Unit 1 E-Commerce: Structure

UNIT 1 E-COMMERCE
Structure
1.1 Introduction
Objectives
1.2 Concept of Electronic Commerce: Features and functions of e-commerce
1.3 E-Commerce practices v/s traditional practices
1.4 Definition and types of e-commerce: B2B, B2C, C2C, B2E, C2B
1.5 Scope and limitations of E-commerce
1.6 E-commerce security
1.7 Summary
1.8 Keywords
1.9 Self-assessment questions
1.10 Answers to SAQ’s
1.11 References
1.12 Further Readings
1.1 INTRODUCTION
E-commerce is changing the way of doing business. The objective of this chapter is to get the
students acquainted with the basic concept of E-commerce. This chapter highlights the basic
elements e-commerce, the difference between traditional and electronic business.
Objectives:
After reading this chapter, you will be able to:
 Describe the concept of E-commerce
 Explain different levels of E-commerce
 Identify the Scope and limitations the e-commerce.
1.2 CONCEPT OF E-COMMERCE
In the past few years, enterprises across the globe have experienced significant changes in
their business information system. Huge investments were made in enterprise resource
planning system implementations but still they struggle to get timely information that is
needed to make effective business decision and to ensure continuous growth of enterprises.
Placing "e" in front of any process or function seemed to be the magic prescription for never
ending story of success and rapid returns for enterprises. E-business, e-procurement, e-sales,
e-payment, e-banking, e-CRM, e-CAD, e-delivery are just a few. Internet, for example is
becoming one of the most popular medium in transmitting various data. Users can find any
kind of information within a shorter time compared with conventional method that consumes
more time. The emergence of the Internet through out the world has been contributing such a
variety medium in doing business as well as people lifestyle. In fact, Internet is the essential
prerequisite for the existence of E- commerce.
DEFINITION
Electronic commerce or e-commerce has been defined as the ability to perform transactions
involving the exchange of goods or services between two or more parties using electronic
tools and technique. The explosion of E-commerce has created new phenomena in our
lifestyle especially in shopping activities. Consumers can easily buy products or services like
magazines and airlines tickets via Internet.
Kalakota and Whintons in 1997 defined the term E-commerce from different perspectives.
These perspectives are:
• Communication
• Business Process
• Service
• Online
Communication Perspective: According to this perspective, E-commerce is the delivery of

information, product/services or payments over tele-communication channels, computer
networks or any other electronic mode of communication.
Business Process Perspective: This says that E-commerce is the application of technology
towards the automation of business transactions and work flow.
Service Perspective: E-commerce is defines as a tool that addresses the desire of firms,
consumers and management to cut service cost while improving the quality of goods/services
and increasing the speed of service delivery.
Online Perspective: E-commerce provides the capability of buying and selling products and
information on the internet and other online services.
The term commerce is treated as transaction between business partners. Therefore, the term
e-commerce seems to fairly narrow to people. Thus some time we use the term e-business. It
is a broader definition of e-commerce. There is confusion among the consultants and the
academicians over the use of this term. Some think that e-commerce encompasses all worlds
of electronically based organizational activities that support a firm’s market exchanges –
including a firm’s entire information system’s infrastructure. On the other hand, some argue
that e-business encompasses the entire world of internal and external electronically based
activities including e-commerce.
Features
Electronic Commerce means better business communication and data interchange
information is essential for every business. The quality and quantity of information which a
business delivers to customers or use this information to make decisions can determine just
how competitive the business is.
SEVEN UNIQUE FEATURES OF E-COMMERCE TECHNOLOGY
Dimension of E-commerce Technology Significance in Business

Ubiquity The marketplace is extended beyond
Internet/Web technology is available every traditional boundaries and is removed from a
where: at work, at home, and elsewhere via temporal and geographic location.
mobile devices, anytime. “Marketspace” is created; shopping can take
place anywhere. Customer convenience is
enhanced, and shopping costs are reduced
Global Reach Commerce is enabled across cultural and
The technology reaches across national national boundaries seamlessly and without
boundaries, around the earth modification. “Marketspace” includes
potentially billions of consumers and
millions of businesses worldwide
Universal Standards There is one set of technical media standards
There is one set of technology standards, across the globe.
namely internet standards.
Richness Video, audio, and text marketing messages
Video, audio, and text messages are possible are integrated into a single marketing
message and consuming experience.
Interactivity Consumers are engaged in a dialog that
The technology works through interaction dynamically adjusts the experience to the
with the users individual, and makes the consumer a co
participant in the process of delivering goods
to the market
Information Density Information processing, storage, and
The technology reduces information costs communication costs drop dramatically,
and raises quality while currency, accuracy, and timeliness
improve greatly. Information becomes
plentiful, cheap, and accurate
Personalization / Customization Personalization of marketing messages and
The technology allows personalized customization of products and services are
messages to be delivered to individuals as based on individual characteristics
well as groups
1.3 E-COMMERCE PRACTICES V/S TRADITIONAL PRACTICES

Traditional Commerce E-Commerce
1. Heavy dependency on information 1. Information sharing is made easy via

exchange from person to person. electronic communication channels
making a little dependency on person
to person information exchange.
2. Communication/transactions are 2. Communication or transactions can

done in synchronous way. Manual be done in asynchronous way. The
intervention is required for each whole process is completely
communication or transaction. automated.
3. It is difficult to establish and 3. A uniform strategy can be easily

maintain standard practices in established and maintained in e-
traditional commerce. commerce.
4. Communications of business 4. In e-commerce, there is no human

depends upon individual skills. intervention.
5. Unavailability of a uniform platform, 5. E-commerce websites provide the

as traditional commerce depends user a platform where all the
heavily on personal communication. information is available at one place.
6. No uniform platform for information 6. E-commerce provides a universal
sharing, as it depends heavily on platform to support
personal communication. commercial/business activities across
the globe.
1.4 DEFINITIONS AND TYPES OF E-COMMERCE
Electronic commerce is the process of conducting commercial transactions electronically

over the Internet. This process is carried out primarily in five levels, and the main aspect of e-
commerce is a merchant selling products or service to the consumers. There are five major
segments under the broader category of e-business. However, the following are some popular
e-commerce models used by companies engaged in ecommerce:-
• Business to business e-commerce (B2B)

• Business to consumers e-commerce (B2C)
• Consumers to consumers e-commerce (C2C)
• Business to employees e-commerce (B2E) and
• Consumer to business e-commerce (C2B)
Business to Business E-commerce (B2B)
E-business is the process of conducting business on the Internet. Its scope includes not only
buying and selling but also services, fulfilling the needs of customers and collaborating with
business partners. Business to business e-commerce is smart business. The opportunity for
business to business e-commerce is even greater.
A wholesaler may sell products to the retailer. There are advanced e-commerce software
which support multi-tier pricing. This helps to set up online stores to offer preferred pricing
to some vendors and shared price to others.
This includes internet-enabled initiatives of an enterprise to form commercial linkages with

another enterprise, dealer, warehouse or manufacturer. In this form of e-commerce, e
paperwork and time-to-market get vastly reduced. Throughout the world, this ecommerce
mode is the biggest.
In a B2B transaction, the interaction is between businesses. For example, a website that is
catching for the steel industry might have facility for buyers and sellers to list their
requirements and post their products. It helps them in quickly closing the transactions and the
buyer can get quality, material and can choose from different suppliers.
B2B commerce is a growing business in the e-commerce arena- with the increasing use of the
internet, more and more business are realizing the commercial advantage of giving business
clients a streamlined and easy manner to order products or service online. It facilitates access
to the ordering process to only those with whom a concern has a commercial relationship.
Business to Business e-commerce provides small and medium enterprises (SMES) with an
excellent opportunity to access new markets, improve customer service and reduce costs.
And while hurdles exist, they should be viewed more as speed breakers rather than road
barriers. As a medium of information storage and dissemination, the internet has and is
emerging a clear winner. Its rate of penetration has far outpaced the growth of other popular
media such as newspaper, radio and television.
B2B transactions are however relatively high value in nature and organisations are slow to
change their traditional systems for the supply chain management. The reasons for the growth
in B2B e-commerce are many. In an increasing competitive scenario, e-commerce offers
highly attractive cost saving options. The shift to this process is often driven by the needs of
buyers.
Innovative methods of enhancing B2B and B2C levels of e-commerce include:
• CD-ROM catalogues that are linked to the user's online catalogue, enabling him to browse
offline and order online.
• Kiosks placed at physical store locations or in shopping malls to introduce users to the easy
online ordering options.
• Extranets to link businesses together that conduct regular business to .business transactions
and
• Affiliate programmes to drive business to your commerce site from other content related
sites.
B2B e-commerce is expected to be the largest mode of transacting e-business and is a global
phenomenon. It involves taking internet enabled initiatives to form commercial links with
other enterprises, dealers or manufacturers. In this form of e-commerce, a business firm
places orders for supplies with another business firms directly over the Internet. Paperwork
and time required for processing the order and delivery of the goods are thus reduced to a
great extent.
Business to Consumers E-commerce (B2C)
It is for the customers to buy stores from the web. The problem to be recognized in this is to
secure payment, using encryption, transaction integrity, quick response, time and reliability.
B2C e-commerce involves selling of goods and services to consumers or end users. It allows
them to browse the product catalogue, select products or services and complete the order
online.
In a B2C transaction, the interaction is between a consumer and the preferred business. For
example, the most popular site is amazon.com, which is the first online bookseller which has
proved a potential competitor to the traditional bricks and mortar booksellers such as Barrens
and Noble. In this category of e-commerce, businesses use the internet to offer to consumers
sales and services around the world 24 hours a day, seven days a week and 365 days a year,
The sites Amazon, Rediff and Uphar are among those belonging to this category. These
websites are meant for selling goods directly to consumers through the internet. The two way
accessibility of the internet enables operating companies to directly ascertain customer
preference and buying trends.
Businesses are using these consumer insights to formulate marketing strategies and offer to
the customers what they want and when they want. E-business in this mode significantly
reduces the costs associated with intermediaries, service centres and mass marketing
campaigns. Since e-commerce makes just in time delivery possible, the supplier does not
have to store the goods. He can procure them from the suppliers as and when he gets the
order from the buyer through the internet.
B2C is the most popular form of e-commerce, wherein the individuals are directly involved
in B2C e-commerce, and businesses use the internet for offering their products or services 24
hours a day through global access. The sites Amazon.com and Rediff are among these. These
websites spell goods directly to consumers over the Internet. The two way accessibility
feature of the internet enables operating companies to ascertain consumer preferences and
buying trends directly.
Consumer to Consumer E-commerce (C2C)

