site, auction
site, software and hardware developer site, etc.
E COMMERCE VS E BUSINESS
|
Factor |
E Commerce |
E Business |
|
Definition |
Buying
and selling goods / services online. |
Conducting
all business activities online. |
|
Scope |
Limited
to online transactions. |
Covers
the entire business process, including internal operations. |
|
Technology
Used |
Websites,
payment gateways, shopping carts. |
CRM,
ERP, cloud computing, AI, social media. |
|
Focus
Area |
Customers
and online sales. |
Internal
and external business processes. |
|
Examples |
Amazon,
Flipkart, eBay. |
Google,
Infosys, PayPal. |
The term "e-business" was
coined by IBM's marketing and Internet team in 1996.
Electronic business (also known as
online business or e-business) is any kind of business or commercial activity
that includes sharing information across the internet. E-businesses utilize the
internet, intranets, extranets and other networks to support their commercial
processes.
E-commerce, or electronic commerce,
refers to the buying and selling of goods and services over the internet. In
this kind of transaction, the seller does not have to face the buyer to
communicate. Few examples of e-commerce are online shopping, online ticket
booking, online banking, social networking, etc. It
involves the use of electronic platforms, such as websites, mobile
applications, and social media, to conduct transactions between businesses and
consumers or between businesses. E-commerce has. E-commerce focuses on the use
of ICT ( Information and Communication Technologies ) to enable the external
activities and relationships of the business with individuals, groups, and
other organizations, while e-business does not only deal with online commercial
operations of enterprises, but also deals with their other organizational
matters such as human resource management and production.
CONCEPTUAL FRAMEWORK OF
E-COMMERCE:-
EASY DEFINITION AND
EXAMPLE
Think of an e-commerce framework as instructions for building a working online store:
- · First, you need a website (storefront) where people can view products.
- · Next, you need ways to manage products, payments, and shipping.
- · You also need tools to keep track of inventory, process orders, and provide support.
- · Security is very important, so it must protect customer data and payments.
Example:
Imagine someone opens an online bakery. The website lets customers choose cakes, pay online, select delivery options, and contact customer service. The bakery uses the framework to manage all orders, update the menu, and ensure payments are safe
- A front end (website or app) where customers browse and shop.
- A back end (system for managing orders, payments, inventory, etc.).
- A database storing product and customer details.
Third-party tools (for payments,
delivery, marketing, and security).
For example, when you buy a book
from an online store, you choose the book on the website (front end), the
store’s systems record your order and payment (back end), and you get your
order delivered with the help of shipping services.
TYPES OF CONCEPTUAL
FRAMEWORKS:-
1. SaaS (Software as a
Service) Framework:- This is a ready-made, cloud-based
e-commerce solution where you subscribe to a service. You don’t need to know
programming or manage servers because the provider does everything for you.
Example:- Shopify and BigCommerce
are SaaS frameworks. If you want to start an online T-shirt store quickly, you
can sign up for Shopify, select a template, add your products, and start
selling in a few hours. You don’t need to worry about technical things like
hosting or updates.
2. Open Source Framework:-
With
open source, you download free software and can change the code to fit your
needs. You have full control, but you (or your developer) are responsible for
running, maintaining, and updating the system.
Example:- WooCommerce
(for WordPress), Magento, and PrestaShop are open source. If you want a bakery
website with a unique look and features, you can install WooCommerce on your
own website and customize everything, but you’ll need to handle backups and
security.
3. Headless Framework:-
Headless means the front end (what customers see) and the back end (where you
manage products, orders, etc.) are separate. This allows you to create any kind
of website or app design, using any programming language, while the back end
handles all the main business tasks.
Example:- BigCommerce and Magento
can be used headlessly if you want a website that looks very different from
typical online stores, or an app that works on both mobile and web with the
same e-commerce system behind it. For example, a big brand with many websites
or custom experiences for mobile and smart TVs might use a headless setup to
keep everything running smoothly.
4. Custom / Enterprise
Framework:- Large companies often build or heavily customize
their frameworks for special needs. These can connect to lots of other business
tools and support complicated selling situations.
GENERAL MODEL OF
BUSINESS:-
A business model identifies the
products or services the business plans to sell, the target market, and any
anticipated expenses, in order to outline how to generate a profit. Business
models are important for both new and established businesses. They help
companies attract investment, recruit talent, and motivate management and
staff.
