A STUDY ON E-BUSINESS

My India Project Report

Submitted in partial fulfillment for the award of the Degree of
Bachelor of Commerce

by
K.MOHAMMED SHAKEEB UR RAHMAN
RA2031201040088

Under the Guidance of

Dr. E. NIXON AMIRTHARAJ
Assistant Professor

DEPARTMENT OF COMMERCE
COLLEGE OF SCIENCE & HUMANITIES
SRM INSTITUTE OF SCIENCE & TECHNOLOGY
VADAPALANI CAMPUS, CHENNAI
OCTOBER – 2021
 CERTIFICATE

This is to certify that the My India Project work titled “A STUDY ON E-

BUSINESS ” is a bonafide work of K.MOHAMMED SHAKEEB UR RAHMAN

(RA2031201040088) carried out in partial fulfillment for the award of the degree of Bachelor

of Commerce, College of Science & Humanities, SRM Institute of Science & Technology,

Vadapalani campus under my guidance. This Project work is original and not submitted

earlier for the award of any degree of any other institutions.

Subject Name: My India Project

Subject Code: UMI20S01L

Marks Awarded: _____ / 50

Place: Chennai

Guide Head of the Department

(Dr. E. NIXON AMIRTHARAJ) (Dr. V.VENKATRAGAVAN)
Assistant Professor

Date of Submission:
INTRODUCTION
Online Business or e-business is any kind of business or commercial transaction that
exchange of products and services between businesses, groups, and individuals and can be
seen as one of the essential activities of any business. Electronic commerce focuses on the
use of information and communication technology to enable the external activities and
relationships of the business with individuals, groups, and other businesses, while e-business
refers to business with help of the internet. Electronic business differs from electronic
commerce as it does not only deal with online transactions of selling and buying of a product
and/or service but also enables to conduct of business processes (inbound/outbound logistics,
manufacturing & operations, marketing and sales, customer service) within the value chain
through internal or external networks. The term "e-business" was coined by IBM's marketing
and Internet team in 1996.

HISTORY

One of the founding pillars of electronic business was the development of the Electronic Data
Interchange (EDI) electronic data interchange. This system replaced traditional mailing and
faxing of documents with a digital transfer of data from one computer to another, without any
human intervention. Michael Aldrich is considered the developer of the predecessor to online
shopping. In 1979, the entrepreneur connected a television set to a transaction processing
computer with a telephone line and called it "teleshopping", meaning shopping at distance.
From the mid-nineties, major advancements were made in the commercial use of the
Internet. Amazon, which launched in 1995, started as an online bookstore and grew to
become nowadays the largest online retailer worldwide, selling food, toys, electronics,
apparel and more. Other successful stories of online marketplaces include eBay or Etsy. In
1994, IBM, with its agency Ogilvy & Mather, began to use its foundation in IT solutions and
expertise to market itself as a leader of conducting business on the Internet through the term
"e-business." Then CEO Louis V. Gerstner, Jr. was prepared to invest $1 billion to market
this new brand.

After conducting worldwide market research in October 1997, IBM began with an eight-page
piece in The Wall Street Journal that would introduce the concept of "e-business" and
advertise IBM's expertise in the new field.[6] IBM decided not to trademark the term "e-
business" in the hopes that other companies would use the term and create an entirely new
industry.[7] However, this proved to be too successful and by 2000, to differentiate itself, IBM
launched a $300 million campaign about its "e-business infrastructure" capabilities. [7] Since
that time, the terms, "e-business" and "e-commerce" have been loosely interchangeable and
have become a part of the common vernacular.[8] According to the U.S. Department Of
Commerce, the estimated retail e-commerce sales in Q1 2020 were representing almost 12%
of total U.S. retail sales, against 4% for Q1 2010.

Business model

The transformation toward e-business is complex and in order for it to succeed, there is a
need to balance between strategy, an adapted business model (e-intermediary, marketplaces),
right processes (sales, marketing) and technology ( Supply Chain Management, Customer
Relationship Management). . When organizations go online, they have to decide which e-
business models best suit their goals.[10] A business model is defined as the organization of
product, service and information flows, and the source of revenues and benefits
for suppliers and customers. The concept of the e-business model is the same but used in the
online presence.

Revenue model

framework for generating revenues. It identifies which revenue source to pursue, what value
to offer, A key component of the business model is the revenue model or profit model, which
is a how to price the value, and who pays for the value. It is a key component of a company's
business model. It primarily identifies what product or service will be created in order to
generate revenues and the ways in which the product or service will be sold.

Without a well-defined revenue model, that is, a clear plan of how to generate revenues, new
businesses will more likely struggle due to costs which they will not be able to sustain. By
having a revenue model, a business can focus on a target audience, fund development plans
for a product or service, establish marketing plans, begin a line of credit and raise capital.