Here interaction is between consumer to consumer. For example, in sites like e-Buy Bid or
Buy.com, Baazi.com which are auction sites, one can virtually sell and buy any goods (either
used or new ones).
This form of e-commerce is nothing but the cyber version of the good old auction houses. If
anyone wants to sell anything, all one has to do is post a message on the site, giving details of
the product and the expected price and wait for an interested customer to turn up and buy it.
The buyer gets in touch with the seller through the Internet and the deal is crossed once the
amount is finalised. Online message boards and barters are also examples of C2C e-
commerce.
Consumer-to-Business E-commerce (C2B)
E-commerce, by empowering the customer, has been strategically redefining business. An

example of C2B model of e-commerce is the site Price line.Com, which allows prospective
airline travellers, tourists in need of hotel reservations etc. to visit its websites and indicate
their preferred price for travel between any two cities. If an airline is willing to issue a ticket
on the customers offered price, the consumer can then travel to the mentioned destination at
his terms.
Business to Employees E-commerce (B2E)
This is concerned more with marketing a corporation's internal processes more efficiently.
Customer care and support activities also hold ground. The requirement is that are all self-
service with applications on the web that the employees can use themselves.
1.5 THE SCOPE AND LIMITATIONS OF E- COMMERCE
The limitations of E-Commerce can be grouped into two categories which are:
• Technical limitations and
• Non-technical limitations
THE TECHNICAL LIMITATIONS OF E-COMMERCE

 There is a lack of s stem security, reliability, standards and communication protocols.
 There is insufficient telecommunication bandwidth.
 The software e development tools are still evolving and changing rapidly.
 It is difficult to integrate the Internet and E-Commerce software with some existing
applications and databases.
 Vendors may need special Web servers and other infrastructures in addition to the
network servers.
 Some E-Commerce software might not fit with some hardware or may be
incompatible with some operating systems or other components.
 As time passes, these limitations will lessen or be overcome; appropriate planning can
minimize their impact.
NON-TECHNICAL LIMITATIONS
Of the many non-technical limitations that slow the spread of E-Commerce, the following are
the major ones:
1. Lack of Awareness: The biggest challenge before successful e-commerce over the Net is
that of changing the minds and attitudes of the merchants in tune with the emerging
information technology. Further, optimism and strategic business projections are
required. If e-commerce has to be an alternate means of doing business in India, a new
awareness is needed, something that would cut through the hype and U.S. look alike.
Most of the business people do not understand the significance and implications of the
electronic business medium or are unsure of the quality and delivery schedule, physical
delivery of goods and mode of payment. Lack of awareness of the technology and its
potential benefits are also equally responsible for the poor growth of e-commerce. Lack
of interest and willingness to make a paradigm shift has become a crucial issue. Many
companies are not willing to accept that their businesses need a revolutionary change to
subsist in the potentially digital world.
In short, information technology should not be looked upon as an end but as a means to
achieve overall development. The IT sector is people intensive, ensuring vast
employment opportunities. The single most important challenge today pertains to
increasing awareness of the benefits of e-commerce to potential customers, educate the
market and the customers will themselves opt for these services. So, the e-commerce
fraternity should accept the fact that the customers are extremely demanding and that they
should be geared up towards this end and surpass the expectations of customers.
2. Lack of Infrastructure: E-commerce infrastructure development is at its infancy stage in
India. This unsatisfactory development is yet another major bottleneck for successful net
business in India. The lack of infrastructure, if made available as required, will ensure
that the investment in e- commerce starts flowing in because the business is happening
and infrastructure will grow. To improve the country's wide infrastructure, major players
must come forward to contribute their pie of technology. All the infrastructure framework
needed for virtual e-commerce has not been there from the very beginning when it was
started, there was a cry for the real shape of the virtual infrastructure for initiating
successful e-commerce. This high cost of infrastructure development for e-business is
also including the cost of leased lines.
3. Lack of Confidence: The people in India still show hesitancy in buying through the Net.
Lack of quality products, timely delivery of products as some of them tend to go out of
stock, lack of solutions security are the potential reasons for not developing e-commerce.
People do not understand this new way of buying and selling products, i.e. the services in
a digital environment which are available online.
4. Skeptic Attitude: Though the Internet is continuing to grow at a rapid rate, along with e-
commerce transactions, the shoppers are still skeptical about safety and have not been
quick to trust sending personal information such as credit card numbers or address over
the Net. Lack of adequate imagination and understanding of what web-based technologies
can do to markets and competition only adds to the delay in economic development. The
old business habits are demanding and controlling the business. The risk adverse attitude
of the people is conspicuous and waiting for others to lead is also another attitude.
5. Credit Cards Frauds: In India, distribution channels are just one part of the problem
related to e-payments. The bigger problem is that of security. All credit cards related
transactions are approved offline and given the high incidence of frauds, the banks are
extremely wary of approving them. In-fact, there are some unconfirmed reports of a
multi-national bank refusing to approve credit card transactions carried out by a large
Indian portal. Other drawbacks may include that the buyers are quite prepared to boot the
real mail for e-mail.
The e-tailers themselves are not yet ready to keep pace with the potential ecommerce and
this brings us to another point. Although e-commerce has the ingredients of being
successful, it may have come slightly ahead of its time. The e-commerce mechanism
eliminates the need for intermediaries. Unfortunately, this also has negative effects. So,
security needs to be extended to customers to gain their loyalty including substantial
business.
6. Absence of Tax Laws E-commerce over the Net has effectively eliminated national
borders. This has posed an important question as to tax on the transactions over the
internet. Net business posed many peculiar technological and legal problems making it
difficult to impose tax and formulate a sound taxation policy. The following are the
various tax implications of ecommerce:
• There is no fixed physical location for the internet.

• It is difficult to monitor or prevent transmissions of information or electronic cash
across the Net.
• Neither the users, administrators nor intermediaries have any control on the type of
information, either transactions or cyber cash and traveling through their networks.
• There is no emphasis on national boundaries, and messages travel across the boundaries
of several countries globally. So, it means no difference, whether the information or
electronic money sought to be transmitted are within one jurisdiction or between several.
• A person's location and identity is necessary for tax purposes. Since these two are
difficult, the anonymity on the Net would pose a big problem for taxations.
• Electronic commerce eliminates intermediaries or middlemen. Though it is an
advantageous feature, it also has negative effects because they could have served as
leverage points for collection of tax also as information sources for transactions entered
by the customers.
• In addition to technology problems, certain legal hurdles may also be encountered with
reference to international taxation laws.
• The difficulties in defining service incomes as distinguished from sale of products,
income or royalties cannot be ignored. So, it is desirable that the Net be turned as a
potential free trade zone.
7. Cyber Laws: Another important problem is lack of comprehensive cyber laws so as to