Businesses should regularly update
their business model, or they'll fail to anticipate trends and challenges
ahead. Business models also help investors to evaluate companies that interest
them and employees to understand the future of a company they may aspire to
join.
In general, a business
model explains four things:-
·
What product or service a company will
sell.
·
How it intends to market that product or
service.
·
What kind of expenses the company will
face.
·
How the company expects to turn a
profit.
TYPES OF BUSINESS MODELS:-
1. Retailer model:- A
retailer is the last link in the supply chain. These businesses purchase goods
from manufacturers or distributors and then sell them to customers for a price
that will both cover expenses and turn a profit. Retailers may specialize in a
particular place or carry a range of products.
Examples: Many of the businesses
you support day to day are probably retailers, from grocery stores to
pharmacies to florists
2. Manufacturer model:- A
manufacturer converts raw materials into products. Then, they sell those
products to distributors, retailers or directly to consumers.
Example: Manufacturing businesses
build everything from furniture to pharmaceuticals. They can be companies of
any size and in almost any industry.
3. Fee-for-service model:- A business charges a
set fee for a specific service. A business set up on this model can increase
its earnings by doing work for additional clients or by raising its rates.
Depending on what type of work the business does, it might charge an hourly
rate, monthly retainer or commission. It may also create a fee schedule with a
set rate for different types of services.
Example:- Accountants and real
estate agents all charge fees for their specialized services. They may work
independently or be affiliated with a salon, office or brokerage that provides
resources in exchange for a percentage of their earnings.
4. Bundling
model:- The
bundling business model involves companies selling two or more products
together as a single unit, often for a lower price than they would charge
selling the products separately. This type of business model allows companies
to generate a greater volume of sales and maybe market products or services
that are more difficult to sell. However, profit margins often shrink since
businesses sell the products for less.
Example: Many class-based fitness
centers and gyms use a type of bundling model, where clients pay fees for a
certain number of classes per month. The more classes a client buys, the
cheaper each individual class becomes, even though their total spend increases.
5. Product-as-a-service model:-
Product-as-a-service
businesses charge customers to use physical products. They may charge a
subscription fee, a per-use or per-mile fee, or a combination of both.
Example: Bike rental companies
offer products as a service. Customers might pay an annual membership fee plus
a per-mile fee each time they ride, or they might have the option to rent a
bike for the day.
6. Franchise model:- A franchise is an
established business blueprint that a franchisee purchases and reproduces. The
franchiser, or original owner, works with the franchisee to help them with
financing, marketing and other business operations to ensure the business
functions as it should. In return, the franchisee pays the franchiser a
percentage of the profits.
Example: Domino’s, Anytime Fitness
and Ace Hardware are all examples of the franchise model.
7. Freemium model:- In a freemium model,
customers can use parts of a product or service for free but must pay for access
to more advanced features. This model is common in the software-as-a-service
(SaaS) space, Spotify, for instance, has a free ad-supported
tier, but subscribers get to listen ad-free.
Example: Some news and internet
publishing companies use a freemium model, where some or all content is free
but premium content or special features are paywalled.
DEFINING E-COMMERCE:-
E-commerce, or electronic commerce,
is the process of buying and selling goods and services over the internet. It
involves the exchange of products or services between businesses, consumers, or
both. E-commerce business is facilitated through platforms such as websites,
mobile apps, or online marketplaces.
Where e-commerce once described a
simple process, a consumer purchase from an e-commerce site, for instance, the
term has expanded as technologies have advanced. E-commerce has the benefit of
24/7 availability, and a global scope.
CHARACTERISTICS OF
E-COMMERCE:-
1. 24/7 accessibility:- One
of the main characteristics of e-commerce is its continuous availability Online
stores are operational 24 hours a day, 7 days a week, allowing consumers to
make purchases at any time and from anywhere.
Example: An electronics store in
Andorra can sell to a customer in France in the middle of the night without any
time limitations.
2. Global scope:- E-commerce
eliminates geographical barriers, allowing businesses to reach customers from
all over the world without the need to open physical stores in other countries.
This considerably increases the potential audience and business opportunities.
3. Reduced costs:- Unlike
traditional commerce, e-commerce has much lower costs. It does not require a
large physical infrastructure, which reduces expenses in rent, staff and
maintenance.
Example: A small business can sell its products with minimal investment on a platform like WooCommerce or Prestashop, with a well-designed and optimized virtual store.