Customer Relationship Management in e-business

Customer Relationship Management (CRM) is the strategy that is used to build relationships
and interactions with customers and potential/future customers. CRM provides better
customer service, allowing companies to analyze their past, current and future customers on a
variety of levels. It is one of the elements which is essential for any business, including e-
commerce because it allows companies to grow and succeed. It cannot be done without
technology. It is the formation of bonds between customers and the company. CRM impacts
e-commerce sites by becoming an essential part of business successes. Interactively
collecting and considering customer data helps to build a company's e-CRM capability,
which then leads to the company's corporate success. The goal of CRM is to establish a
profitable, long term 1-1 relationship with customers, by understanding their needs and
expectations. This strategy is using 2 different approaches: software applications and
software as a service.
E-commerce CRM (e-CRM) primarily focuses on customer experiences and sales that are
conducted online. Most e- CRM software has the ability to analyze customer information,
sales patterns, record and store data, and website's metrics, for example:

 Conversion rates
 Customer click-through rate
 E-mail subscription opt-ins
 Which products customers are interested in

Security

E-business systems naturally have greater security risks than traditional business systems,
therefore it is important for e-business systems to be fully protected against these risks. A far
greater number of people have access to e-businesses through the internet than would have
access to a traditional business. Customers, suppliers, employees, and numerous other people
use any particular e-business system daily and expect their confidential information to stay
secure. Hackers are one of the great threats to the security of e-businesses. Some common
security concerns for e-Businesses include keeping business and customer information
private and confidential, the authenticity of data, and data integrity. Some of the methods of
protecting e-business security and keeping information secure include physical security
measures as well as data storage, data transmission, anti-virus software, firewalls,
and encryption to list a few.

Privacy and confidentiality

Confidentiality is the extent to which businesses makes personal information available to

other businesses and individuals.[18] With any business, confidential information must remain
secure and only be accessible to the intended recipient. However, this becomes even more
difficult when dealing with e-businesses specifically. To keep such information secure means
protecting any electronic records and files from unauthorized access, as well as ensuring safe
transmission and data storage of such information. Tools such as encryption and firewalls
manage this specific concern within e-business

Authenticity

E-business transactions pose greater challenges for establishing authenticity due to the ease
with which electronic information may be altered and copied. Both parties in an e-business
transaction want to have the assurance that the other party is who they claim to be, especially
when a customer places an order and then submits a payment electronically. One common
way to ensure this is to limit access to a network or trusted parties by using a virtual private
network (VPN) technology. The establishment of authenticity is even greater when a
combination of techniques are used, and such techniques involve checking "something you
know" (i.e. password or PIN), "something you need" (i.e. credit card), or "something you are"
(i.e. digital signatures or voice recognition methods). Many times in e-business, however,
"something you are" is pretty strongly verified by checking the purchaser's "something you
have" (i.e. credit card) and "something you know" (i.e. card number).

Data integrity

Data integrity answers the question "Can the information be changed or corrupted in any
way?" This leads to the assurance that the message received is identical to the message sent.
A business needs to be confident that data is not changed in transit, whether deliberately or
by accident. To help with data integrity, firewalls protect stored data against unauthorized
access, while simply backing up data allows recovery should the data or equipment be
damaged.[17]

Non-repudiation

This concern deals with the existence of proof in a transaction. A business must have the
assurance that the receiving party or purchaser cannot deny that a transaction has occurred,
and this means having sufficient evidence to prove the transaction. One way to address non-
repudiation is using digital signatures.[17] A digital signature not only ensures that a message
or document has been electronically signed by the person, but since a digital signature can
only be created by one person, it also ensures that this person cannot later deny that they
provided their signature.

Access control

When certain electronic resources and information is limited to only a few authorized
individuals, a business and its customers must have the assurance that no one else can access
the systems or information. There are a variety of techniques to address this concern
including firewalls, access privileges, user identification and authentication techniques (such
as passwords and digital certificates), Virtual Private Networks (VPN), and much more.[17]

Availability

This concern is specifically pertinent to a business's customers as certain information must be

available when customers need it. Messages must be delivered in a reliable and timely
fashion, and information must be stored and retrieved as required. Because the availability of
service is important for all e-business websites, steps must be taken to prevent disruption of
service by events such as power outages and damage to physical infrastructure. Examples to
address this include data backup, fire-suppression systems, Uninterrupted Power Supply
(UPS) systems, virus protection, as well as making sure that there is sufficient capacity to
handle the demands posed by heavy network traffic.[17]

Cost Structure

The business internet which supports e-business has a cost to maintain of about $2 trillion in
outsourced IT dollars just in the United States alone. With each website custom crafted and
maintained in code, the maintenance burden is enormous. In the twenty-first century, look for
new businesses that will help standardize the look and feel of the internet presence of a
business to be more uniform in nature to help reduce the cost of maintenance.

The cost structure for e-businesses varies a lot from the industry they operate in. There are
two major categories that have commune characteristics. The first group is fully digital
businesses that don't provide any product or services outside of the digital world. This
includes for example software companies, social networks, etc. For those, the most
significant operational cost is the maintenance of the platform. Those costs are almost
unrelated to every additional customer the business acquires, making the marginal cost
almost equal to zero. This is one of the major advantages of that kind of business. The second
group are businesses that provide services or products outside of the digital world, like online
shops, for those costs are much harder to determine. Some common advantages over
traditional businesses are lower marketing cost, lower inventory cost, lower payroll, lower
rent, etc.