ensure safety and protection. There should not be any legal regulations, or barriers to
faster and increased development of e-commerce. The crying need of the hour is urgent
action to be taken by the Government to enact cyber laws including electronic fund
transfer, and amendments of official Secrets Act. Cyber laws are not in place. In other
countries, the business community is moving fast ahead, and stringent government
regulations are there. The technology is changing the business paradigm so fast;
government’s ability to proactively change the law is a very difficult task in India. In
addition to them, the fear regarding the security aspects of online transactions without
proper government directives and the existing policy machinery contribute to cyber
criminality. Adding to them, separate cyber laws and amendments are also required to
many existing laws like Companies Act, Evidence Act, Copyright Act, Bankers Book
Evidence Act, Indian Penal Code, Contract Act etc. The country entered into a cyber
space and documents through the computers should be made acceptable in a court of law.
This is actually a big hurdle on the way which would solve one big hurdle for the
business-to-business and business- to-customers e-commerce segment
8. Stock Dilemma: Many people are not too happy with e-commerce trends. Though online
shopping may be growing but so is frustration with it. A key source of dissatisfaction is
the out of stock dilemma. In most cases, advertised products or services are not available.
The options of feedback and not receiving suggestions are also reasons for annoyance.
Many online consumers want more detailed information on their purchases but are not
available. The Net is becoming more mainstream and the expectations are also becoming
more mainstream.
9. Internet Outrage Failures in networks and the Net itself can play havoc. We read of
frequent press reports of internet outrages. The IT industry is not yet attempting to
improve network reliability to prevent these outrages. Reliability is a major issue in net
business that needs to be attended. Though worldwide, many business people looking at
e-commerce as a blessing, many people also perceived the cyber space as a threat. There
are also reported evidences of enforcing new censorship regimes to prevent cyber crimes.
10. Blocking and Censorship People worldwide are under virtual slavery. It has been ISS
reported in some media that many countries are blocking their citizens from accessing the
Net, either partially or wholly. Censorship is enforced by some countries by stopping
either a total ban on the Net or controlling the access traffic or installing filters blocking
access to websites. Indian citizens enjoy unprecedented degree of freedom of speech and
therefore may constitute a threat to the government. Development in any field may prove
detrimental if it does not appreciate the code of ethics.
1.6 E-COMMERCE SECURITY
Security is an essential part of any transaction that takes place over the internet. Customers
will lose his/her faith in e-business if its security is compromised. Following are the essential
requirements for safe e-payments/transactions:
 Confidentiality - Information should not be accessible to an unauthorized person. It

should not be intercepted during the transmission.
 Integrity - Information should not be altered during its transmission over the network.
 Availability - Information should be available wherever and whenever required within
a time limit specified.
 Authenticity - There should be a mechanism to authenticate a user before giving
him/her an access to the required information.
 Non-Reputability - It is the protection against the denial of order or denial of
payment. Once a sender sends a message, the sender should not be able to deny
sending the message. Similarly, the recipient of message should not be able to deny
the receipt.
 Encryption - Information should be encrypted and decrypted only by an authorized
user.
 Auditability - Data should be recorded in such a way that it can be audited for
integrity requirements.
Measures to ensure Security
Major security measures are the following:

 Encryption - It is a very effective and practical way to safeguard the data being
transmitted over the network. Sender of the information encrypts the data using a
secret code and only the specified receiver can decrypt the data using the same or a
different secret code.
 Digital Signature -Digital signature ensures the authenticity of the information. A
digital signature is an e-signature authenticated through encryption and password.
 Security Certificates - Security certificate is a unique digital id used to verify the
identity of an individual website or user.
1.7 SUMMARY
Thus, e-commerce is still commerce and still about human beings. Customers are still
customers and merchants want people at their end. They send confidential, personal and
financial information only by e-mail or can cash on the phone or might just prefer to visit in
person. E-commerce is just only a new way of doing business or an additional method of
doing business. It is a new generation technology, a new method of doing business with new
generation technology. Still, there are many drawbacks which fail to benefit the users of
technology to a great extent. E-commerce is to be viewed as business but not as a technology
issue. It must be business driven but not IT driven and initiatives must be integrated
thoroughly into the existing commerce structure and strategy
1.8 KEYWORDS
E-Commerce: Digitally enabled commercial transactions between and among

organizations and individuals.
B2B : Business to Business, means e-commerce transactions taking
place between business to business organizations.
B2C : Business to Consumers, means e-commerce transactions taking
place between business organizations and consumer directly.
C2C : Consumers to consumers e-commerce, means e-commerce
transactions taking place between consumer to consumer.
B2E : Business to employees e-commerce, means e-commerce
transactions taking place between business organizations to
employees.
C2B : Consumer to business e-commerce, means e-commerce
transactions taking place between consumer to business
organizations.
Cyber Law: Cyber law is that law which is used to deal with all cyber-
crimes, i.e., crimes done on internet.
1.9 SELF ASSESSMENT QUESTIONS
1. What is e-commerce? Discuss various characteristics of e-commerce.

2. Discuss various limitations of e-commerce.
3. “E-commerce is the new way to do business. Justify the statement.
4. What is scope of e-commerce in country like India?
5. Discuss various types of e-commerce models.
1.10 ANSWER TO SAQ’S
Refer the relevant text in this unit for answer to SAQ’s.
1.11 SUGGESTED READINGS
• Kalakota, Ravi and Whinston, Andrew B. “Electronic Commerce – A Manager’s Guide”, Pearson
Education, Inc.
• Kalakota, Ravi and Whinston, Andrew B. “Frontiers of Electronic Commerce”, Pearson Education,
Inc.
• Rich, Jason R. “Starting an E-Commerce Business”. IDG Books, Delhi, 2000.
• Samantha Shurety. “E-business with Net Commerce”, Addison Wesley, Singapore, 2001.
• Turban et al. “Electronic Commerce: A Managerial Perspective”, Pearson Education, Inc.
1.12 REFERENCES
1 V. Zwass, ‘Structure and macro-level impacts of electronic commerce: from technological infrastructure to
electronic marketplaces’, http://www.mhhe.com/business/mis/zwass/ecpaper.html (accessed May 2001).
2 T. Seideman, ‘What Sam Walton learned from the Berlin airlift’, Audacity: The Magazine of Business
Experience, Spring 1996, 52–61.
3 E. Turban, J. Lee, D. King and H.M. Chung, Electronic Commerce: A Managerial Perspective. Prentice
Hall, 1999.
4 www.whatis.com/ecommerce (accessed September 2000).
5 P. Timmers, Electronic Commerce – Strategies and Models for Business-to-Business Trading. John Wiley
& Sons, 2000.
6 http://www.straight-on.com/ecommerce_definition.htm (accessed September 2000).
7 www.ibm.com/e-business (accessed September 2000).
8 Walid Mougayar, Chairman of CommerceNet Canada.
9 Walid Mougayar ‘E-commerce? E-business? Who E-cares?’, COMPUTERWORLD, 2 November 1998;
http://www.cybermanagement.com/cw7.htm (accessed September 2001).
10 Walid Mougayar ‘E-commerce? E-business? Who E-cares?’ COMPUTERWORLD, 2 November 1998;
11 The Shorter Oxford English Dictionary, Vol. I, p. 376. Book Club Associates, 1983.
13 ‘Crisis continues as fuel blockades lift Thursday’, http://news.bbc.co.uk/hi/
english/uk/newsid_924000/924478.stm (accessed 14 September, 2000).
14 R. Kalakota and A.B. Whinston, Frontiers of Electronic Commerce, AddisonWesley, 1996.
15 DTI Report – Government’s Expenditure Plans for 2001–2002 (March 2001): http://
www.dti.gov.uk/expenditureplan/expenditure2001 (accessed December 2001).
16 DTI Report – Government’s Expenditure Plans for 2001–2002 (March 2001), Chapter 1 – ‘Delivering
Better Public Services’ (Figure
dti.gov.uk/expenditureplan/expenditure2001/intro_chap1/chap1/section3.htm (accessed December 2001).
17 Definition of peer-to-peer networking: www.whatis.com (accessed December 2001).
18 Choi et al., The Economics of Electronic Commerce. Macmillan Technical Publications, 1997, p. 18
19 ‘A study of on-line retailing 2000 – Forrester Research’: www.forrester.com (accessed March 2000).
UNIT 2 WORLD OF E-RETAILING
Structure
2.1 Introduction
Objectives
2.2 Advantages and Disadvantages
2.3 E-Retail Mix
2.4 Growth and Prospects
2.5 Product Categories
2.6 Market Penetration
2.7 Summary
2.8 Keywords
2.9 Self assessment questions
2.11 References
2.12 Further Readings
2.1 INTRODUCTION
The E-Retailing is the concept of selling of retail goods using electronic media, in particular,
the internet. The vocabulary electronic retailing, that used in internet discussions as early as
1995, the term seems an almost in evitable addition to e-mail, e-business and e-commerce,
etc. e-retailing is synonymous with business- to- consumer (B2C) transaction model of e-
commerce. Although e-retailing is an independent business model with certain specific
constituents like; trust model, electronic transaction process, etc, but in reality it is a subset of
e- commerce by nature.
E-Retailing refers to retailing over the internet. Thus an e-Retailing is a B2C (Business to
customer) business model that executes a transaction between businessman and the final
consumer. E-Retailers can be pure play businesses like amazon.com or businesses that have
evolved from a legacy business such as tesco.com.
Objectives:
After studying this unit, the student will be able to understand:

 The advantages and disadvantages of e-retailing
 Practice and trends in e-retailing the main tangible product categories
 E-retail mix
2.2 ADVANTAGES AND DISADVANTAGES OF E-RETAILING
Electronic retailing or e-tailing, as it is generally being called now, is the direct sale of
products, information and service through virtual stores on the web, usually designed around
an electronic catalogue format and auction sites. There are thousands of storefronts or e-
commerce sites on the Internet that are extensions of existing retailers or start-ups.
Penetration of computers and proliferation of the Internet has given rise to many new forms
of businesses, such as business process outsourcing, call center based customer relationship
management, medical transcription, remotely managed educational and medical services and
of course, electronic retailing. There are certain essential ingredients for an electronic
retailing business to be successful. One must consider these components well in advance
before setting up an electronic storefront. These essential components are:
 Attractive business-to-consumer (B2C) e-commerce portal

 Right revenue model
 Penetration of the Internet
E-Catalog – It is a database of products with prices and available stock.
Shopping Cart – The customers select their goodies and fill shopping cart. Finally, as in a
real store, at the time of checkout, the system calculates the price to be paid for the products.
A payment gateway – Customer makes payments through his/her credit card or e-cash. The
payment mechanism must be fully secure.
DEFINATION OF E- RETAILING
The sale of goods and services through the Internet. Electronic retailing, or e-tailing, can
include business-to-business and business-to-consumer sales. E-tailing revenue can come
from the sale of products and services, through subscriptions to website content, or through
advertising.
It is a play on the words "retail" and "e-commerce."
MEANING OF E-RETAILING
E-retailing uses internet as a medium for customers to shop for the goods or services. It can
be either Pure-plays or bricks-and-clicks. Pure-play uses internet as primary means of
retailing while bricks-and-clicks uses the internet as an addition to the physical store.
Now a day retailers have started offering almost everything under the sun on internet. From
products like groceries to services like online gaming and jobs, e-retailing covers all frontiers.
Unfortunately, India has lagged in e-retail growth story due to low density of internet
connections, lower penetration of credit cards and customer anxiety in using new
technologies. We now discuss these issues and suggest possible avenues for e-retailers to turn
them to their advantage.
BENEFITS OF E-RETAILING TO ORGANIZATIONS
The benefits to organizations are as follows:
• E-retailing expands the market place to national and international market with minimal
capital outlay, a company can easily and quickly locate more customers, the best suppliers,
and the most suitable business partners worldwide.
• E-retailing decreases the cost of creating, processing, distributing, storing, and retrieving
paper-based information. For example, by introducing an electronic procurement system,
companies can cut the purchasing administrative costs by as much as 85 percent.
• Ability for creating highly specialized businesses. For example, dog toys which can be
purchased only in pet shops or department and discounts stores in the physical world are sold
now in a specialized www.dogtoys.com
• E-retailing allows reduced inventories and overhead by facilitating “pull” type supply chain
management. In a pull-type system the process starts from customer orders and uses just-in-
time manufacturing.
• The pull-type processing enables expensive customization of products and services which
provides competitive advantage to its implementers.
 E-retailing reduces the time between the outlay of capital and the receipt of products and
services.
 E-retailing initiates business processes reengineering projects By changing processes,
productivity of salespeople, knowledge workers, and administrators can increase by 100
percent or more.
 E-retailing lowers telecommunication cost the internet is much cheaper than value added
networks.
 Other benefits include improved image, improved customer service, new found business
partners, simplified processes, compressed cycle and delivery time, increased productivity,
eliminating paper, expediting access to information, reduced transportation costs, and
increased flexibility.
BENEFITS TO CONSUMERS
The benefits of E-retailing to consumers are as follows:
• E-retailing enables customers to shop or do other transactions 24 hours a day, all year
round, from almost any location.
• E-retailing provides customer with more choices; they can select from many vendors and
from many more products.
• E-retailing frequently provides customers with less expensive products and services by
allowing them to shop in many places and conduct quick comparisons.
• In some cases, especially with digitized products, E-retailing allows quick delivery.
Customers can receive relevant and detailed information in seconds, rather than days or
weeks.
• E-retailing makes it possible to participate ate in virtual auctions.
• E-retailing allow customers to interact with other customers in electronic communities and
exchange ideas as well as compare experiences.
• E-retailing facilitates competition, which results in substantial discounts..

BENEFITS TO SOCIETY
The benefits of E-retailing to society are as follows:
• E-retailing enables more individuals to work at home and to do less traveling for shopping,
resulting in less traffic on the roads and lower air pollution.
• E-retailing allows some merchandise to be sold at lowest prices, so less affluent people can
buy more and increase their standard of living.
• E-retailing enables people in third world countries and rural areas to enjoy products and
services that otherwise are not available to them.
• E-retailing facilitates delivery of public services, such as health care, education, and
distribution of government social services at a reduced cost and/or improved quality. Health
care services, e.g., can reach patients in rural areas.
2.3 E- RETAIL MIX
The marketing mix is the combination of techniques and tools that retailer’s and e-retailers
use to give their customers value. The marketers work on creating strategies that are aimed at
increasing customer satisfaction and increasing value for the customer. Over the past decade
there have been several attempts to update the marketing mix.
What are the 7Cs of e-retail mix?
C1 – Convenience for the customer

In the traditional marketing mix, place is a factor. Being able to place products where the
customers want them to be. In an e-retail, the retailers need to provide the products in places
they want them to be and this is usually on multiple channels. Customers like to be able to
buy online or buy in store for example. They also like the ability to buy online but return in
store and so on. The C1 also includes being easy to find the websites online, which involves
digital marketing, website design, SEO, page layouts and so on.
C2 – Customer value and Benefits

The product itself can offer benefits and customer value. It includes the serve and customer
satisfaction. The customers aren’t only buying the product; they are finding solutions to their
problems or making themselves feel good. Therefore the task of selecting the right range of
product for the customers is essential. Customers who buy online are not likely to request as
much help making their purchase compared with those who buy instore. E-shoppers often
decide not to buy the product if they need help, they will abandon the transaction and look for
an alternative product to buy. This is why descriptions are essential in e-retail. It’s vital to
provide the customer with plenty of help options that are easy to find and navigate online.
C3 – Cost to the Customer

The cost to the customer includes the real costs that the customer will have to pay, which
includes the cost of packaging and shipping, any additional taxes and so on. One of the
reasons customer’s abandons their transactions are finding out the shipping costs at the
checkout. Customers do think products should be cheaper online, compared with in-store.
C4 – Communication and Customer Relationships

Communication is basically promotion. Promotion is how the companies encourage people to
buy from them but communication is a two-way process. Communication includes feedback
from customers to the suppliers. The retailers have better communication with customers
compared to manufacturers as they are closer to customers and they can receive more
feedback from the customers. Communication includes:
 Emails
 Internet
 Marketing databases
 Public relation
 Surveys
 Marketing research
 Loyalty schemes
 Offline marketing may also be used alongside the online marketing
Reaching the emotional side of selling is also an essential part of customer value and
benefits. Customers like to get a good feeling when buying, but this can be difficult for e-
retailers to achieve. Face to face sellers can find the emotional needs of the customer a lot
easier and work hard to give the customer a tailored shopping experience using emotional
cues. E-retailers have to use the website enhancements to give a good experience to their
customers. Faster loading times, attractive visuals are some examples of how to improve the
customer experience online.
C5 – Computing and Category Management Issues

Meeting customer’s expectations is what makes retailers successful. Customers want what
they want, in the right quantities, in the right place at the right time. Customers now have a
lot of choice with some superstores holding tens of thousands of products, even millions of
products. Retail logistics had developed over time. Retailers have taken more control over
supply chains and wholesalers control has reduced. Supply chains have become more
efficient thanks to computer networks linking the suppliers and retailers. Modern retailers
are using real-time electronic point of sale data while others still use Electronic data
interchange that predates the Internet. The link and cooperation between the suppliers and
retailers is what increases the efficiency and helps to keep customers satisfied. More retailers
are now using the web to improve the efficiency of their supply chains.
C6 Customer Franchise
Successful retailers with brick and mortar stores have made large investments in providing
quality and the best customer service to increase customer loyalty and respect. Building the
trust and value of the image is the customer franchise. Lack of trust is one of the main factors
for limiting the growth of e-retail. Many of the brick and mortar retailers have quality brands,
the customers understand the brand and know their personality that have been backed by long
term corporate retailers. These established retailers have a head start trading online and the
new startups have to work a lot harder to build trust.
C7 Customer Care and Service