4. Process automation:- Business
processes, such as inventory management, payment, and shipment tracking, can be
automated. This reduces human error and saves valuable time for business
owners. Common tools: Payment gateways: Stripe, PayPal, Bizum. Automatic stock
management: Platforms like OpenCart integrate real-time inventory update
systems.
5. Security in transactions:-
The implementation of advanced security systems, such as , secure payment
gateways and data protection, is essential to build customer trust.
Example: An online store that uses
HTTPS and payment platforms like PayPal It generates more trust than a store
without obvious security measures.
6. Diversity of payment methods:- Online
businesses offer multiple payment options to make transactions easier for
customers.
Among the most common are:
·
Credit and debit cards.
·
PayPal or other digital wallets.
·
Bank transfers.
·
Deferred payment options (financing).
Example: A customer can choose to
pay with PayPal for an immediate purchase or finance the total amount in 3
interest-free installments.
7. Adaptability to mobile devices:-
Nowadays, a large percentage of online purchases are made through mobile
devices. E-commerce is characterized by having websites responsive and adapted
to smartphones and tablets.
Example: A store with an optimized
mobile version can attract more customers who shop from their phone while
traveling or doing other activities.
8. Fast Delivery and Logistics:- E-commerce sites
have included logistics companies in their operations for the shipping time in
home delivery. Some also provide
same-day or next-day delivery, therefore improving customer satisfaction. Logistics
decreases shipping time, hence providing a quality experience to the customer. Customers
can monitor their orders in real time.
9. Global Access:- E-business has
eliminated the geographical restrictions and allowed firms to sell their
products and services to customers globally.
A global reach brings business
operations as the reorganization generates sales and higher income. International
business through e-business develops opportunities in a competitive market.
E-COMMERCE ADVANTAGES AND
DISADVANTAGES:-
ADVANTAGES:- 1. Increases
Sales and Revenue:- E-commerce always helps to increase
sales and revenue as it expands the market by reaching out to new customers. It
also allows businesses to offer discounts and incentives that are not possible
in a physical store. There are also many opportunities for cross-selling and
up-selling.
2. Reduces Costs:- E-commerce also helps
reduce business costs as it eliminates the need for a physical store and sales
staff. It also reduces inventory costs and transportation costs. There are also
many opportunities for cost-saving through online auctions and supply chains.
3. Eliminates Geographic Barriers:-
E-commerce also eliminates geographic barriers, as customers can buy goods and
services from anywhere in the world. This allows businesses to sell to new
markets and expand their customer base. It may also help to reduce the cost of
doing business.
4. Improves Customer services:- This is because
e-commerce allows businesses to offer 24/11 customer service, which is not
possible in a physical store. It also allows customers to compare prices and
products from different retailers easily. Sometimes there are also additional
services, such as customer reviews and ratings, that are not available in a
physical store.
5. Increases Efficiency:- Efficiency is
increased as orders can be placed and processed quickly and easily through an
e-commerce website. This eliminates the need for paperwork and reduces the
chances of human error. It also allows businesses to track inventory levels and
sales trends in real-time.
6. Track logistics:- Keeping track of
logistics is an essential part of e-commerce and retail marketing, and it’s
significantly easier with e-commerce than it is with a physical store. You can
outsource fulfillment logistics so your customers can enjoy benefits like 2-day
shipping and easy returns processing.
DISADVANTAGES:-
1. IT issues:- IT issues can be a big problem for
e-commerce websites. If your website suddenly crashes or you’re having a
problem with your payment processor, that downtime could potentially cost you
money and customers.
2. Lack of Social Interaction:- One
disadvantage is that there is a lack of social interaction, as people cannot
see or touch the product before they buy it. This may lead to dissatisfaction
with the purchase if the product is not what was expected.
3. Security Risks:- Another disadvantage is
that there are security risks, as sensitive financial information can be stolen
by hackers. This can result in loss of money and identity theft. There may also
be risks involved with buying and selling products online, as there is no
guarantee of product quality or authenticity.
4. Lack of Trust:- There may be a lack of
trust among consumers when it comes to buying goods and services online. This
is because they may be afraid of being scammed or not receiving the product
that they ordered.
5. Hackers :- Hackers also try to get access of
data or to destroy data in e-commerce.
6. Dependence on Technology:- E-commerce
heavily relies on technology, which means that any technical failure can
disrupt the entire shopping experience. Website downtime, slow load times, or
payment processing errors can turn customers away, impacting sales and customer
loyalty.
ADOPTION AND IMPACT OF E-
BUSINESS:-
E-business adoption is transforming
the way companies operate, providing both large and small businesses with
powerful tools for reaching customers, reducing costs, and expanding globally.