Security solutions

When it comes to security solutions, sustainable electronic business requires support for data
integrity, strong authentication, and privacy. Numerous things can be done in order to protect
our E-Business. Starting off with basic things like switch to HTTPS from old outdated HTTP
protocol which is more vulnerable to attacks. Furthermore, the other things that require full
attention are securing servers and admin panels, payment gateway security, antivirus and
anti-malware software, using firewalls is also a must, regular updates, and back up our data.
Access and data integrity

There are several different ways to prevent access to the data that is kept online. One way is
to use anti-virus software. This is something that most people use to protect their networks
regardless of the data they have. E-businesses should use this because they can then be sure
that the information sent and received to their system is clean.[17] A second way to protect the
data is to use firewalls and network protection. A firewall is used to restrict access to private
networks, as well as public networks that a company may use. The firewall also has the
ability to log attempts into the network and provide warnings as it is happening. They are
very beneficial to keep third parties out of the network. Businesses that use Wi-Fi need to
consider different forms of protection because these networks are easier for someone to
access. They should look into protected access, virtual private networks, or internet protocol
security.[17] Another option they have is an intrusion detection system. This system alerts
when there are possible intrusions. Some companies set up traps or "hot spots" to attract
people and are then able to know when someone is trying to hack into that area.

Encryption

Encryption, which is actually a part of cryptography, involves transforming texts or messages

into a code that is unreadable. These messages have to be decrypted in order to be
understandable or usable for someone. There is a key that identifies the data to a certain
person or company. With public-key encryption, there are actually two keys used. One is
public and one is private. The public one is used for encryption and the private one for
decryption. The level of the actual encryption can be adjusted and should be based on the
information. The key can be just a simple slide of letters or a completely random mix-up of
letters. This is relatively easy to implement because there is software that a company can
purchase. A company needs to be sure that its keys are registered with a certificate authority.
[17]

Digital certificate

The point of a digital certificate is to identify the owner of a document. This way the receiver
knows that it is an authentic document. Companies can use these certificates in several
different ways. They can be used as a replacement for user names and passwords. Each
employee can be given these to access the documents that they need from wherever they are.
These certificates also use encryption. They are a little more complicated than normal
encryption, however. They actually used important information within the code. They do this
in order to assure the authenticity of the documents as well as confidentiality and data
integrity which always accompany encryption.[17] Digital certificates are not commonly used
because they are confusing for people to implement. There can be complications when using
different browsers, which means they need to use multiple certificates. The process is being
adjusted so that it is easier to use.[17]

Digital signatures

A final way to secure information online would be to use a digital signature. If a document
has a digital signature on it, no one else is able to edit the information without being detected.
That way if it is edited, it may be adjusted for reliability after the fact. In order to use a digital
signature, one must use a combination of cryptography and a message digest. A message
digest is used to give the document a unique value. That value is then encrypted with the
sender's private key

Advantages

When looking at e-Business we have many advantages, which are mostly connected to
making doing business easier. The benefits of implementing e-Business tools are in the
streamlining of business processes and not so much in the use of technology. Here are some:

 Easy to set up: electronic business is easy to set up even from home, the only
requirements are software, a device and internet connection.
 Flexible Business Hours: There are no time barriers that a location-based business
can encounter since the internet is available to everyone all the time. Your
products and services can be accessed by everyone with an internet connection.
 Cheaper than Traditional Business: Electronic business is less costly than a
traditional business, but it is more expensive to set up. Transactions cost are also
cheaper.
 No Geographical Boundaries: The greatest benefit is the possibility of
geographical dispersion. Anyone can order anything from anywhere at any time.
 Government Subsidies: Digitalisation is very encouraged by the government and
they provide the necessary support.
 Newmarket entry: It has a great potential to enable an entry to a previously
unknown market that a traditional business could not.[22][23]
 Lower levels of inventory: Electronic business enables companies to lower their
level of inventory by digitalizing their assets. (i.e.: Netflix does not sell anymore
physical DVD's but proposes online streaming content instead).
 Lower costs of marketing and sales: E-commerce allows the actors of the industry
to advertise for their product/service offer (i.e.: house rental) at generally lower
costs than by promoting physically their business.
Disadvantages

Despite all the advantages, there are also some disadvantages that we need to address. The
most common limitations of electronic business are:

 Lack of Personal Touch: The products cannot be examined or felt before the final
purchase. In the traditional model, we have a more personal customer experience,
while in electronic business that is mostly not the case. Another missing factor of
personal touch could also be in online transactions.
 Delivery Time: Traditional business enables instant satisfaction as you obtain the
product the moment you purchase it, while in electronic business that is not
possible. There will always be a waiting period before you receive the product.
For example, Amazon assures one-day delivery. This does not resolve the issue
completely, but it is an improvement.
 Security Issues: Scams could be mentioned as a factor for people's distrust in
electronic business. Hackers can easily get customers' financial and personal
details. Some customer still finds it hard to trust electronic businesses because of
the lack of security, reliability and integrity issues
History and timeline of E-COMMERCE

The term was coined and first employed by Dr. Robert Jacobson, Principal Consultant to the
California State Assembly's Utilities & Commerce Committee, in the title and text of
California's Electronic Commerce Act, carried by the late Committee Chairwoman Gwen
Moore (D-L.A.) and enacted in 1984.