Retailing has long been classified as a service industry. In recent years the retailers have been
more preoccupied with services offered and service quality. Most retailer activities have a
focus on delivering some kind of service to the consumer, making products accessible and
offering competitive prices and assortments. All of these activities play a part in keeping the
customer satisfied.
For e-retailers, the quality service meant providing reliable and fast deliveries, at the time that
is convenient for the customer. They provide customers with help online and on the
telephone; they provide a way of returning and obtaining refunds. In the past, e-retailers
were poor at providing this level of service and many early online consumers remember their
negative experiences.
2.4 GROWTH AND PROSPECTS
Evolution of E-tailing in India
There is no denying the fact that e-commerce has re-entered India and is here to stay. Even
the small and medium retailers of the country want to ride the wave and are ready to make a
fortune out of the market place concept. It may be now that online shopping has become
popular but the concept of e-Commerce was introduced long back in the 20th century.
1991: Introduction of E-Commerce
The year 1991 noted a new chapter in the history of the online world where e-commerce
became a hot choice amongst the commercial use of the internet. At that time nobody would
have even thought that the buying and selling online or say the online trading will become a
trend in the world and India will also share a good proportion of this success.
2002: IRCTC taught India to Book ticket online
India first came into interaction with the online E-Commerce via the IRCTC. The
government of India experimented this online strategy to make it convenient for its public to
book the train tickets.
2003: Introduction of Low Cost Airline with Air Deccan
After the unpredicted success of the IRCTC, the online ticket booking system was followed
by the airlines (like Air Deccan, Indian Airlines, Spice-jet, etc.). Airline agency encouraged,
web booking to save the commission given to agents and thus in a way made a major
population of the country to try E-Commerce for the first time.
2007: The Deep Discounted model of Flipkart
The acceptance of the ecommerce on a large scale by the Indian people influenced other
business players also to try this technique for their E-businesses and gain high profits.
Though online shopping has been present since the 2000 but it gained popularity only with
deep discount model of Flipkart. In a way it re-launched online shopping in India. Soon other
portals like Amazon, Flipkart, Jabong, etc. started hunting India for their businesses.
2016: Current Scenario
Online shopping in its early stage was a simple medium for shopping with fewer options. The
users can just place an order and pay cash on delivery. But, in last few years this field has
been renovated to a high extent and hence fascinated many customers. Today, the online
shopping has become a trend in India and the reason behind the adoption of this technique
lies in the attractive online websites, user friendly interface.
Growth Factors of E-Retailing in India
As estimated by Euro-monitor report, Electronic retail growth of Indian market has already
touched Rs. 2700 crores in the year 2010 from Rs. 400 crores in 2005.
(http://indianecommercestory.blogspot.com/2010/01/etailing-market-in-india.html). E-
Retailing, which includes purchases of durable products such as electronic items, home and
kitchen appliances, as well as personal items like apparels and jeweler, constitutes 8 per cent
of the overall e-commerce market in India. The broadband and mobile penetration, 3G
rollout, cash on delivery, internet banking has led to rise in online transactions. Indian e-
Retail market is also expected to be more than INR 10,000 crores by 2015.
The Internet Economy Watch Report for the month of April 2015, released by the Internet &
Mobile Association of India (IAMAI), indicates 28.84 million people accessed various e-
tailing sites. There were 2453.35 million page views in the category. The user reach for job
and matrimonial websites is 16.28 million and 9.27 million respectively with 460.68 million
and 110.19 million respective page views. As compared to e-tailing and job and matrimonial
websites, online travel segment has less reach with 14.10 million reach and 490.22 million
page views. The total time spent by users on the etailing, online job portals, online
matrimonial portals and online travel portals was 52014276 seconds, 25687398 seconds,
7281667 seconds, and 22959918 seconds respectively
India has seen some dramatic changes in the way internet has affected the lives of the people.
Following are the essential factors which are responsible for significant growth of e-Retailing
in India.
a. Provision of Anywhere Anytime Services:

People nowadays find it easier shopping online, as the products get home-delivered coupled
with the facility to shop 24x7. Thus, an online buyer saves precious time, extra efforts and
money while buying online as compared to buying from physical stores.
Best Price with Better Bargains: e-Retailing eliminates the need to maintain expensive and
fancy showrooms. Instead, what attracts customer attention to online stores is the great deals,
best prices and better bargains.
b. Rising trend of cyber cities:
The rising trend of internet shopping has taken off more noticeably in metropolitans such as
Delhi and Mumbai where both consumers and merchants have become equally netsavvy.
There is also rise in internet shopping in small cities such as Chandigarh, Ludhiana,
Jalandhar, puducherry etc.
c. Mobile Governance:
Moreover the growth of the mobile communication i.e. mobile governance has led to the
growth of the online retailing as people are more accessible to internet 24 x 7.
d. Increased use of Net banking/credit cards/ debit cards:
The electronic transactions have been made secure by the use of various technologies. The
banks (RBI and others) are bringing out new guidelines (like one time passwords, security
questions) so that the online transactions can be made safe for the consumer.
e. Emergence of Nuclear Family in modern era:
In the present era, nuclear families are increasing and both husband and wife are working, as
they have less time to go to the market for purchasing commodities.
f. E-Retailing attraction for NRI’s :
Online shopping is a big attraction for the NRIs (non-resident Indian), the apparel and gifting
business online has maximum NRI consumers.
g. Emerging Rural India:
With increased internet and broadband penetration and schemes like e Choupal for the
convenience of farmers, the rural India is awakening. If farmers have to purchase any such
thing they have to come all the way to a nearby city. The online stores can offer them these
products and many good deals in a convenient way.
h. Mechanism of Product Comparison:
Most of the websites are providing product comparison facility wherein shopper can choose
the product which exactly suits him.
i. Government –Online Initiatives:
Online shopping trend is not just for consumer market. The Government is another rising user
of the online buying under the overall theme of e-Commerce. A series of initiatives from the
government, public sector banks and Indian Railways embracing the net, have helped to
boost the confidence of users to trade online in this sector as well.
j. Latest trend of Social Networking:
In the age of 21st Century, everyone wants to be in touch with friends and latest trends of
technology by using the social networking websites.
k. Internet Shopping Portal for e-Retailing:
Internet shopping portal are also responsible for incremental growth of e-Retailing industry
E-RETAILING PROSPECTS IN INDIA
The formalization and growth of E-Retailing will play a pivotal role in bringing sustainability
and economic viability to many facets of the economy. It will provide both direct and indirect
employment as well as support such infrastructure industries as logistics, telecom, etc. by
creating demand.
 In India, E-Retailing has the potential to grow more than hundred fold in the next 7
years to reach a value of USD 76 billion by 2021. The country’s growing Internet-
habituated consumer base, which will comprise ~180 million broadband users by
2020, along with a burgeoning class of mobile Internet users, will drive the E-
Retailing story.
 E-Retailing can provide employment to ~1.45 million people by 2021. Its growth will
spur the creation of new capabilities and human skills in the areas of logistics,
packaging, and technology. Additionally, such growth will promote the rise of service
entrepreneurs who will have the potential to earn ~USD 7.5 billion, annually, by
2021. It will open up international markets for the SME sector and can become an
important facilitator for the growth of the telecom and domestic air cargo industries.
 The growth of E-Retailing in India will be complementary to the growth of traditional
retail, and in no way be at cross purposes. On the contrary, it will improve efficiencies
and reduce transaction costs in retailing and thereby boost the productivity of
manufacturers (SMEs) and service providers.
 The potential of India’s E-Retailing will continue to remain untapped if the current
mindset, of exclusion and seeing E-Retailing as a “passing fad”, prevails. E-Retailing
is different from retail and therefore requires a different mindset and fresh thinking
from the policy makers as well as the private sector.
2.5 PRODUCT CATEGORIES
The year 2015 was a definitive year for Indian e-commerce. As the economy continued to
grow at a healthy 6-7%, the sluggish Chinese economy meant investors are looking at India
with renewed interest. Nobody cashed in bigger than the e-commerce players. Experts
believe that while the Indian e-commerce market is currently pegged at $5 billion, the figure
might leap to as much as $40-50 billion by 2020. A 2015 PwC report even states that Tier 2
and 3 cities have seen 30% to 50% rise in transactions.
With the rural and semi-rural markets catching up to the trend, no wonder the likes of
Flipkart, Amazon and Snapdeal are pulling out all their stocks to acquire customers with
hefty discounts. As 2015 makes way for 2016, here are the top 10 most promising e-
commerce categories in India currently.
Fashion
Undoubtedly the most popular B2C e-commerce category. The industry has grown by over
35% since 2009, and a large part of that is due to the apparels division. 2015 saw Indian e-
commerce portals like Flipkart and Snapdeal bag multi-billion dollar investments, with
Alibaba and Foxconn reportedly investing over $500 million into Snapdeal.
An interesting statistic here is that while previously, only 5% of the ecommerce transactions
were made with mobile devices, the figure has more than doubled in 2015. Some online
retailers even claim that over 70% of their orders are through mobile apps. This clearly
means that a majority of the world’s fast-growing internet population of 243 million are
moving in using mobile apps, thanks to cheap Chinese Smartphone and 3G connectivity.
Mobiles and Tablets
India is currently the third largest Smartphone market in the world, only after China and the
US. This year might see the country becoming the second biggest market. The large scale
influx of Chinese Smartphone manufacturers has fuelled a Smartphone revolution across the
country. The year 2014 alone saw 95 brands launch over 1,137 phones, and 2015 trumped it
several times over.
Consumer Electronics
Consumer Electronics is one of the top selling categories today and the country has
increasingly seen a number of online exclusive consumer electronics models. The restriction
of only being available online doesn’t stop these from being hugely popular. Snapdeal
released data about its big Electronics Sale, and it speaks a lot about who shops electronics
online today. Over 75% registrations were from mobile and over 70% were men. The most
important insight is that a sizeable 80% of the total registrations were from people between
the 18-34 age bracket, cementing the notion that it is the youth who primarily shop online.
Books
Believe it or not, books are what kick started the e-commerce revolution. Initial Flipkart and
Amazon buyers were too scared to fork out thousands, and books with 40-50% discount were
a big draw. While mobile and consumer electronics are currently the top-selling segments,
books continue to be one of the most attractive categories in the e-commerce space.
Movie Tickets
Skip the serpentine queues, the black-ticket dealers and the bad seats, sites like
BookMyShow now empower movie-goers in exchange for a small processing fee. With new
ticket booking portals cropping every day, even the official websites of cineplexes offer
booking services today. A cine-goer can book tickets, meals and even seats at the touch of a
button. It’s too sweet a deal for anybody to ignore.
Baby Products
Total Marketing Size is 10 billion USD and currently it has reached 10% of total market size.
In this segment demand is growing at 17% every ever year. With urban couples with high
disposable income on the rise, young mothers across the country shopped for their babies,
and they went all out. While niche sites like BabyOye might not have the numbers like
Amazon, Snapdeal or Flipkart, they have shown much promise.
Groceries
Total Indian retail market size is 500 billion US Dollar and out of it 290 US Dollar of
Grocery itself. Everyday 10 lacks people are ordering grocery through mobile apps and this
trend is increasing by 30% every month. Reliance Fresh and Reliance Fresh Direct have been
plagued with storage and sourcing issues, but that didn’t stop many a brave e-commerce
retailer like BigBasket and LocalBanya from entering grocery retail.
Around 67% of India’s retail spending is on food and groceries, and organized retail accounts
for a mere 15%. With estimates pegging the total opportunity at $20 billion by 2020, even the
Ambanis and the Birlas couldn’t ignore the allure of online grocery retail. According to
Technopak, the market for online grocery retail is growing at 25-30% across Indian metros.
Food Takeaway/Delivery
Food ordering over phone business size is 15 billion Dollar. Indian players in this segment
are delivering 10 thousand orders every day. India’s online takeaway/delivery sector has seen
a lot in the past 12 months. While Zomato and FoodPanda were in the news for firing
employees to stay afloat, India’s $15 billion food delivery market saw a steady influx of
newer players like Faasos and TinyOwl. You can’t blame them; just 1% of the industry is
online.
With segment leader Zomato now delivering in Indian metros, the likes of Ola Café making
their presence felt and hefty discounts, the consumers are in for a treat.
Home Furnishings
Total market size of this segment is 32 billion US Dollar. More than 90% of India’s furniture
and décor market has been with the unorganized sector. Carpenters and their brochures have
been ruling the roosts for centuries with their flexibility and value-for-money quotients.
However, with no provision for a realistic sense of quality or finish, the urban crowd with
sufficient disposable income is ready to spend a premium for good quality.
That’s where a fleet of online furniture and home décor sites like Pepperfry, FabFurnish and
UrbanLadder come in. Indians can now shop furniture and décor online that are sourced
globally from China, Malaysia and Indonesia. Swedish furniture giant Ikea has also
expressed interest in the market. The company announced it’ll launch 25 major stores across
four states with a hefty Rs 12,000 Crores investment by 2017.
Jewelry
If you believe people falter before they shop jewelry online, you are wrong. The mentality
seems to be, “If I can get an iPhone, why not buy jewelry at the same price?” With the latest
facial recognition and 3D imaging technology, several players currently provide a virtual
‘try-on’ experience.
Efficiency has been a big problem in the jewelry industry since ages. The bigger the store, the
lower the inventory rotation, the lesser its efficiency. With store rentals accounting for a mere
2-3%, jewelry sites like CaratLane realized there is huge potential of savings in terms of
stocks and working capital, and are more than willing to pass on that savings to the customer.
Investors around the world have fed close to $10 billion into Indian e-commerce. Critics
complain VCs are pumping billions into a model that’s already bleeding cash. However,
several industry experts believe it’s still too early to draw a conclusion on India’s potential.
This is the country with the world’s fast-growing internet population, and that is a general
indicator of the huge potential of e-commerce. India’s online commerce is on steroids right
now with billionaire VCs going all out till they buy off someone or lose all and go home.
There may or may not be any consolidation in the future, but the great Indian e-commerce
dream is obviously not for shallow pockets or faint hearts.
2.6 MARKET PENETRATION
Market Development and market penetration in case of Retail comes largely from extending
and building new product portfolios and embarking on multi channel strategies. Internet and
E Commerce have added a new dimension to the marketing strategies of retail companies.
Increasing Market Presence
E Commerce as a platform for market development is in its nascent stages especially in the
fashion retail segment as well as grocery segment. Retailers hereto are extending online
shopping to their existing customers as an add on facility rather than targeting new markets.
Retailers like Tesco and Sainsbury’s are currently pursuing multi channel sales strategy
where in they have established the Stores or the high street as well as mail order sales
channels.
With offering of online sales services, they are able to offer a convenient way of shopping to
their existing customers and may be able to swing a few customers from competition too.
Developing New Markets
The potential that E commerce provides to the Retail industry is to establish themselves in
new emerging markets through online selling. Amazon has created history by providing
online sales globally and targeting the new markets besides its UK & US markets. Online
selling enables Retail firms to start selling in new markets with negligible operational, selling
and distribution costs as compared to setting up an establishment in the new region.
New Market Development - Essentials
However harnessing new and emerging markets through E Commerce need to be driven
strategically by the Companies with complete understanding of the platform and the local
needs. The companies need to reach out to customers in their own languages. Be it in Europe
or in China, the customers are likely to shop online when they find the website translating the
information into their language. To be able to address the specific local market, the Retail
companies would need to be compliant with local tax and legal regulations. Product
development would need to be done in accordance with the local flavor and culture of the
market.
Though retailing services can be offered by the Companies online across the globe, they
would need to customize the features and processes to suit local or regional markets. E
Commerce can be pursued as a independent strategy by the Companies to take advantage of
the global platform that the technology provides. Pursuing such a strategy would need the
Company to be very strong in marketing and build adequate operational capability to service
the global customers. At this stage it is quite possible that the management faces the
challenge of focusing on traditional marketing strategy as well as pursuing the new global e
commerce strategy, leading to compromises or spin off of E commerce business into purely
plug and play online selling.
Currently the volume generated through E Commerce being miniscule compared to

traditional sales channels, the Retail Companies have not yet arrived at the stage where they
need to set up separate entity to pursue E Commerce strategy independently. However it is
quite possible that we might find intermediaries and dealers establishing pure online trading
platform to offer multiple retail brands on their website. Virtual world is expanding fast and
providing new business opportunities for those who understand E Commerce and are able to
harness the potential.
2.7 SUMMARY
The business of e-retail is the sale of goods and services via the Internet or other electronic
channels, for personal or household use by consumers. The well-known marketing mix of
4P/4C can be extended by the addition of three more C’s to make a more catchy retail mix.
These are: Computing and category management issues; customer franchise, trust, image and
branding; customer care and service.
2.8 KEYWORDS
Marketing mix It is the combination of techniques and tools that

retailer’s and e-retailers use to give their customers
value
Electronic retailing or e-tailing The direct sale of products, information and service
through virtual stores on the web, usually designed
around an electronic catalogue format and auction sites
E-Catalog It is a database of products with prices and available

stock.
Shopping Cart The customers select their goodies and fill shopping
cart. Finally, as in a real store, at the time of checkout,
the system calculates the price to be paid for the
products.
A payment gateway Customer makes payments through his/her credit card
or e-cash. The payment mechanism must be fully
secure.
1. Define e-retailing. What are the advantages and disadvantages of this business model?
2. Write a note on e-retailing prospects in India.
3. Identify the growth factors of e-retailing in India.
2.10 ANSWERS TO SAQ’S
Education, Inc.
Inc.
2.12 REFERENCES
Hall, 1999.
& Sons, 2000.
Better
UNIT 3 INTEGRATIONS OF E-RETAILING
Structure
3.1 Introduction
Objectives
3.2 Strategies for Integration
3.3 Strategic Options
3.4 Integration Strategies
3.5 Retailer-Customer Relationship
3.6 Summary
3.7 Key words
3.8 Self assessment questions
3.10 References
3.11 Further readings
3.1 INTRODUCTION
This chapter looks at the integration of B2C e-commerce, namely e-Retail, into established
businesses, and begins by examining the reasons for traditional retailers to incorporate e-
retail into their business model.
Objectives:
After studying this unit, the student will be able to:
1. Understand why traditional retailers integrate e-retail
2. Strategies for integration
3.2 STRATEGIES FOR INTEGRATION
There are many strategic options for the adoption of e-retail and the level of involvement a
business can choose in online activity, e-retail, at the very least, represents an alternative or
additional channel for traditional retailers. Given that there are relative advantages and
disadvantages to retailing in cyberspace or in a traditional physical store, the question that we
address here is, ‘How can one combine e-commerce techniques with traditional physical
retailing to enhance the value of the shopping experience for both the customer and
merchant?’.
If we want to integrate cyber retailing and physical-retailing experiences, and we cannot