An easy example is a small shop selling handmade crafts; by creating an online
store, the shop can access worldwide customers instead of just those nearby.
This shift to digital platforms brings immense benefits and changes the
structure of trade and competition everywhere.
WHAT IS E-BUSINESS
ADOPTION? :- E-business adoption refers to a company’s decision
to use digital technologies and online platforms to run parts, or all, of its
operations and sales. This includes setting up online stores, automating
orders, using online payment systems, and engaging with customers through
social media. For example, a bookstore previously trusting on walk-in customers
now sells books on Amazon, using software to manage orders and stock.
WHY COMPANIES ADOPT
E-BUSINESS:-
1)
Reach a larger market than traditional
retail:- E-business allows companies to
connect with customers worldwide, instead of being limited to those near their
physical store. For example, a furniture shop in France can use an online
platform to sell products to customers in Germany, the US, or even Asia,
dramatically expanding market reach compared to traditional sales.
2)
Reduce operational costs for things like
staffing and physical stores:- By moving to online operations, businesses can
cut expenses like rental costs for physical stores and salaries for in-person
staff. For instance, a toy company that used to have ten retail outlets can now
close most shops and sell through one central website, saving thousands in rent
and payroll each month
3)
Improve efficiency via automation (order
processing, payments, inventory):- Digital platforms automate routine tasks
such as order confirmations, inventory tracking, and payment processing. For
example, an online grocery store uses software to automatically update stock
levels and send invoices, allowing employees to focus on providing better
customer service and managing growth rather than repetitive paperwork
4)
Analyze customer preferences using
digital data and personalize offers:- E-businesses
can collect data on customer behavior—like what items are viewed most or which
products are often bought together. Businesses then use this information to
recommend products or give discounts tailored to each shopper. Netflix, for
example, analyzes user activity to suggest movies each person is likely to
enjoy, keeping customers engaged and boosting sales
5)
Compete better by delivering products
worldwide:- Online businesses aren’t limited to local competition; they can
ship products globally and serve customers wherever they may be. A cosmetics
brand, for instance, can accept orders from around the world and deliver
directly, competing with international brands and growing its market share
IMPACT ON BUSINESS AND
SOCIETY:-
1)
Businesses enjoy faster sales growth and
increased competitiveness:- India’s e-commerce market is expected to expand by
12.5% in 2025 to about $211.6 billion, thanks to strong consumer demand for
online shopping on platforms like Flipkart, Amazon, and Myntra. For example,
Reliance Retail increased its reach and sales by launching JioMart online,
achieving rapid market growth far beyond its physical stores
2)
Global trade dynamics shift, with
companies quickly accessing international buyers and cutting out middlemen:- Many
Indian exporters and direct-to-consumer brands, such as FabIndia and Chumbak,
can now sell directly to overseas buyers using their websites and international
marketplaces, removing the need for brokers. Tata CLiQ and Nykaa ship branded
goods abroad, letting Indian fashion and beauty products compete globally without
traditional intermediaries
3)
Small businesses and startups get
opportunities to compete globally on platforms like Amazon and eBay (means buy
or sell (goods) through the eBay website) :- A handicraft artist
from Jaipur, for instance, can list her products on Amazon Global Selling or
eBay, reaching customers in the US, Europe, or Australia. Thousands of Indian
small businesses and startups have grown by connecting with worldwide shoppers
on these platforms, often with the support of the “Startup India” initiative.
4)
E-business creates jobs in logistics,
digital marketing, and customer service:- The rise of e-business in India has
generated millions of jobs in sectors like last-mile logistics (Delhivery, Ecom
Express), digital marketing agencies, and customer support centers, especially
in Tier-2 and Tier-3 cities. Large e-commerce events like Flipkart’s Big
Billion Days spur hiring for packaging, delivery, and technical support
5)
Payment, shipping, and supply chains
become more transparent:- Integration of UPI, secure gateways (Razorpay,
Paytm), and digital logistics tracking have made payment and shipping far more
transparent. Buyers can see order status in real time on platforms like
Bigbasket, and UPI-based payments provide instant confirmation, boosting trust
in online commerce.
