E-BUSINESS AND COMPUTERISED ACCOUNTING| Unit 1
Unit 1
E-BUSINESS AND COMPUTERISED ACCOUNTING
Definition of E-Commerce
The term electronic commerce (E-commerce) refers to a business model that allows companies and individuals to buy and sell goods and services over the Internet. E-commerce operates in four major market segments and can be conducted over computers, tablets, smartphones, and other smart devices.
History of E-Commerce
E-commerce is everywhere.but only few know that it has a history that goes back before the internet began.Almost majority of people might have shopped something online at some point, which means we have taken part in E-commerce.
E-commerce dates back to the 1960's when companies used an electronic system called the Electronic Data Interchange to facilitate the transfer of documents. But it was in 1994 that the very first transaction ,which involved the sale of a CD between friends through an online retail website called NetMarket took place.
The industry had gone through so many changes after that resulting in a great deal of evolution. When companies like Alibaba, Amazon, eBay, and Etsy became household names, traditional brick-and-mortar retailers were forced to embrace new technology in order to stay afloat .These companies created a virtual marketplace for goods and services that consumers can easily access.
New technology continues to make it easier for people to do their online shopping. People can connect with businesses through smartphones and other devices and by downloading apps to make purchases. The introduction of free shipping, which reduces costs for consumers, has also helped increase the popularity of the E-commerce industry.
E-Payment Mechanisms-Unit 2 notes click here
Advantages of E-Commerce
1.Overcome Geographical Limitations
Physical stores, are limited by the geographical area that you can service. With an e-commerce website, the whole world is your playground. Additionally, the advent of m-commerce, i.e., e-commerce on mobile devices, has dissolved every remaining limitation of geography.
2.Gain New Customers with Search Engine Visibility
Online retail is driven by traffic from search engines it is common that customers follow a link in search engine results and land on an e-commerce website that they have never heard of. This can boost the business.
3.Lower Costs
One of the most advantage of e-commerce is the lowered cost which is passed on to customers in the form of discounted prices. Costs can be reduced with e-commerce in advertising and marketing through organic search engine traffic, social media traffic and also the automation of checkout, billing, payments, inventory management, etc lowers the number of employees required to run an e-commerce setup.
4.Locate the Product Quicker
On an e-commerce website, customers can click through intuitive navigation or use a search box to narrow down their product search immediately. Some websites remember customer preferences and shopping lists to facilitate repeat purchase.
5.Eliminate Travel Time and Cost
E-commerce allows the customers to visit the store virtually, with just a few mouse clicks without the need of going physically to the store.
6.Provide Comparison Shopping
There are several online services that allow customers to browse multiple e-commerce merchants and find the best prices.
7.Enable Deals, Bargains, Coupons, and Group Buying
E-commerce enables the customer with deals, bargains, coupons, discounts etc which makes the shopping more convenient for the customer. The customer could do that online with a few mouse-clicks.
8.Provide Abundant Information
There are limitations to the amount of information that can be displayed in a physical store. E-commerce websites provide additional information easily available to customers in the form of reviews or feed back from customers as well as information from the manufacturers.
9.Create Targeted Communication
Using the information that a customer provides in the registration form, and by placing cookies on the customer's computer, an e-commerce merchant can access a lot of information about its customers. Thus it is easier for the merchant to target particular products for the targeted group.
10.Remain Open All the Time
Store timings are now 24/7/365. E-commerce websites can run all the time. From the merchant's point of view, this increases the number of orders they receive. From the customer's point of view, an "always open" store is more convenient.
11.Create Markets for Niche Products
Buyers and sellers of niche products can find it difficult to locate each other in the physical world. Online, it is only a matter of the customer searching for the product in a search engine. One example could be the purchase of obsolete parts. Today we can locate parts online with great ease.
Disadvantages of E-Commerce
1) Security
Lack of security is thus considered a major disadvantage of e-commerce.Online portals can be hacked by cyber criminals and hackers. It is a very serious issue as your account might be hacked because of negligence and wiped out of the existing cash.
A website cannot give this assurance that the financial information cannot be compromised on its portal. The website owner needs to take important steps to change its password so as to stop any data breaches.