move physical stores to cyberspace, then by default we must move cyber retailing to the
physical-retailing realm. In other words, enhance the physical shopping experiences using
cyber-retailing techniques. We call this concept cyber enhanced retailing.
With cyber retailing competitors, such as Amazon.com, making strong inroads, the brick-
and-mortar stores may be able to leverage their physical presence near the customer to
competitive advantage by employing cyber enhanced physical retailing. They can provide
additional services and functionality with their physical stores that cannot be provided by the
Internet only stores.
For example, traditional retail outlets can offer immediate cash and carry and allow the
customer to physically inspect the product. By enhancing their mercantile processes with
cyber-retailing techniques they can also provide individualized service and product database
searches along with a wider exchange of goods that compete directly with cyber store
services.
3.3 STRATEGIC OPTIONS
A company’s strategy towards e-retailing will be influences by a number of factors, including

its market sector and prospects for online and offline retail, in house technical knowledge and
experience of outsourcing, re-engineering and development projects, as well as its overall
vision, desire and ability to operate in a very fast changing and possibly unfamiliar
commercial environment.
In order to recognize the additional complexity that e-commerce is likely to introduce, it is

useful to consider the digital and physical dimensions of a business in relation to the type of
product, process and delivery agent involved. Once a retailer has evaluated the potential of its
products or services for e-retailing, it must then decide its position for e-retail adoption, and
determine a course of action. Researchers list ten options than can be arranged on a scale
from no e-retail operation to e-retail only, in order of increasing e-shopping responsiveness,
paralleled with increasing commitment to e-retailing.
3.4 INTEGRATION STRATEGIES
According to Kalakota and Whinston (1997), consumer trade activities take place in eight
consecutive steps -product service search; comparison shopping; product selection;
negotiation of terms; placement of order; authorization of payment; receipt of product; and
customer service and support. The first four activities primarily pertain to the process of
gathering information about the product of service to satisfy the consumer’s needs. The next
two activities commit both parties to a transaction. Finally, the last two activities are
necessary to fulfil the consumer’s satisfaction from the transaction.
As can be seen in each of the steps, the retailing process involves a significant exchange of
information. It is in this area especially, the support of information exchange between buyer
and seller, where cyber-retailing techniques and technologies can enhance traditional
retailing. These cyber techniques could be employed before the customer enters the store
(such as on a home computer), or when a shopper enters a store (such as on an in-store PC or
kiosk).
Product Service Search Phase:
During this phase, consumers are searching for a product with the set of attributes (e.g., price,
service, quality) that best meet their needs. In the physical-retailing realm, the consumer will
generally visit or phone multiple retail establishments, search catalogues or review
advertisements. In the e-commerce realm, this process can be aided considerably by database
and search engine technologies. The consumer can implement a database or web search to
search for products that meet their requirements.
One of the most obvious approaches would be for a physical retail establishment to establish
a presence on the web that facilitates consumer searching prior to a visit to the establishment.
They can use cyberspace to drive customers to their physical retail stores. For example,
Perfumia, Inc. uses its website to advertise in-store promotions and also advertises its
websites in its stores. Less obvious approaches include a kiosk in the establishment that
allows for a search of products available from the company, including products in-stock, out-
of-stock, on layaway, available at nearby affiliate stores, and special order items. In this way
the consumer has more information, more quickly, to support the search process.
This also provides information to the consumer concerning products not available for
inspection in the store. Another potential use of in-store e-commerce technology is to provide
a map of product locations within the store or to other affiliate stores that might have the
product. Additionally, since the customer is already in the establishment, and can physically
inspect products that are in stock, the possibility of a sale may increase. The system could be
integrated with the existing barcode scanning information systems to allow the customer to
independently retrieve additional information on a product. For example, a customer could
take a food item off the shelf and scan its barcode at a kiosk to retrieve information about the
product’s pricing, promotions or specifications.
Another potential use for cyber retailing might be in the display of a product that does not yet
exist. For example, a customer might take a virtual tour of a house that is not yet built. In a
related manner, customers might be able to view or listen to snippets of entertainment
products. Cross promotion with related, but noncompetitive products or stores, is also
possible.
Comparison Shopping Phase:
During this phase, the shopper is comparing the basket of attributes available from each
product. A decision support system, available on many cyber retail establishments (such as
www.dell.com), might be able to help the user make these comparisons. Such a capability
might be useful for an in-store kiosk as well as a traditional retail establishment’s web page.
Additionally, the shopper can compare product attributes against one another or search
products based on a priority attribute such as lowest price or best warranty. If the store does
not sell the product of interest, a decision support system might be able to suggest an
alternative product that might meet the customer’s requirements.
Product Selection Phase:
The product selection phase occurs when consumers determine which product(s) best meets
their needs. They might also choose from a variety of options for the specific product
selected. For example, the product may come in different colours or sizes. Upon selection by
a customer (while either on a PC at home or at a kiosk in the store), the shopper could be
presented with a variety of useful information concerning the product.
For example, the size, weight, final cost including tax, where the product is located within a
store, loan terms, additional product requirements (such as batteries or fuel), and maybe even
coupons for printing. If customer service is important, the store can have the products waiting
for the customer for immediate pickup and checkout at the front door or loading dock. At the
time of product selection, it may also be advantageous to present the customer with additional
ideas on related products that the consumer might find useful.
Negotiation of Terms Phase:
During this phase, a kiosk could present the customer with a variety of terms regarding price,
delivery, and loan terms to select from. In special circumstances, the negotiation process
could be mediated by software. For example, on certain in-store products, online auctions
could be held with the support of one or more kiosks. ·
Placement of Order Phase:
During the order placement process, a shopper and merchant exchange necessary information
to order and pay for the product. In most traditional stores, this process involves taking the
product to the checkout and paying for it. This immediacy is an advantage of the traditional
retail process. Cyber processes might be able to enhance this process by allowing the
customer to purchase and receive the product electronically.
Using a kiosk, a shopper could also place a product on layaway. Other business models that
have integrated the Internet for placement of orders include Peapod, Inc. which delivers
grocery items from local stores to customers who order online. In this way, the customer can
get their products almost immediately and local stores can extend their boundaries to
customers who may not be willing to travel to the store to purchase their products. Finally, by
allowing kiosk ordering, it may be possible to sell the customer additional related products
or warranties. ·
Authorization of Payment Phase:
Traditional stores have a significant advantage over cyber retailing in that they can accept
cash at the checkout counter. However, an instore kiosk may be able to help automate this
payment authorization process by accepting credit cards and allowing customers to avoid
queues at the checkout
Receipt of Product Phase:
Traditional stores have a decided advantage over cyber stores when it comes to product
delivery. In many cases, the customer wants the product immediately. This is possible in
physical retail establishment because the customer can walk out with the product.
Nonetheless, in the case of information-based products, such as music, tickets, books, stock
trades, etc., where the product is not a physical one, cyber retailing techniques may enhance
the traditional in-store mercantile process.
Customer Service and Support Phase:
A traditional store has significant advantages when it comes to returning products. The
customer does not need to pack up and mail the product back to the company. Instead, the
customer only needs to return it to the store for a credit or their money back. Ironically,
however, it is in this after sale support phase where cyber retailing may be able to most
strongly enhance traditional retail outlets. If the customer is willing to provide some
identifying information, such as name, address, and email, then the store can send
information of interest to the shopper.
For example, if a frequently purchased item goes on sale, then the store can send an email or
flyer to the customer. In this way traditional retailers may be able to increase their customer
relationship management services. Additionally, an in-store kiosk may be able to provide
detailed support and service information on products in the store. Examples might include
product support websites, technical support phone numbers, part numbers and parts ordering.
3.5 RETAILER CUSTOMER RELATIONSHIP
It costs five times as much to attract a new customer than to keep an existing one, so forging
long-term relationships with customers is critical to any e-commerce retailer’s bottom line
and future company health. With increased e-commerce competition, retailers need
differentiated experiences filled with sticky retention mechanisms to engage customers in
valuable ways over time.
Relationship commerce makes it easier for retailers to ensure lasting customer loyalty starting
at the top of the funnel. Rather than positioning search solely as a transactional driver,
relationship commerce leverages search to first acquire visitors and then build long-term
relationships with them, even when they’re not expressing specific purchasing intent. There
are a few ways small businesses can drive better sales by building stronger customer
relationships online.
1. Survey Your Customers and Get Their Opinions
Giving your customer exactly what they want is probably the best way to make sales, build
trust and gain repeat customers. Before marketers ventured online, market research was
conducted by old fashion questionnaires. Today, customer surveys and feedback can be done
through email, on the website or through social media channels. SurveyMonkey is one of the
survey platforms available that allows you to send targeted surveys to customers through
different platforms such as email and social media networks.
2. Communication through Email
Building an email list is probably one of the most important ways a company can stay in
contact with their customers, build rapport and make sales. Emails should be able to provide
valuable content for the consumer to share. When you provide content that addresses the need
and provides a solution to your customer’s problem then you build rapport and foster the
digital relationship that you company needs to be successful.
3. Real Time Video Chat for Customer Support
Real time video chat is a real hot topic with companies that are looking to build better
connections with their online users. Late last year, Amazon introduced their “Mayday
Button.” This new feature on the Kindle Fire allowed a user to receive a video connection
with a customer support representative. Never before has an online consumer been able to
communicate with a company in such an innovative way and at such a scale. Today, Amazon
boasts that a user can live video chat with a customer support representative in under ten
seconds.
4. Rewarding Your Best Customers
It is human nature to want to be liked so acknowledging your most loyal customers is a great
way to continue to strengthen your relationship – do it in front of others and it works
exponentially. We all know the 80/20 rule where 20% of your customers make up 80% of
your sales so here are so more accurate statistics about how important your most loyal
customers are from Entrepreneur.com, “According to global management consulting firm
Bain and Co., a 5 percent increase in retention yields profit increases of 25 to 100 percent.
And on average, repeat customers spend 67 percent more than new customers.
There are many ways to reward your customers through social media. Whether you’re using
gamification, running contests and giving away free prizes or simply saying thanks there are
many ways to show your loyal customers that you care. As our society turns to more digital
communication and commerce, building strong relationships with your customers isn’t easy.
3.6 SUMMARY
Most businesses recognize that the minimum involvement with the internet today is to have
e-mail and an informational website. This is a step up from only a few years ago, and with
the pace of change, suggest that businesses already need to consider whether it is now
imperative to adopt a transactional online presence.
Many traditional retailers have already taken significant steps towards e-retail, and some of
them are setting the pace for online innovation and have e-retail integration strategies that
work.
3.7 KEY WORDS
E-Commerce Digitally enabled commercial transactions between and