6)
Communities benefit economically as
local businesses grow their reach:- A local saree vendor in Varanasi can now
sell across India using Meesho or Shopify, improving livelihoods and expanding
community wealth. In fact, 60% of new online sellers since 2021 are from Tier-2
and Tier-3 cities, democratizing business opportunities for previously offline
communities
CHALLENGES AND BARRIERS:-
1)
Small businesses face hurdles like high
initial costs for technology, lack of digital skills, security concerns, and
complex legal regulations.:- Setting up an e-commerce operation involves
website creation, digital marketing, inventory management software, and
adopting digital payment systems. For example, a local textile shop in Surat
may need to invest thousands of rupees to join an online marketplace or create
its own digital storefront, which is a significant upfront expense for small,
traditional retailers.
2)
Lack of Digital Skills:- Many small
business owners, especially in Tier-2 and Tier-3 Indian cities, are unfamiliar
with website management, social media marketing, or data analytics. For
instance, a small saree vendor in Varanasi may struggle to upload product
photos, optimize descriptions, or respond to online customer queries, making
digital transition difficult without training.
3)
Security Concerns:- Indian businesses
worry about online fraud, cyber attacks, and customer data breaches. A
Mumbai-based electronics reseller could hesitate to accept online payments due
to scams and hacking incidents, risking financial losses or reputation damage
if security isn’t robust.
4)
Complex
Legal Regulations:- Navigating India’s evolving e-commerce rules—such as
compliance with GST, data protection laws (like the 2023 Digital Personal Data
Protection Bill), and sector-specific restrictions—is tough for small firms.
For example, a small food business selling jams online has to register for
FSSAI (Food Safety and Standards Authority of India ) , follow online sales
regulations, and set up correct tax processes, all of which can be
overwhelming.
5)
Government Support and Raising
Awareness:- Recognizing these barriers, the Indian government offers
initiatives like the Digital MSME (Micro, Small, and Medium Enterprises )
scheme and partnerships with Amazon’s “Stand Up India” to provide digital
literacy, funding, and marketplace access for small businesses. Training
sessions, financial incentives, and startup mentorship help more local businesses
bridge the digital gap, access new markets, and compete online.
ELECTRONIC DATA
INTERCHANGE (EDI):- EDI is the exchange of business
documents between any two trading partners in a standard or structured, machine
readable form. EDI is used to electronically transfer documents such as
purchase orders, invoice, shipping bills, and communicate with one another. A
Specified format is set by both the parties to facilitate transmission of
information. Traders use Electronic Data Interchange EDI to exchange financial
information in electronic form. Electronic Fund Transfer facility provided by banks
is an example of Electronic Data Interchange EDI. EDI helps to eliminate paper-based
transactions.
EDI is an electronic way of
transferring business documents in an organization internally, between its
various departments or externally with suppliers, customers, or any
subsidiaries. In EDI, paper documents are replaced with electronic documents
such as word documents, spreadsheets, etc.
EDI DOCUMENTS:-The
most common documents exchanged via EDI are:
1)
Invoices
2)
Purchase Orders
3)
Financial Information letters
4)
Transaction Bills
5)
Shipping requests and notifications
6)
Acknowledgment and feedback
7)
Transcripts
8)
Claims
9)
Business Correspondence letters
COMPONENTS OF ELECTRONIC DATA INTERCHANGE EDI:-
1. Standard Document Format – A standard format agreed upon by both parties which do not require complicated hardware or software to access information. Both parties communicate directly through a business application.
2. Translator and Mapper – A translator is
used to convert the raw data into meaningful information according to
specifications provided by a mapper. A mapper is used to create conversion
specification. It compiles the specification and then gives instructions to the
translator on how to convert the data.
3. Communication Software – Communication
software is used to transmit data and convert business documents into a
standard format. It follows a standard communication protocol which is
incorporated in the software.
4. Communication Network – A communication
network provides a direct link between trading partners who are will to
exchange business documents through Electronic Data Interchange EDI.
(a) Modem – It is a hardware device that transmits data from one
computer to another.
(b) VAN
– A network that connect the computer system of one organization to another.
( c) Point to Point link – A direct communication link between two
computers.
APPLICATIONS OR USES OF
ELECTRONIC DATA INTERCHANGE EDI:-
1. Retail Sector – In the retail sector
profit margins usually depend upon efficient inventory management. EDI provides
a structured way to maintain and replace goods stocked at a retail outlet.
Retailers use a common model stock for each shop location and the point of sale
stock position is updated continuously and data in fed via EDI enabled SCM
(supply chain management) network. The EDI software monitors all the logistics
and makes updates in the original stock.