A timeline for the development of e-commerce:

 1971 or 1972: The ARPANET is used to arrange a cannabis sale between students
at the Stanford Artificial Intelligence Laboratory and the Massachusetts Institute
of Technology, later described as "the seminal act of e-commerce" in John
Markoff's book What the Dormouse Said.
 1976: Atalla Technovation (founded by Mohamed Atalla) and Bunker Ramo
Corporation (founded by George Bunker and Simon Ramo) introduce products
designed for secure online transaction processing, intended for financial
institutions.
 1979: Michael Aldrich demonstrates the first online shopping system.[7]
 1981: Thomson Holidays UK is the first business-to-business (B2B) online
shopping system to be installed.
 1982: Minitel was introduced nationwide in France by France Télécom and used
for online ordering.
 1983: California State Assembly holds first hearing on "electronic commerce" in
Volcano, California.Testifying are CPUC, MCI Mail, Prodigy, CompuServe,
Volcano Telephone, and Pacific Telesis. (Not permitted to testify is Quantum
Technology, later to become AOL.) California's Electronic Commerce Act was
passed in 1984.
 1983: Karen Earle Lile (AKA Karen Bean) and Kendall Ross Bean create e-
commerce service in San Francisco Bay Area. Buyers and sellers of pianos
connect through a database created by Piano Finders on a Kaypro personal
computer using DOS interface. Pianos for sale are listed on a Bulletin board
system. Buyers print list of pianos for sale by a dot matrix printer. Customer
service happened through a Piano Advice Hotline listed in the San Francisco
Chronicle classified ads and money transferred by a bank wire transfer when a
sale was completed.
 1984: Gateshead SIS/Tesco is first B2C online shopping system[10] and Mrs
Snowball, 72, is the first online home shopper[11]
 1984: In April 1984, CompuServe launches the Electronic Mall in the US and
Canada. It is the first comprehensive electronic commerce service.[12]
 1989: In May 1989, Sequoia Data Corp. introduced Compumarket, the first
internet based system for e-commerce. Sellers and buyers could post items for
sale and buyers could search the database and make purchases with a credit card.
 1990: Tim Berners-Lee writes the first web browser, WorldWideWeb, using
a NeXT computer.[13]
 1992: Book Stacks Unlimited in Cleveland opens a commercial sales website
(www.books.com) selling books online with credit card processing.
 1993: Paget Press releases edition No. 3[14] of the first[15] app store, The Electronic
AppWrapper[16]
 1994: Netscape releases the Navigator browser in October under the code
name Mozilla. Netscape 1.0 is introduced in late 1994 with SSL encryption that
made transactions secure.
 1994: IpswitchIMail Server becomes the first software available online for sale
and immediate download via a partnership between Ipswitch,
Inc. and OpenMarket.
 1994: "Ten Summoner's Tales" by Sting becomes the first secure online purchase
through NetMarket.[17]
 1995: The US National Science Foundation lifts its former strict prohibition of
commercial enterprise on the Internet.[18]
 1995: Thursday 27 April 1995, the purchase of a book by Paul Stanfield, product
manager for CompuServe UK, from W H Smith's shop within CompuServe's UK
Shopping Centre is the UK's first national online shopping service secure
transaction. The shopping service at launch featured W H Smith, Tesco, Virgin
Megastores/Our Price, Great Universal Stores (GUS), Interflora, Dixons Retail,
Past Times, PC World (retailer) and Innovations.
 1995: Amazon.com is launched by Jeff Bezos.
 1995: eBay is founded by computer programmer Pierre Omidyar as AuctionWeb.
It is the first online auction site supporting person-to-person transactions.[19]
 1995: The first commercial-free 24-hour, internet-only radio stations, Radio HK
and NetRadio start broadcasting.
 1996: The use of Excalibur BBS with replicated "storefronts" was an early
implementation of electronic commerce started by a group
of SysOps in Australia and replicated to global partner sites.
 1998: Electronic postal stamps can be purchased and downloaded for printing
from the Web.[20]
 1999: Alibaba Group is established in China. Business.com sold for US$7.5
million to eCompanies, which was purchased in 1997 for US$149,000. The peer-
to-peer filesharing software Napster launches. ATG Stores launches to sell
decorative items for the home online.
 1999: Global e-commerce reaches $150 billion[21]
 2000: The dot-com bust.
 2001: eBay has the largest userbase of any e-commerce site.[19]
 2001: Alibaba.com achieved profitability in December 2001.
 2002: eBay acquires PayPal for $1.5 billion.[22] Niche retail
companies Wayfair and NetShops are founded with the concept of selling
products through several targeted domains, rather than a central portal.
 2003: Amazon.com posts first yearly profit.
 2004: DHgate.com, China's first online B2B transaction platform, is established,
forcing other B2B sites to move away from the "yellow pages" model.[23]
 2007: Business.com acquired by R.H. Donnelley for $345 million.[24]
 2014: US e-commerce and online retail sales projected to reach $294 billion, an
increase of 12 percent over 2013 and 9% of all retail sales.[25] Alibaba Group has
the largest Initial public offering ever, worth $25 billion.
 2015: Amazon.com accounts for more than half of all e-commerce growth,
[26]
selling almost 500 Million SKU's in the US.
 2017: Retail e-commerce sales across the world reaches $2.304 trillion, which
was a 24.8 percent increase than previous year.[27]
 2017: Global e-commerce transactions generate $29.267 trillion,
including $25.516 trillion for business-to-business (B2B) transactions and $3.851
trillion for business-to-consumer (B2C) sales.[28]
Business application

