Unit 3: Chapter 4: Email and E-Commerce

UNIT- 3

*E-mail :

Email is short for 'electronic mail'. Similar to a letter, it is sent via the internet to a recipient. An email address is required to receive email, and that address is unique to the user. Some people use internet-based applications and some use programs on their computer to access and store emails.

Advantages of email-

·        It's quick – your recipient receives your email as soon as they go online and collect their mail.

·        It's secure.

·        It's low cost.

·        Photos, documents and other files can be attached to an email, so that more information can be shared.

·        One email can be sent to more than one recipient at a time.

*Parts of an email message

An email message consists of the following general components:

Headers

The message headers contain information concerning the sender and recipients. The exact content of mail headers can vary depending on the email system that generated the message. Generally, headers contain the following information:

·        Recipient (To:). First/last name of email recipient, as configured by the sender.

·        Cc:Cc means carbon copy. For emailing, you use Cc when you want to copy others publicly

·        Bcc:Bcc means blind carbon copy. Bcc when you want to do it privately. Any recipients on the Bcc line of an email are not visible to others on the email

·        Subject. Subject is a description of the topic of the message and displays in most email systems that list email messages individually.

·        Attachments. Files that are attached to the message.

Body: The body of a message contains text that is the actual content, such as "Employees who are eligible for the new health care program should contact their supervisors by next Friday if they want to switch."  The message body also may include signatures or automatically generated text that is inserted by the sender's email system.

Emergence of E-commerce and M-commerce

*E-commerce:

E-Commerce or Electronic Commerce means buying and selling of goods, products, or services over the internet. E-commerce is also known as electronic commerce or internet commerce. These services provided online over the internet network. Transaction of money, funds, and data are also considered as E-commerce. These business transactions can be done in four ways: Business to Business (B2B), Business to Customer (B2C), Customer to Customer (C2C), and Customer to Business (C2B). The standard definition of E-commerce is a commercial transaction which is happened over the internet. Online stores like Amazon, Flipkart,Myntra, Ebay, Quikr, Olx are examples of E-commerce websites. 

             Electronic commerce or e-commerce (sometimes written as e commerce) is a business model that lets firms and individuals buy and sell things over the internet. E commerce, also known as electronic commerce or internet commerce, refers to the buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions. E-commerce is often used to refer to the sale of physical products online, but it can also describe any kind of commercial transaction that is facilitated through the internet.

 

 *Features of E-commerce

1.     Ubiquity- The traditional business market is a physical place, access to treatment by means of document circulation. For example, clothes and shoes are usually directed to encourage customers to go somewhere to buy. E-commerce is ubiquitous meaning that it can be everywhere. E-commerce is the world’s reduce cognitive energy required to complete the task.

2.     Global Reach- E-commerce allows business transactions on the cross country bound can be more convenient and more effective as compared with the traditional commerce. On the e-commerce businesses potential market scale is roughly equivalent to the network the size of the world’s population.

3.     Universal Standards- E-commerce technologies is an unusual feature, is the technical standard of the Internet, so to carry out the technical standard of e-commerce is shared by all countries around the world standard. Standard can greatly affect the market entry cost and considering the cost of the goods on the market. The standard can make technology business existing become more easily, which can reduce the cost, technique of indirect costs in addition can set the electronic commerce website 10$ / month.

4.     Richness- Advertising and branding are an important part of commerce. E-commerce can deliver video, audio, animation, billboards, signs and etc. However, it’s about as rich as television technology.

5.     Interactivity- Twentieth Century electronic commerce business technology is called interactive, so they allow for two-way communication between businesses and consumers.

6.     Information Density- The density of information the Internet has greatly improved, as long as the total amount and all markets, consumers and businesses quality information. The electronic commerce technology, reduce the information collection, storage, communication and processing cost. At the same time, accuracy and timeliness of the information technology increases greatly, information is more useful, more important than ever.