2. Manufacturing Sector – EDI ensures
effective and efficient management of materials required for production of a
commodity. In manufacturing sector EDI facilitates Material requirement
planning and just in time manufacturing. The Inventory position of OEM (Original
Equipment Manufacture) is constantly updated through EDI and the supplier is
notified about shortage of materials. This helps the supplier to plan and
schedule supply according to requirements of the manufacturer.
3. Automobile Sector – In automobile
sector EDI is used to keep customers updated with the current product and
pricing information during the purchase cycle. An advance shipping notice is
transmitted through EDI to the customers to prepare a loading schedule and to
ensure proper receipt of the product. The customer may also make payment on receipt
of goods via EDI to speed up the payment process.
4. Financial Sector – In the financial
sector EDI replaces the labour intensive activities of collecting, processing
and dispersing payments with an electronic system. It facilitates the flow of
payment between the bank accounts of trading partners without requiring any
human intervention. A payee`s bank account is electronically credited and the
payer`s account is electronically credited on the scheduled day of payment;
such an exchange is known as electronic fund transfer (EFT).
5. Computer-to-computer– EDI replaces
postal mail, fax and email. While email is also an electronic approach, the
documents exchanged via email must still be handled by people rather than
computers. Having people involved slows down the processing of the documents
and also introduces errors. Instead, EDI documents can straight through to the
appropriate application on the receiver’s computer (e.g., the Order Management
System) and processing can begin immediately. A typical manual process looks
like this, with lots of paper and people involvement.
6. Business documents – These are any of
the documents that are typically exchanged between businesses. The most common
documents exchanged via EDI are purchase orders, invoices and advance ship
notices. But there are many, many others such as bill of lading, customs
documents, inventory documents, shipping status documents and payment
documents.
7. Standard format– Because EDI documents
must be processed by computers rather than humans, a standard format must be
used so that the computer will be able to read and understand the documents. A
standard format describes what each piece of information is and in what format
(e.g., integer, decimal, mmddyy). Without a standard format, each company would
send documents using its company-specific format and, much as an
English-speaking person probably doesn’t understand Japanese, the receiver’s
computer system doesn’t understand the company-specific format of the sender’s
format.
WHAT ARE THE BENEFITS OF
ELECTRONIC DATA INTERCHANGE?:-
1. Reduction
in data entry errors. - Chances of errors are much less while using a computer
for data entry.
2. Shorter
processing life cycle - Orders can be processed as soon as they are entered
into the system. It reduces the processing time of the transfer documents.
3. Electronic
form of data:- It is quite easy to
transfer or share the data, as it is present in electronic format.
4. Reduction
in paperwork :- As a lot of paper documents are replaced with electronic
documents, there is a huge reduction in paperwork.
5. Cost
Effective :- As time is saved and orders
are processed very effectively, EDI proves to be highly cost effective
6. Standard
Means of communication :- EDI enforces
standards on the content of data and its format which leads to clearer
communication.
7. Automated
Data entry:- Data is entered
automatically by EDI software. For instance, when purchase order (PO) from one
company is received by another company. Sales order (SO) is automatically
generated at other company’s system with the help of EDI software.
8. Receipt
verification:- Receipt verification can
easily be done with help of EDI software. No human intervention is involved so
there are minimal chances of error or delay.
9. Data
Validation:- Data validation is
automatically done.
10. Availability
of free software-Free software’s are available depending upon the EDI format
chosen. For example- In TRADACOMS EDI format, Price Information file and order
files are available for free.
11. Low
cost-Lower administrative, resource and maintenance cost
12. Faster
processing-With the help of EDI, business processes can be executed at a much
faster rate as compared to the traditional method sending information.
DRAWBACKS OF EDI:-
1. Expensive-Setup
and maintenance of some of the formats of EDI is expensive.
2. Initial
setup is time consuming-Initial cost to setup EDI is time consuming
3. EDI
standard changes-The business process depends on EDI standard format. If any of
the standard format changes then the business process has to be changed
accordingly
4. System
electronic protection-An EDI enabled system needs electronic protection from
viruses, hacking, malware and other frauds.
5. Staff
training cost-Staff needs training in order to run EDI enabled software.
Investment has to be done in training.
6. Proper
backup-should be maintained as the whole data depends on EDI. In case of any
crash of EDI system, proper backup has to be maintained and extra cost is
required for it.
7. Limit
your trading partners-Some organization stops doing business which don’t use
EDI. For instance, Wal-Mart prefers to do business only with those organization
which uses EDI.