An example of an older generation of avatar-style automated online assistant on a

merchandising website.

Some common applications related to electronic commerce are:

 B2B e-commerce (business-to-business)

 B2C e-commerce (business-to-consumer)
 Conversational commerce: e-commerce via chat
 Digital Wallet
 Document automation in supply chain and logistics
 Electronic tickets
 Enterprise content management
 Group buying
 Instant messaging
 Internet security
 Online auction
 Online banking
 Online office suites
 Online shopping and order tracking
 Online transaction processing
 Pretail
 Print on demand
 Shopping cart software
  Social networking
 Teleconference
 Usenet newsgroup
 Virtual assistant
 Domestic and international payment systems

Governmental regulation

In the United States, California's Electronic Commerce Act (1984), enacted by the
Legislature, and the more recent California Privacy Act (2020) enacted through a popular
election proposition, control specifically how electronic commerce may be conducted in
California. In the US in its entirety, electronic commerce activities are regulated more
broadly by the Federal Trade Commission (FTC). These activities include the use of
commercial e-mails, online advertising and consumer privacy. The CAN-SPAM Act of
2003 establishes national standards for direct marketing over e-mail. The Federal Trade
Commission Act regulates all forms of advertising, including online advertising, and states
that advertising must be truthful and non-deceptive.[29] Using its authority under Section 5 of
the FTC Act, which prohibits unfair or deceptive practices, the FTC has brought a number of
cases to enforce the promises in corporate privacy statements, including promises about the
security of consumers' personal information.[30] As a result, any corporate privacy policy
related to e-commerce activity may be subject to enforcement by the FTC.

The Ryan Haight Online Pharmacy Consumer Protection Act of 2008, which came into law
in 2008, amends the Controlled Substances Act to address online pharmacies.[31]

Conflict of laws in cyberspace is a major hurdle for harmonization of legal framework for e-
commerce around the world. In order to give a uniformity to e-commerce law around the
world, many countries adopted the UNCITRAL Model Law on Electronic Commerce (1996).
Internationally there is the International Consumer Protection and Enforcement Network
(ICPEN), which was formed in 1991 from an informal network of government customer fair
trade organisations. The purpose was stated as being to find ways of co-operating on tackling
consumer problems connected with cross-border transactions in both goods and services, and
to help ensure exchanges of information among the participants for mutual benefit and
understanding. From this came Econsumer.gov, an ICPEN initiative since April 2001. It is a
portal to report complaints about online and related transactions with foreign companies.

There is also Asia Pacific Economic Cooperation (APEC) was established in 1989 with the
vision of achieving stability, security and prosperity for the region through free and open
trade and investment. APEC has an Electronic Commerce Steering Group as well as working
on common privacy regulations throughout the APEC region.

In Australia, Trade is covered under Australian Treasury Guidelines for electronic commerce
and the Australian Competition & Consumer Commission[33] regulates and offers advice on
how to deal with businesses online,[34] and offers specific advice on what happens if things go
wrong.

In the United Kingdom, The Financial Services Authority (FSA)[36] was formerly the
regulating authority for most aspects of the EU's Payment Services Directive (PSD), until its
replacement in 2013 by the Prudential Regulation Authority and the Financial Conduct
Authority.[37] The UK implemented the PSD through the Payment Services Regulations 2009
(PSRs), which came into effect on 1 November 2009. The PSR affects firms providing
payment services and their customers. These firms include banks, non-bank credit card
issuers and non-bank merchant acquirers, e-money issuers, etc. The PSRs created a new class
of regulated firms known as payment institutions (PIs), who are subject to prudential
requirements. Article 87 of the PSD requires the European Commission to report on the
implementation and impact of the PSD by 1 November 2012.[38]
In India, the Information Technology Act 2000 governs the basic applicability of e-
commerce.