2) Site crash
E-commerce is fully dependent on internet connection. A major disadvantage of e-commerce is site crash which has the ability to put a whole business down within a few seconds.
This can happen without good bandwidth connection as one will face serious issues while loading pages and placing orders. It is impossible to make a purchase if the site you are looking at crashes down.
3) No possibility of tried and tested product
One of the major disadvantages of e-commerce portal is that a customer is unable to try and test the product for his own satisfaction. People miss the tangible feeling and there is always the fear that the product will not meet the standard you are expecting.
4) Late delivery
Late delivery is one of the common disadvantages of e-commerce platforms. While ordering a product the customer is assured that it will reach him in maximum seven days or a particular time period. In most cases that does not happen and the customers are kept waiting for it. Such a situation makes the customer irritated.
5) Some products are difficult to buy online
There are certain products for instance eatables like ice cream, spectacles, and metals like gold and silver which most people do not want to buy online even if they have the option of doing so.
6) Lack of privacy
Lack of privacy is a serious disadvantage of e-commerce. A customer has to provide his personal details before making a purchase like address, name, and phone number and so on.
Some sites do not have advanced encrypted technology that can protect your personal details from hackers and it is a cause of grave concern. This sensitive information if is leaked can create lots of problems for a consumer.
Some sites collect the sensitive details illegally and this is why people are afraid to use e-commerce portals as they have to give personal details which can be misused.
7) Tax issues
E-commerce portals are accessible in most part of the world as it is not limited to a particular geographical location. When a customer makes a purchase he has to pay the tax on it and it becomes difficult to calculate the actual sales tax levied in that place.
The consumers thus face issues during the computation of tax and this is also an added disadvantage of e-commerce.
8) Legal issues
Several cyber laws have been implemented to protect the rights of both seller and buyer. If you are looking to create a website it is important that you go through the local laws as well as cyber laws so that you do not have to face any problems later on.
A serious disadvantage of e-commerce portals is that people either take care of local laws or cyber laws and fail to realize that you need to pay attention to both of them if you want to make a success of your business.
9) Huge technological cost
E-commerce requires advanced platforms to better their performance. If it faces disturbances in the form of software, network or domain issue it will not be able to offer seamless transactions.
The apt technical infrastructure is costly and needs huge investment. It also needs to be upgraded periodically to stay with changing times. Huge technological cost for a successful venture is a disadvantage of the e-commerce portal.
10) Shipping problems
E-commerce stores run successfully because it can ship its products from anywhere to everywhere with ease.This is not so on an online store where the customer has to choose and buy and then wait for the product to arrive at his doorstep within the stipulated time frame. Shipping is an integral part of commerce and if you do not have appropriate infrastructure then it can cause serious issues and become a disadvantage of e-commerce.
11) Fear
E-commerce transactions are mostly faceless and paperless without any due proof. Most of the organizations do not have a physical existence and customers are hesitant to make card payments beforehand.They fear that if the desired product does not arrive then they will lose their money.
12) High labour cost
High labour cost is a serious disadvantage of the e-commerce platform. You need to hire technically sound, trained and qualified workforce for your website who are talented and capable of handling them in an efficient manner.
13) Lack of personal touch
The personal touch at the physical store serves as an encouragement and feels good. The interaction with sales associates helps us in making choices. This experience is valuable but not available at online outlets and seems like a disadvantage of e-commerce.
14) Credit card fraud
Online transactions are mostly made by debit card, credit card, and internet banking and in very few cases with cash on delivery option. Though the website owners try to take every available precaution to protect the card details but what if the site is hacked by cyber criminals. The websites need to place proper blockers in place because the customers will lose faith and will stop making online payments.
15) Dependency on the website
An e-commerce site is heavily dependent on its website. If it is not properly projected or the software is not implemented the site can face technology hiccups. It then comes under the serious radar.
Customers tend to lose faith very easily and shift their loyalties to other portals that they find convenient. The portal will suffer substantial loss because of this action.
Do not keep all the eggs in one basket as the dependency on the website can prove a disadvantage of e-commerce in times of crises.