TYPES OF E-TRANSACTIONS:-
Types
of e-transactions include card payments (credit, debit, virtual),
electronic funds transfers (ACH (Automated
Clearing House), wire (wire transfers: Wire transfers represent less than 1% of
the total number of B2B payments ), RTGS (Real-Time Gross Settlement )), digital wallets (PayPal, Google Pay), mobile
payments (NFC (Near Field Communication ) , SMS ( Short Message Service ) -based),
and other methods like cryptocurrency and Buy Now, Pay Later (BNPL (Buy Now,
Pay Later )) options.
THERE ARE SEVERAL MAJOR
TYPES OF E-TRANSACTIONS (E-COMMERCE MODELS): - LIKE :- B2B, B2C, C2C, C2B, B2A, C2A
(1). B2B:- (Not directly to consumers) Business-to-business
(B2B), also called B-to-B, is a form of transaction between businesses such as
a manufacturer and wholesaler or a wholesaler and a retailer.
Business-to-business refers to commerce that's conducted between companies
rather than companies and individual consumers. They help you run operations
smoothly by saving time, reducing errors, and managing cash flow better. This
also strengthens your relationships with vendors, suppliers, and partners.
Examples of Common B2B Transactions:-
(1). Product purchases, (2). Wholesale purchases., (3). Services. (A real
estate investment company with a lot of apartment units to clean can’t hire an
individual to do all of that work ), (4). Partnerships
TYPES OF B2B PAYMENTS:-
1)
Credit Cards:- Credit cards offer a
convenient way to manage B2B payments, especially for short-term expenses. They
help with cash flow by allowing deferred payments and providing detailed
transaction records. Virtual credit cards add a layer of security, reducing
fraud risks in digital transactions.
2)
Wire Transfers:- Wire transfers are best
for high-value or urgent transactions, both domestically and internationally.
They provide real-time payments with immediate fund availability, though they
may involve higher fees and daily cut-off times
3)
Razorpay and Other Digital Payment
Platforms:- Razorpay provides a suite of digital payment solutions, including
Razorpay Payment Gateway, Payment Links, and International Payments, enabling
seamless B2B transactions. Other platforms, such as PayPal and Google Pay, also
facilitate secure and efficient online payments, catering to diverse business
needs.
4)
Paper Cheques:- While declining in use,
paper cheques remain relevant for businesses that prioritise security and
detailed audit trails. They offer traceability and do not require immediate
deposit, but processing times can be slow.
5)
Cash:- Cash payments provide immediate
settlement without transaction fees. Suitable for small, local transactions,
they eliminate the risk of interest charges but can affect cash flow visibility
and security.
(2). B2C OR BUSINESS-TO-CONSUMER:- B2C, or business-to-consumer, is a retail model where products or services move directly from a business to the end user who has purchased the goods or services for personal use. It is often contrasted with the business-to-business (B2B) model, which involves exchanging goods and services between businesses instead of between businesses and consumers.
The B2C
Business model applies to any business transaction where the consumer directly
receives goods or services, such as small businesses and entrepreneurs, retail
stores, restaurants and doctor's offices.
Common types of
e-commerce B2C companies include the following:-
1. Direct sellers:- These are the most common e-commerce
businesses; customers buy directly from online stores, such as Zappos.com,
Ikea.com and Target.com.
2. Intermediaries:- Rather than offering their own products or
services, these e-commerce companies offer a platform to connect buyers with
independent sellers and resellers. Online intermediaries often profit by
charging a small percentage of each sale from vendors. Consumers often use
intermediaries because they offer lower prices.
Examples include eBay, Etsy, Expedia, Facebook Marketplace and Poshmark.
3. Advertising-based:- These e-commerce companies use traffic-driving digital marketing strategies, such as content marketing and social media marketing, to connect shoppers with relevant advertisements for products and services. Advertising-based businesses profit from selling advertising space on websites and social media platforms. HuffPost is an example of this type of B2C company.
Affiliate
marketing is also an advertisement-based approach to B2C, in which a company
partners with content creators to promote their product through blogs or social
media posts.
4. Community-based:- Similar to advertising-based businesses,
community-based companies use online communities focused on specific
identities, interests and information. They use data they get from website
users, such as demographic data and geographic location, to connect those users
with targeted ads.
Examples
include social media sites like Facebook and online forums.
6. Fee-based:- These e-commerce businesses
require a paid subscription in exchange for unrestricted access to their
content, such as The Wall Street Journal, The New Yorker and Netflix.