In China, the Telecommunications Regulations of the People's Republic of China

(promulgated on 25 September 2000), stipulated the Ministry of Industry and Information
Technology (MIIT) as the government department regulating all telecommunications related
activities, including electronic commerce.[39] On the same day, The Administrative Measures
on Internet Information Services released, is the first administrative regulation to address
profit-generating activities conducted through the Internet, and lay the foundation for future
regulations governing e-commerce in China.[40] On 28 August 2004, the eleventh session of
the tenth NPC Standing Committee adopted The Electronic Signature Law, which regulates
data message, electronic signature authentication and legal liability issues. It is considered the
first law in China's e-commerce legislation. It was a milestone in the course of improving
China's electronic commerce legislation, and also marks the entering of China's rapid
development stage for electronic commerce legislation.[41]

Forms

Contemporary electronic commerce can be classified into two categories. The first category
is business based on types of goods sold (involves everything from ordering "digital" content
for immediate online consumption, to ordering conventional goods and services, to "meta"
services to facilitate other types of electronic commerce). The second category is based on
the nature of the participant (B2B, B2C, C2B and C2C).[42]

On the institutional level, big corporations and financial institutions use the internet to
exchange financial data to facilitate domestic and international business. Data
integrity and security are pressing issues for electronic commerce.

Aside from traditional e-commerce, the terms m-Commerce (mobile commerce) as well
(around 2013) t-Commercehave also been used.
Global trends

In 2010, the United Kingdom had the highest per capita e-commerce spending in the world.
[44]
As of 2013, the Czech Republic was the European country where e-commerce delivers the
biggest contribution to the enterprises´ total revenue. Almost a quarter (24%) of the country's
total turnover is generated via the online channel.[45]

Among emerging economies, China's e-commerce presence continues to expand every year.
With 668 million Internet users, China's online shopping sales reached $253 billion in the
first half of 2015, accounting for 10% of total Chinese consumer retail sales in that
period. The Chinese retailers have been able to help consumers feel more comfortable
shopping online. e-commerce transactions between China and other countries increased 32%
to 2.3 trillion yuan ($375.8 billion) in 2012 and accounted for 9.6% of China's total
international trade. In 2013, Alibaba had an e-commerce market share of 80% in China. In
2014, there were 600 million Internet users in China (twice as many as in the US), making it
the world's biggest online market.China is also the largest e-commerce market in the world
by value of sales, with an estimated US$899 billion in 2016.Research shows that Chinese
consumer motivations are different enough from Western audiences to require unique e-
commerce app designs instead of simply porting Western apps into the Chinese market.

Recent research clearly indicates that electronic commerce, commonly referred to as e-

commerce, presently shapes the manner in which people shop for products. The GCC
countries have a rapidly growing market and are characterized by a population that becomes
wealthier (Yuldashev). As such, retailers have launched Arabic-language websites as a means
to target this population. Secondly, there are predictions of increased mobile purchases and
an expanding internet audience (Yuldashev). The growth and development of the two aspects
make the GCC countries become larger players in the electronic commerce market with time
progress. Specifically, research shows that the e-commerce market is expected to grow to
over $20 billion by the year 2020 among these GCC countries (Yuldashev). The e-commerce
market has also gained much popularity among western countries, and in particular Europe
and the U.S. These countries have been highly characterized by consumer-packaged goods
(CPG) (Geisler, 34). However, trends show that there are future signs of a reverse. Similar to
the GCC countries, there has been increased purchase of goods and services in online
channels rather than offline channels. Activist investors are trying hard to consolidate and
slash their overall cost and the governments in western countries continue to impose more
regulation on CPG manufacturers (Geisler, 36). In these senses, CPG investors are being
forced to adapt to e-commerce as it is effective as well as a means for them to thrive.

In 2013, Brazil's e-commerce was growing quickly with retail e-commerce sales expected to
grow at a double-digit pace through 2014. By 2016, eMarketer expected retail e-commerce
sales in Brazil to reach $17.3 billion.India has an Internet user base of about 460 million as of
December 2017.Despite being the third largest user base in the world, the penetration of the
Internet is low compared to markets like the United States, United Kingdom or France but is
growing at a much faster rate, adding around 6 million new entrants every month.In India,
cash on delivery is the most preferred payment method, accumulating 75% of the e-retail
activities. The India retail market is expected to rise from 2.5% in 2016 to 5% in 2020.

The future trends in the GCC countries will be similar to that of the western countries.
Despite the forces that push business to adapt e-commerce as a means to sell goods and
products, the manner in which customers make purchases is similar in countries from these
two regions. For instance, there has been an increased usage of smartphones which comes in
conjunction with an increase in the overall internet audience from the regions. Yuldashev
writes that consumers are scaling up to more modern technology that allows for mobile
marketing. However, the percentage of smartphone and internet users who make online
purchases is expected to vary in the first few years. It will be independent on the willingness
of the people to adopt this new trend (The Statistics Portal). For example, UAE has the
greatest smartphone penetration of 73.8 per cent and has 91.9 per cent of its population has
access to the internet. On the other hand, smartphone penetration in Europe has been reported
to be at 64.7 per cent (The Statistics Portal). Regardless, the disparity in percentage between
these regions is expected to level out in future because e-commerce technology is expected to
grow to allow for more users.
The e-commerce business within these two regions will result in competition. Government
bodies at the country level will enhance their measures and strategies to ensure sustainability
and consumer protection (Krings, et al.). These increased measures will raise the
environmental and social standards in the countries, factors that will determine the success of
the e-commerce market in these countries. For example, an adoption of tough sanctions will
make it difficult for companies to enter the e-commerce market while lenient sanctions will
allow ease of companies. As such, the future trends between GCC countries and the Western
countries will be independent of these sanctions (Krings, et al.). These countries need to
make rational conclusions in coming up with effective sanctions.