16) Severe competition
When there are unimaginable portals for a single product, it is surely a disadvantage of e-commerce because the competition turns inwards and the companies try harder to attract a large chunk of the consumer base.This forces them to drop their prices by allowing discounts, incentives and other allowances on their products. but to recover their money they compromise on the quality of the products and finally it is the customers who are made a fool of.
Difference between E-Commerce and E-Business
E commerce involves the purchase and sale of goods and services online and is actually just one part of an E-business. An E-business involves the entire process of running a company online. Put simply, it's all of the activity that takes place with an online business.E-Business encompasses executing all types of business transactions and services via the web. This includes procuring raw materials, supply chain management,online education, commercial transactions, monetary transactions on the internet and more. This indicates an online presence of all types of businesses and services.
E-commerce Vs Traditional Commerce
Traditional Commerce or Commerce is a part of business, which encompasses all those activities that facilitate exchange. Two kinds of activities are included in commerce,Traditional commerce is a branch of business which focuses on the exchange of products and services, and includes all those activities which encourages exchange, in some way or the other.E-Commerce means carrying out commercial transactions or exchange of information, electronically on the internet.Traditional commerce is done manually whereas e commerce is automatic
1. Cost effective
E-commerce is very cost effective when compared to traditional commerce. In traditional commerce, cost has to be incurred for the role of middlemen to sell the company’s product. The cost incurred on middlemen is eliminated in e-commerce as there is a direct link between the business and the customer. The total overhead cost required to run e-business is comparatively less, compared to traditional business.
For example, in running an e-business, only a head office is required. Whereas in traditional method, a head office with several branches are required to cater to the needs of customers situated in different places. The cost incurred on labour, maintenance, office rent can be substituted by hosting a website in e-business method.
2. Time saving
It takes a lot of time to complete a transaction in traditional commerce. E-commerce saves a lot of valuable time for both the consumers and business. A product can be ordered and the transaction can be completed in few minutes through internet.
3. Convenience
E-commerce provides convenience to both the customers and the business. Customers can browse through a whole directories of catalogues, compare prices between products and choose a desired product any time and anywhere in the world without any necessity to move away from their home or work place.
E-commerce provides better connectivity for its prospective and potential customers as the organization’s website can be accessed virtually from anywhere, any time through internet. It is not necessary to move away from their work place or home to locate and purchase a desired product.
4. Geographical accessibility
In traditional commerce, it may be easy to expand the size of the market from regional to national level. Business organizations have to incur a lot of expenses on investment to enter international market. In e-commerce it is easy to expand the size of the market from regional to international level.
By hosting a website, by placing advertisements on the internet and satisfying certain legal norms, a business can penetrate into global market. It is quite easy to attract customers from global markets at a marginal cost.
5. Introduction of new products
In traditional commerce, it takes a lot of time and money to introduce a new product and analyze the response of the customers. Initially, cost has to be incurred to carry out pilot surveys to understand the taste of the customers.
In e-commerce, it is easy to introduce a product on the website and get the immediate feedback of the customers. Based on the response, the products can be redefined and modified for a successful launch.
6. Profit
E-commerce helps to increase the sales of the organization. It helps the organization to enjoy greater profits by increasing sales, cutting cost and streamlining operating processes.
The cost incurred on the middlemen, overhead, inventory and limited sales pulls down the profit of the organization in traditional commerce.
7. Physical inspection
E-commerce does not allow physical inspection of goods. In purchasing goods in e-commerce, customers have to rely on electronic images whereas in traditional commerce, it is possible to physically inspect the goods before the purchase.
8. Time accessibility
Business is open only for a limited time in traditional commerce. Round the clock (24 x 7) service is available in e-commerce.
9. Product suitability
E-commerce is not suitable for perishable goods and high valuable items such as jewellery and antiques. It is mostly suitable for purchasing tickets, books, music and software. Traditional commerce is suitable for perishables and touch and feel items. Purchasing software, music in traditional commerce may appear expensive,
10. Human resource
To operate in electronic environment, an organization requires technically qualified staff with an aptitude to update themselves in the ever changing world. E-business has difficulty in recruiting and retaining talented people.
Traditional commerce does not have such problems associated with human resource in non electronic environment.