7.     Personalization- E-commerce technology allows for personalization. Business can be adjusted for a name, a person’s interests and past purchase message objects and marketing message to a specific individual. The technology also allows for custom. Merchants can change the product or service based on user preferences, or previous behavior.

 

*Types of E-Commerce Models / Business Models of E-commerce-

Electronic commerce can be classified into four main categories. The basis for this simple classification is the parties that are involved in the transactions. So the four basic electronic commerce models are as follows,

1. Business to Business(B2B)

This is Business to Business transactions. Here the companies are doing business with each other. The final consumer is not involved. So the online transactions only involve the manufacturers, wholesalers, retailers etc.

 B2B is shorthand for business to business. The products and services of the business are marketed to other businesses. Examples include advertising agencies, web hosting and graphic design services, office furniture manufacturers and landlords who lease office and retail space.

Business to business relationships are developed and ongoing, and the sales processes involved take longer than business-to-consumer relationships. B2B decision making may take place at more than one level. For instance, the salesperson meets with the departmental manager, who then has to get approval from the business owner before the sale is closed.

2. Business to Consumer(B2C)

Business to Consumer. Here the company will sell their goods and/or services directly to the consumer. The consumer can browse their websites and look at products, pictures, read reviews. Then they place their order and the company ships the goods directly to them. Popular examples are Amazon, Flipkart, Jabong etc.

The final customer is the consumer with a B2C business. Housecleaning services, restaurants and retail stores are examples of B2C companies. Websites that offer consumer products are B2C. The B2C sales cycle is shorter. The consumer is encouraged to buy the product immediately.

For example, a mother is looking for educational toys. She finds the site, reviews the product and buys the toy. Purchases are made on an emotional basis as well as on the basis of price and product. It gets a little confusing when the product is marketed to consumers but goes through several steps to get to the customer.

3. Consumer to Consumer (C2C)

Consumer to consumer, where the consumers are in direct contact with each other. No company is involved. It helps people sell their personal goods and assets directly to an interested party. Usually, goods traded are cars, bikes, electronics etc. OLX, Quikr etc follow this model.

   Sometimes known as Consumer to Consumer, E-Commerce involves electronically-facilitated transactions between individuals, often through a third party. One common example is online auctions, such as Ebay, where an individual can list an item for sale and other individuals can bid to purchase it. Auction sites normally charge commission to the sellers using them. They act purely as intermediaries who match buyers with sellers and they have little control over the quality of the products being offered, although they do try to prevent the sale of illegal goods, such as pirate CDs or DVDs.

4. Consumer to Business (C2B)

This is the reverse of B2C, it is a consumer to business. So the consumer provides a good or some service to the company. Say for example an IT freelancer who demos and sells his software to a company. This would be a C2B transaction. Sometimes known as Consumer to Business, is the most recent E-Commerce business model. In this model, individual customers offer to sell products and services to companies who are prepared to purchase them. This business model is the opposite of the traditional B2C model.

5. Business to Government (B2G)  which stands for business-to-government, refers to the business relationship a company can have with a government institution. It commonly refers to the offering of products, services, or information online. However, we use the term for traditional business procedures too.

6. G2B (government-to-business). This means government selling to businesses.

7. G2C (government-to-consumer or government-to-citizen). When the government gives somebody a tax rebate that is a G2C transaction.

Examples of E-Commerce

• Amazon
• Flipkart
• eBay
• Olx
• Quikr

 Advantages of E-Commerce

• E-commerce provides the sellers with a global reach. They remove the barrier of place (geography). Now sellers and buyers can meet in the virtual world, without the hindrance of location.
• Electronic commerce will substantially lower the transaction cost. It eliminates many fixed costs of maintaining brick and mortar shops. This allows the companies to enjoy a much higher margin of profit.
• It provides quick delivery of goods with very little effort on part of the customer. Customer complaints are also addressed quickly. It also saves time, energy and effort for both the consumers and the company.
• One other great advantage is the convenience it offers. A customer can shop 24×7. The website is functional at all times, it does not have working hours like a shop.
• Electronic commerce also allows the customer and the business to be in touch directly, without any intermediaries. This allows for quick communication and transactions. It also gives a valuable personal touch.