The rate of growth of the number of internet users in the Arab countries has been rapid –
13.1% in 2015. A significant portion of the e-commerce market in the Middle East comprises
people in the 30–34 year age group. Egypt has the largest number of internet users in the
region, followed by Saudi Arabia and Morocco; these constitute 3/4th of the region's share.
Yet, internet penetration is low: 35% in Egypt and 65% in Saudi Arabia.[57]

E-commerce has become an important tool for small and large businesses worldwide, not
only to sell to customers, but also to engage them.[58][59]

In 2012, e-commerce sales topped $1 trillion for the first time in history.[60]

Mobile devices are playing an increasing role in the mix of e-commerce, this is also
commonly called mobile commerce, or m-commerce. In 2014, one estimate saw purchases
made on mobile devices making up 25% of the market by 2017.[61]

For traditional businesses, one research stated that information technology and cross-border
e-commerce is a good opportunity for the rapid development and growth of enterprises. Many
companies have invested an enormous volume of investment in mobile applications. The
DeLone and McLean Model stated that three perspectives contribute to a successful e-
business: information system quality, service quality and users' satisfaction.[62] There is no
limit of time and space, there are more opportunities to reach out to customers around the
world, and to cut down unnecessary intermediate links, thereby reducing the cost price, and
can benefit from one on one large customer data analysis, to achieve a high degree of
personal customization strategic plan, in order to fully enhance the core competitiveness of
the products in the company.[63]

Modern 3D graphics technologies, such as Facebook 3D Posts, are considered by some social
media marketers and advertisers as a preferable way to promote consumer goods than static
photos, and some brands like Sony are already paving the way for augmented reality
commerce. Wayfair now lets you inspect a 3D version of its furniture in a home setting
before buying.[64]

Logistics

Logistics in e-commerce mainly concerns fulfillment. Online markets and retailers have to
find the best possible way to fill orders and deliver products. Small companies usually control
their own logistic operation because they do not have the ability to hire an outside company.
Most large companies hire a fulfillment service that takes care of a company's logistic needs.
[65]

Contrary to common misconception, there are significant barriers to entry in e-commerce.[66]

Impacts
Impact on markets and retailers

Store closing flags outside a Toys R Us in New Jersey. Despite investments, the chain
struggled to win market share in the age of digital commerce.

E-commerce markets are growing at noticeable rates. The online market is expected to grow
by 56% in 2015–2020. In 2017, retail e-commerce sales worldwide amounted to 2.3 trillion
US dollars and e-retail revenues are projected to grow to 4.891 trillion US dollars in 2021.
[67]
Traditional markets are only expected 2% growth during the same time. Brick and
mortar retailers are struggling because of online retailer's ability to offer lower prices and
higher efficiency. Many larger retailers are able to maintain a presence offline and online by
linking physical and online offerings.[68]

E-commerce allows customers to overcome geographical barriers and allows them to

purchase products anytime and from anywhere. Online and traditional markets have different
strategies for conducting business. Traditional retailers offer fewer assortment of products
because of shelf space where, online retailers often hold no inventory but send customer
orders directly to the manufacture. The pricing strategies are also different for traditional and
online retailers. Traditional retailers base their prices on store traffic and the cost to keep
inventory. Online retailers base prices on the speed of delivery.

There are two ways for marketers to conduct business through e-commerce: fully online or
online along with a brick and mortar store. Online marketers can offer lower prices, greater
product selection, and high efficiency rates. Many customers prefer online markets if the
products can be delivered quickly at relatively low price. However, online retailers cannot
offer the physical experience that traditional retailers can. It can be difficult to judge the
quality of a product without the physical experience, which may cause customers to
experience product or seller uncertainty. Another issue regarding the online market is
concerns about the security of online transactions. Many customers remain loyal to well-
known retailers because of this issue.[69][70]

Security is a primary problem for e-commerce in developed and developing countries. E-

commerce security is protecting business' websites and customers from unauthorized access,
use, alteration, or destruction. The type of threats include: malicious codes, unwanted
programs (ad ware, spyware), phishing, hacking, and cyber vandalism. E-commerce websites
use different tools to avert security threats. These tools include firewalls, encryption software,
digital certificates, and passwords.

Impact on supply chain management

Main article: Supply chain management

For a long time, companies had been troubled by the gap between the benefits which supply
chain technology has and the solutions to deliver those benefits. However, the emergence of
e-commerce has provided a more practical and effective way of delivering the benefits of the
new supply chain technologies.