11. Customer interaction
In traditional commerce, the interaction between the business and the consumer is a “face-to-face”.
In electronic commerce, the interaction between the business and the consumer is “screen-to-face”. Since there is no personal touch in e-business, companies need to have intimate relationship with customers to win over their loyalty.
12. Process
There is an automated processing of business transactions in electronic commerce. It helps to minimize the clerical errors.
There is manual processing of business transactions in traditional commerce. There are chances of clerical errors to occur as human intervention takes place.
13. Business relationship
The business relationship in traditional commerce is vertical or linear, whereas in electronic commerce the business relationship is characterized by end-to-end.
14. Fraud
Lot of cyber frauds take place in electronic commerce transactions. People generally fear to give credit card information. Lack of physical presence in markets and unclear legal issues give loopholes for frauds to take place in e-business transactions.
Fraud in traditional commerce is comparatively less as there is personal interaction between the buyer and the seller.
E-commerce business models
E-commerce business modelscan generally be categorized into the following categories.
- Business - to - Business (B2B)
- Business - to - Consumer (B2C)
- Consumer - to - Consumer (C2C)
- Consumer - to - Business (C2B)
- Business - to - Government (B2G)
- Government - to - Business (G2B)
- Government - to - Citizen (G2C)
Business - to - Business
A website following the B2B business model sells its products to an intermediate buyer who then sells the product - to - Business to the final customer. As an example, a wholesaler places an order from a company's website and after receiving the consignment, sells the endproduct to the final customer who comes to buy the product at one of its retail outlets.
Indiamart is one of the best examples of B2B e-commerce business. Founded in 1999, the company’s mission is ‘to make doing business easy’. It is India’s largest B2B marketplace. With 60% market share of the online B2B Classified space in India, the channel focuses on providing a platform to Small & Medium Enterprises (SMEs), Large enterprises as well as individuals.
Business - to - Consumer
A website following the B2C business model sells its products directly to a customer. A customer can view the products shown on the website. The customer can choose a product and order the same. The website will then send a notification to the business organization via email and the organization will dispatch the product/goods to the customer.
Flipkart Flipkart started off with a direct-to-consumer model selling books and some other products, before turning to a marketplace model which connect sellers and buyers and expanding its catalogue. The sources of income to Flipkart include seller commission, advertisements, logistics and convenience fees.
Consumer - to - Consumer
A website following the C2C business model helps consumers to sell their assets like residential property, cars, motorcycles, etc., or rent a room by publishing their information on the website. Website may or may not charge the consumer for its services. Another consumer may opt to buy the product of the first customer by viewing the post/advertisement on the website.
OLX is another best example for C2C e-commerce business model which works according to above mentioned process but does not involves auctions. Rather they collect nominal fees to list the sellers’ product in the home page to attract the prospective buyer of that product. These websites even rate the sellers and buyers on basis of their past transactions, from which a new buyer can easily identify the genuine sellers.
Consumer - to - Business
In this model, a consumer approaches a website showing multiple business organizations for a particular service. The consumer places an estimate of amount he/she wants to spend for a particular service. For example, the comparison of interest rates of personal loan/car loan provided by various banks via websites. A business organization who fulfills the consumer's requirement within the specified budget, approaches the customer and provides its services.
Examples Freelancer.com Freelancer is an Australian crowd sourcing marketplace website, which allows potential employers to post jobs that freelancers can then bid to complete. Where the freelancers are mostly individuals who provides personalized jobs to the business organisations for some consideration. This is one of the best examples for C2B e-commerce business model.
Business - to - Government
B2G model is a variant of B2B model. Such websites are used by governments to trade and exchange information with various business organizations. Such websites are accredited by the government and provide a medium to businesses to submit application forms to the government.
Government - to - Business
Governments use B2G model websites to approach business organizations. Such websites support auctions, tenders, and application submission functionalities.
Consumer to government model
- The C2G, short for Consumer to Government model allows consumers to provide feedback or ask for information about government authority from the public sector. When you pay an electricity bill via the government website, it is a favourite E-commerce business model. Hence, the C2G model of business allows consumers to reach higher authorities without going around in circles. Example: A consumer can pay his income tax or GST online. The transaction involved in this case are C2G transactions.