Disadvantages of E-Commerce

• The start-up costs of the e-commerce portal are very high. The setup of the hardware and the software, the training cost of employees, the constant maintenance and upkeep are all quite expensive.
• Although it may seem like a sure thing, the e-commerce industry has a high risk of failure. Many companies riding the dot-com wave of the 2000s have failed miserably. The high risk of failure remains even today.
• At times, e-commerce can feel impersonal. So it lacks the warmth of an interpersonal relationship which is important for many brands and products. This lack of a personal touch can be a disadvantage for many types of services and products like interior designing or the jewelry business.
• Security is another area of concern. Only recently, we have witnessed many security breaches where the information of the customers was stolen. Credit card theft, identity theft etc. remain big concerns with the customers.
• Then there are also fulfillment problems. Even after the order is placed there can be problems with shipping, delivery, mix-ups etc. This leaves the customers unhappy and dissatisfied.

*M-commerce

M-commerce (mobile commerce) is the buying and selling of goods and services through wireless handheld devices such as smartphones and tablets. As a form of e-commerce, m-commerce enables users to access online shopping platforms without needing to use a desktop computer. E-commerce stands for electronic commerce, wherein shopping is done over the internet. ... M-commerce implies the use of mobile devices, so people can do their business transactions anywhere they go as long as they can access the internet on their smartphones and can perform transactions with just a few taps on the screen.

                         M-commerce (mobile commerce) is the buying and selling of goods and services through wireless handheld devices such as smartphones and tablets.  As a form of e-commerce, m-commerce enables users to access online shopping platforms without needing to use a desktop computer.  Examples of m-commerce include  in-app purchasing, mobile banking, virtual marketplace apps like the Amazon mobile app or a digital wallet such as Apple Pay, Android Pay and Samsung Pay.  M-commerce can be categorized by function as either mobile shopping, mobile banking or mobile payments. Mobile shopping allows for a customer to purchase a product from a mobile device, using an application such as Amazon, or over a web app.

*E-Governance

 E-governance, expands to electronic governance, is the integration of Information and Communication Technology (ICT) in all the processes, with the aim of enhancing government ability to address the needs of the general public. The basic purpose of e-governance is to simplify processes for all, i.e. government, citizens, businesses, etc. at National, State and local levels.

In short, it is the use of electronic means, to promote good governance. It connotes the implementation of information technology in the government processes and functions so as to cause simple, moral, accountable and transparent governance. It entails the access and delivery of government services, dissemination of information, communication in a quick and efficient manner.

Benefits of E-governance

§  Reduced corruption

§  High transparency

§  Increased convenience

§  Growth in GDP

§  Reduction in overall cost.

§  Expanded reach of government

*Revenue Models Of E-commerce-

In business, revenue typically consists of the total amount of money received by the company for goods sold or services provided during a certain time period. Therefore, revenue models are a part of the business model. Many online companies generate revenues from multiple income streams such as advertising, subscription, affiliate marketing etc. 

1. Advertising Revenue Model

            Typically, fees are generated from advertisers in exchange for advertisements, which is ultimately the classic principal among the revenue models besides sales. Even if representatives of major media companies complain about earning less money with online advertising than with advertising in print or TV, the figures indicate steadily rising revenues.

                     The advertising revenue model is based on contacts making it one of the indirect sources of revenue. The conventional version is display-marketing - for example wallpaper, super banner, rectangle, skyscraper - which is paid according to traffic (invoice per CPC/cost-per-click or CPX/cost-per-action). The main online advertising variations are besides display-marketing, affiliate-marketing (advertising on many websites, CPX) and search-engine-marketing (CPC). Special models are e-mail-marketing and social-media-marketing. For advertisers with a lower budget for example the New York Times created a self-booking-tool for display-ads on a CPM(Cost-per-mille)-basis  And there are still rising new opportunities.