E-commerce has the capability to integrate all inter-company and intra-company functions,
meaning that the three flows (physical flow, financial flow and information flow) of the
supply chain could be also affected by e-commerce. The affections on physical flows
improved the way of product and inventory movement level for companies. For the
information flows, e-commerce optimised the capacity of information processing than
companies used to have, and for the financial flows, e-commerce allows companies to have
more efficient payment and settlement solutions.

In addition, e-commerce has a more sophisticated level of impact on supply chains: Firstly,
the performance gap will be eliminated since companies can identify gaps between different
levels of supply chains by electronic means of solutions; Secondly, as a result of e-commerce
emergence, new capabilities such implementing ERP systems, like SAP ERP, Xero, or
Megaventory, have helped companies to manage operations with customers and suppliers.
Yet these new capabilities are still not fully exploited. Thirdly, technology companies would
keep investing on new e-commerce software solutions as they are expecting investment
return. Fourthly, e-commerce would help to solve many aspects of issues that companies may
feel difficult to cope with, such as political barriers or cross-country changes. Finally, e-
commerce provides companies a more efficient and effective way to collaborate with each
other within the supply chain.[71]

Impact on employment

E-commerce helps create new job opportunities due to information related services, software
app and digital products. It also causes job losses. The areas with the greatest predicted job-
loss are retail, postal, and travel agencies. The development of e-commerce will create jobs
that require highly skilled workers to manage large amounts of information, customer
demands, and production processes. In contrast, people with poor technical skills cannot
enjoy the wages welfare. On the other hand, because e-commerce requires sufficient stocks
that could be delivered to customers in time, the warehouse becomes an important element.
Warehouse needs more staff to manage, supervise and organize, thus the condition of
warehouse environment will be concerned by employees.

E-commerce brings convenience for customers as they do not have to leave home and only
need to browse website online, especially for buying the products which are not sold in
nearby shops. It could help customers buy wider range of products and save customers’ time.
Consumers also gain power through online shopping. They are able to research products and
compare prices among retailers. Also, online shopping often provides sales promotion or
discounts code, thus it is more price effective for customers. Moreover, e-commerce provides
products’ detailed information; even the in-store staff cannot offer such detailed explanation.
Customers can also review and track the order history online.

E-commerce technologies cut transaction costs by allowing both manufactures and

consumers to skip through the intermediaries. This is achieved through by extending the
search area best price deals and by group purchase. The success of e-commerce in urban and
regional levels depend on how the local firms and consumers have adopted to e-commerce. [72]

However, e-commerce lacks human interaction for customers, especially who prefer face-to-
face connection. Customers are also concerned with the security of online transactions and
tend to remain loyal to well-known retailers. In recent years, clothing retailers such
as Tommy Hilfiger have started adding Virtual Fit platforms to their e-commerce sites to
reduce the risk of customers buying the wrong sized clothes, although these vary greatly in
their fit for purpose.[73] When the customer regret the purchase of a product, it involves
returning goods and refunding process. This process is inconvenient as customers need to
pack and post the goods. If the products are expensive, large or fragile, it refers to safety
issues.

Impact on the environment

In 2018, E-commerce generated 1.3 million tons of container cardboard in North America, an
increase from 1.1 million in 2017. Only 35 percent of North American cardboard
manufacturing capacity is from recycled content. The recycling rate in Europe is 80 percent
and Asia is 93 percent. Amazon, the largest user of boxes, has a strategy to cut back on
packing material and has reduced packaging material used by 19 percent by weight since
2016. Amazon is requiring retailers to manufacture their product packaging in a way that
doesn't require additional shipping packaging. Amazon also has an 85-person team
researching ways to reduce and improve their packaging and shipping materials.[74]

Impact on traditional retail

E-commerce has been cited as a major force for the failure of major U.S. retailers in a trend
frequently referred to as a "retail apocalypse."[75] The rise of e-commerce outlets like Amazon
has made it harder for traditional retailers to attract customers to their stores and forced
companies to change their sales strategies. Many companies have turned to sales promotions
and increased digital efforts to lure shoppers while shutting down brick-and-mortar
locations.The trend has forced some traditional retailers to shutter its brick and mortar
operations.

Distribution channels

E-commerce has grown in importance as companies have adopted pure-click and brick-and-
click channel systems. We can distinguish pure-click and brick-and-click channel system
adopted by companies.

 Pure-click or pure-play companies are those that have launched a website without
any previous existence as a firm.
 Bricks-and-clicks companies are those existing companies that have added an
online site for e-commerce.
 Click-to-brick online retailers that later open physical locations to supplement
their online efforts.[78]

E-commerce may take place on retailers' Web sites or mobile apps, or those of e-commerce
marketplaces such as on Amazon, or Tmall from AliBaba. Those channels may also be
supported by conversational commerce, e.g. live chat or chatbots on Web sites.
Conversational commerce may also be standalone such as live chat or chatbots on messaging
apps and via voice assistants