(3). C2C
or CONSUMER-TO-CONSUMER or CUSTOMER-TO-CUSTOMER :- C2C is a business model
regularly defined as one consumer selling goods or services to another
consumer. When done online, C2C becomes a type of eCommerce. This C2C sale is
regularly facilitated by a third party that takes care of the transaction
details for a commission for bringing the parties—direct sellers and potential
customers—together while offering quality control that is acceptable to both.
Like:- eBay.
eBay is a prominent example of a C2C intermediary. It includes fixed-price and
auction items and appeals to customers seeking good deals and hard-to-find
products.
Amazon, Amazon is both a B2C and C2C platform. Its
Amazon Marketplace focuses on third-party sellers offering new and used items.
Selling on Amazon requires creating a seller account, listing products, and
shipping directly to the consumer or Amazon.
Example:- The
buyer may also get more competitive prices if sellers on the same C2C platform
compete. The most common term for these types of eCommerce platforms is
“marketplace.” The idea of a marketplace mirrors real-world examples like flea
markets, WHERE A BUILDING OWNER WILL OFFER BOOTHS TO SELLERS IN EXCHANGE FOR A
PERCENTAGE OF THE PROFITS.
(4). C2B:- C2B eCommerce (Consumer to Business) is a business
model in which consumers offer products, services, or content directly to
businesses on an online platform. In exchange, these consumers typically
receive compensation, such as monetary payments, discounts, or other incentives,
rewarding them for their contributions.
Examples:-
1.
Social Media Influencers:- Social Media Influencers promote products or
services for brands in exchange for payment or perks, such as a beauty
influencer reviewing skincare on Instagram to drive traffic to a company’s
website.
2.
Freelancers:- Freelancers on platforms like Upwork offer services like writing,
design, or software development to businesses.
3.
Incentivized Participants:- Consumers
participate in feedback programs, receiving discounts or incentives for surveys
or product reviews, often for new launches.
4.Bloggers:- Bloggers share sponsored posts for brands,
getting paid for exposure through their content.
5.
Photographers:- Photographers sell
stock images on platforms like Shutterstock, enabling businesses to purchase
images for marketing or content use.
Example:- Imagine there is a clothes shop in your
city called “AjayFashion Point.” Earlier, people used to go to the shop physically
to buy clothes. Now, the owner creates a website called www.ajayfashionpoint.com
On this
website:
ü Customers can see pictures of shirts, jeans, and
dresses
ü Each product has price, size, and description
ü There is a “Buy Now” or “Add to Cart” button
ü Customers can pay online (with UPI, card, etc.)
ü The shop delivers clothes to their homes
Examples
:- Amazon.in – You can buy anything like books, phones, and clothes., Flipkart.com – An Indian online shopping
site., Myntra.com – Specially for
clothes, shoes, and fashion items., Swiggy
/ Zomato – Online storefronts for food delivery.
E-MARKETPLACE:- E-marketplace is a virtual online market platform
where companies can register as buyers and sellers to conduct business to
business (B2B) or Business to Consumers (B2C) transactions over the internet.
The use of the internet has helped remove intermediaries in a transaction. It
is a web based information system which provides opportunities for both suppliers
and buyers.
It
enables the buyers to compare various products and services by different
measures like performance, quality, price etc. Buyers get access to a broader
range of products and services. On the other hand the sellers can reach the
customers more conveniently and affordably. Sellers gets to enter new markets,
find new buyers and increase sales by generating more value for the buyers.
Types
and Examples of E-marketplace:-
1. Independent E-marketplace:- The basic motive of this model is to generate
revenue. A B2B platform which is managed by a third party and is open to buyers
and sellers from a particular industry. When a party registers on an
independent e-marketplace it gets quotations or bids in a particular sector. Example- Alibaba
2. Buyer-oriented marketplace:- A bunch of people with similar business
interests come together to create an efficient purchase environment. This helps
a party get sufficient bargaining power to purchase at a desired price from the
supplier. A supplier can also benefit from this marketplace as it gives them a
customer base with which they can share their catalogue. Example – Amazon
3.Supplier-oriented
marketplace - This type of marketplace is also known as supplier’s directory.
It provides a platform for the seller to improve their visibility through
different mediums of communication. The suppliers can target the large number
of potential buyers. Example - E-bay
THE HAPPY END OF THE UNIT 1
No comments:
Post a Comment
PLEASE DO LEAVE YOUR COMMENTS