Examples: Google (e.g. AdWords and AdSense), Facebook, New (Marketing)

2. Subscription Revenue Model

                  Users are charged a periodic (daily, monthly or annual) fee to subscribe to a service. Many sites combine free content with premium membership, i.e. subscriber- or member-only content. Subscription fees do not depend on transactions. Subscribers use the content as long and often as they want.

Examples

§  Publishers and content services, e.g. newspapers, magazines, tv channels - they provide text, audio or video content to users who subscribe for a fee to get access to the service or to download the new issue: New York Times, Zattoo, Netflix

3. Transaction Fee Revenue Model

A company receives commissions based on volume for enabling or executing transactions.The revenue is generated through transaction fees by the customer paying a fee for a transaction to the operator of a platform. The company is a market place operator providing the customer with a platform to place his transactions.

                      During this process the customer may be presented as a buyer as well as a seller. To actively participate in this e-market, customers must register, so both parties of a transaction taking place are identified. From a business perspective, the offer is determined by others as customers offer their goods online and are acting as sellers. The amount of the transaction fee can be both – fixed and percentage calculated.

Example eBay, Amazon

4. Sales Revenue Model

 

Wholesalers and retailers of goods and services sell their products online. The main benefits for the customer are the convenience, time savings, fast information etc. The prices are often more competitive. In terms of online sales there are different models such as market places as common entry points for various products from multiple vendors.

Examples

§  the shops of single companies, sometimes based on web-catalogs (combines mail, online and telephone-ordering): Otto

§  e-tailers operating solely over the web: Amazon

5. Affiliate Revenue Model

 

The affiliate program is an online distribution solution which is based on the principle of commission. Merchants advertise and sell their products and services through links to partner-websites. It is a pay-for-performance model: Commissions are only paid for actual revenue or measurable success. An affiliate-link includes a code, which identifies the affiliate. That’s how clicks, leads or sales are tracked.

                           The affiliate therefore acts as the interface between merchants and customers. This model leads to a win-win situation: the merchants sell their products or services and the affiliates get their commissions. Variations include banner exchange, pay-per-click and revenue sharing programs. The affiliate model is well-suited for the web and therefore very popular.

 Examples: Amazon,affilinet

*Electronic Fund Transfer (EFT) -

An electronic funds transfer (also known as EFT) is a system for transferring money from one bank to another without using paper money. Its use has become widespread with the arrival of personal computers, cheap networks, improved cryptography and the Internet. Since it is affected by financial fraud, the electronic funds transfer act was implemented. This federal law protects the consumer in case a problem arises at the moment of the transaction.

The history electronic funds transfer originated from the common funds transfer of the past. Since the 19th century, and with the help of telegraphs, funds transfers were an usual thing in commercial transactions. Finally, it migrated itself to computers and became the electronic money transfers of today.

One of the most common EFT’s is Direct Deposit. It is used by employers for depositing their employees’ salary in a bank account. Other kind of EFT is the automatic charge to your check or savings account. For example, when you are paying a mortgage, the bank will discharge the monthly payment from a pre-accorded bank account. The benefit is that you won’t have to go to the bank to do it. It’s automatic. ATM’s are also used for EFT’s. Since an automatic teller machine is much cheaper than a group of bank tellers, it has helped to bring costs down and beneficiate the costumer.

*Electronic Data Interchange (EDI) -

              Electronic Data Interchange (EDI) is the electronic interchange of business information using a standardized format; a process which allows one company to send information to another company electronically rather than with paper. Business entities conducting business electronically are called trading partners.

Electronic data interchange (EDI) is the electronic transmission of structured data by agreed message standards from one computer system to another without human intervention. It is a system for exchanging business documents with external entities.

EDI refers to a family of standards and does not specify transmission methods, which are freely agreed upon by the trading partners.

The wide adoption of EDI in the business world facilitates efficiency and cost reduction. EDI is used in such diverse business-to-business relationships as:

• Interchanges between health care providers and insurers
• Travel and hotel bookings
• Education
• Supply chain management
• Administration
• Tax reporting