Types of E-commerce Business Revenue Models
five common eCommerce revenue models that have proven to be highly successful over the years.
1. Sales Revenue Model
The most common of all eCommerce revenue models, here profits are achieved by selling products or providing services online versus, or in addition to, brick-and-mortar stores. Any business selling items through the internet, regardless of their business model, is following the sales revenue model. While they may have other revenue streams, this tends to be their bread-and-butter.
2. Advertising Revenue Model
The advertising revenue model is when popular platforms allow others to advertise with them for a fee. Media sites, such as magazines, newspapers, and TV channels also frequently use this model. While they may charge a flat fee for advertising, generally cost is based on pay-per-click (PPC), which is the number of people who click on the ad.
3 Subscription Revenue Model
When it comes to the subscription revenue model, a lot of people think of Netflix or Spotify. However, there are also many popular subscription box brands like Bark Box, Hello Fresh, Ipsy, and Harry’s. Regardless of the offering, with this model users are charged a recurring
fee (monthly or annual) for using services or having existing products replenished and delivered regularly. Today, there are an estimated 7,000 subscription box services operating globally!
4. Transaction Fee Revenue Model
This model charges a fee every time a transaction is made through their platform. For example, eBay charges sellers a fee whenever an item is sold; PayPal charges users a fee for transferring money; e-Trade gains a transaction fee whenever a stock is sold; and so on. While fees tend to be minimal, if people are making thousands of transactions per day, the revenue can be substantial!
5. Affiliate Revenue Model
With this model, businesses earn revenue just by promoting and selling another person’s (or company’s) product on their site The concept of affiliate marketing is based on revenue sharing. If a business has a product and wants to earn more, you can promote complementary products or services of another company that will, in turn, pay you for your referrals. It’s a win-win for both parties; the affiliate gains a new, passive revenue stream, and the merchant gains new customers!
Successful Business Models in India
Swiggy is a food delivery application that works on the hyper-local business model. The business model of Swiggy delivers food to customers with the help of business restaurants and delivery partners. The business model depends on two partnerships the restaurants and the delivery service.
- Restaurant partners: These are restaurants that take orders through the Swiggy application. The order comes through the website and app.
- Delivery partner: They provide the service of delivering food from the partner restaurant to the customer.
- The business model of Paytm is based in the Marketplace model, which also offers recharge, booking, and payment services. Paytm is an excellent example of a cashless business model. Paytm revenue model can be divided into five categories, which are Paytm Mall, Recharge, Bill Payments, Buy and sell, Paytm wallet, and Paytm bank.
The business model of Flipkart is based on the Business to Consumer model. Flipkart started as a book selling platform, which later developed into e-commerce with thousands of products that can be ordered online. Flipkart is a bridge between buyers and sellers in India. It has increased the reach of sellers in terms of area. Walmart owns Flip kart.
- The business model of Oyo is a mixture of aggregation and franchise business model. Oyo started as a hotel booking service. It booked hotel rooms in hotels exclusively for Oyo users. The payment was made monthly, and Oyo rented the rooms at its price. The nature of the business model is almost the same as today’s model. Now instead of booking rooms for the customers, Oyo sells its franchise to hotels.
5. Byju’s business model
Byju’s is an online learning service founded by Byju Raveendran. He helped his friends to crack CAT and scored a 100 percentile in the exam. Instead of pursuing an MBA in IIMs, he started his dream of doing something big. Thus he founded Byju’s.
The business model of Byju’s is freemium. The students have to provide full details about them to the website, and they can test the service in its 15 days free trial period.
Syllabus for Unit 1
Unit -1 E-BUSINESS 10 Hrs Introduction, E-Commerce – Definition, History of E-commerce, Difference between E - Commerce and E – Business, E-Commerce v/s Traditional Commerce, Strengths, Weakness, Opportunities and Challenges of E- Commerce, E-Commerce Business models –B2C, B2B, C2B, C2C, B2G, C2G, Types of Ecommerce Business Revenue Models, Successful Business Models in India
Comments
Post a Comment