among organizations and individuals
Electronic retailing or e-tailing The direct sale of products, information and service
through virtual stores on the web, usually designed
around an electronic catalogue format and auction sites
E-Catalog It is a database of products with prices and available

stock.
3.8 SELF-ASSESSMENT QUESTIONS
1. Explain how consumer trade activities can be integrated with e-retailing platform?
2. How can e-businesses drive better sales by building stronger customer relationships
online?

Education, Inc.
Inc.
3.11 REFERENCES
Hall, 1999.
& Sons, 2000.

UNIT 4 COMMUNICATING WITH E-CONSUMER
Structure
4.1 Introduction
Objectives
4.2 E-Shoppers
4.3 E-Shopping for Consumers
4.4 Male –Female Shopping Styles
4.5 E-Retail Mix Communication
4.6 Summary
4.7 Key words
4.8 Self-assessment questions
4.10 References
4.11 Further Reading
4.1 INTRODUCTION
Online shopping has been shown to provide more satisfaction to modern consumers seeking
convenience and speed. On the other hand, some consumers still feel uncomfortable to buy
online. Lack of trust, for instance, seems to be the major reason that impedes consumers to
buy online. Also, consumers may have a need to exam and feel the products and to meet
friends and get some more comments about the products before purchasing. Such factors may
have negative influence on consumer decision to shop online.
Objectives:
After completing this chapter you will have an understanding of:

 Why consumer’s e-shop/not shop?
 How do consumers achieve satisfaction from e-shopping
 What factors are inhibiting the growth of e-shopping
4.2 E-SHOPPERS
When consumers want to buy product, they will look at the brand and the characteristics of
product or service. Some products can be purchased and shipped easily online such as,
software, books. On the other hand, some products are hard to decide through online channel.
Web site features, firm capabilities, marketing communication stimuli, and consumer skills
are also important, in terms of the proposed framework.
For example, online retailers can use high technology to improve their websites in order to
influence consumer perceptions of the web environment. If the web site is too slow, not
navigability, or not safe enough, will have negatively impact consumer willingness to try or
buy products from the website. Consumer experience with online shopping or consumer
skills, which refer to the knowledge that consumers have about product, and how online
shopping works also influences online shopping behaviors.
Clickstream behavior is another aspect that becomes more important in the online world. It
refers to the behavior that consumers search for information through web sites many sites in
the same time, then to a single site, then to a single page, and finally to a decision to
purchase. All these factors lead to specific attitudes and behaviors about online purchasing
and a sense that they can control their purchasing environment thru the online world.
4.3 E-SHOPPING FOR CONSUMERS
MOTIVATIONS THAT LEAD CONSUMER TO BUY ONLINE
There are many reasons why people shop online. For examples, consumers can buy anything
at anytime without going to the store; they can find the same product at a lower price by
comparing different websites at the same time; they sometime want to avoid pressure when
having a face-to-face interaction with salespeople; they can avoid in store traffic jam, etc.
These factors can be summarized into four categories—convenience, information, available
products and services, and cost and time efficiency.
Convenience: Online shopping is available for customers around the clock comparing to
traditional store as it is open 24 hours a day, 7 days a week . Research shows that 58 percent
chose to shop online because they could shop after-hours, when the traditional stores are
closed and 61 percent of the respondents selected to shop online because they want to avoid
crowds and wailing lines, especially in holiday shopping . Consumers not only look for
products, but also for online services. Some companies have online customer services
available 24 hours. Therefore, even after business hours, customers can ask questions, get
necessary support or assistance, which has provided convenience to consumers .
Some customers use online channels just to escape from face-to-face interaction with
salesperson because they pressure or uncomfortable when dealing with salespeople and do
not want to be manipulated and controlled in the marketplace. This is especially true for those
customers who may have had negative experience with the salesperson, or they just want to
be free and make decision by themselves without salespersons’ presence.
Information: Given customers rarely have a chance to touch and feel product and service
online before they make decision, online sellers normally provide more product information
that customers can use when making a purchase. In addition to get information from its
website, consumers can also benefit from products’ reviews by other customers. They can
read those reviews before they make a decision. Available products and services: E-
commerce has made a transaction easier than it was and online stores offer consumers
benefits by providing more variety of products and services that they can choose .
Consumers can find all kinds of products which might be available only online from all over
the world. Most companies have their own websites to offer products or services online, no
matter whether they already have their front store or not. . Many traditional retailers sells
certain products only available online to reduce their retailing costs or to offer customers with
more choices of sizes, colors, or features.
Moreover, online shopping sometimes offer good payment plans and options for customers.
Customers can decide their payment date and amount in their own preference and
convenience.
Cost and time efficiency: Because online shopping customers are often offered a better deal,
they can get the same product as they buy at store at a lower price. Since online stores offer
customers with variety of products and services. it gives customers more chances to compare
price from different websites and find the products with lower prices than buying from local
retailing stores.
Some websites, Ebay for example, offer customers auction or best offer option, so they can
make a good deal for their product. As such, customers often find shop from the website that
is offering convenience can reduce their psychological costs.
FACTORS THAT IMPEDE CONSUMERS FROM ONLINE SHOPPING
Major reason that impede consumers from online shopping include unsecured payment, slow
shipping, unwanted product, spam or virus, bothersome emails and technology problem.
Business should be aware of such major problems which lead to dissatisfaction in online
shopping.
Security: Since the payment modes in online shopping are most likely made with credit card,
so customers sometime pay attention to seller’s information in order to protect themselves.
Customers tend to buy product and service from the seller who they trust, or brand that they
are familiar with.
Online trust is one of the most critical issues that affect the success or failure of online
retailers. Security seems to be a big concern that prevents customers from shopping online
because they worried that the online store will cheat them or misuse their personal
information, especially their credit card.
Intangibility of online product: Some products are less likely to be purchased online
because of the intangible nature of the online products. For example, customers are less likely
to buy clothes through online channel because they have no chance to try or examine actual
product. Customers viewing a product on computer screen can show a different effect than
actually seeing it in the store. In sum, customers cannot see, hear, feel, touch, smell, or try the
product that they want when using online channel. In many cases, customers prefer to
examine the product first and then decide whether or not they want to buy.
Some people think the product information provided in website is not enough to make a
decision. Online shoppers will be disappointed if the product information does not meet their
expectation.
Social contact: While some customers likely to be free from salesperson pressure, many
online shopping would feel difficult to make a choice and thus get frustrated if there is no
experienced salesperson’s professional assistance. Moreover, some customers are highly
socially connected and rely on other peoples’ opinions when making purchase decision tend.
There are also consumers who sometimes shop at traditional store because they want to fulfill
their entertainment and social needs which are limited by online stores.
Dissatisfaction with online shopping: customers’ past online shopping experience often
affect their future purchase decision. In online shopping, for example, they may get unwanted
product or low quality products, product does match what is described or expected .The
product may be fragile, wrong, or not working. Some online sellers may not agree to refund
those products even though it is not what the customer wanted. Delivery is another thing that
affects online purchasing decision. Slow or late shipping, for instance, makes customer walk
away from online shopping.
4.4 MALE –FEMALE SHOPPING STYLES
Gender is an important consumer demographic to judge the perception of online shopping

behavior. In general, gender has been the most influential factor affecting Internet usage
observed in the recent years. There is a significant gender gap in consumer’s shopping
behavior which can be related to difference in online shopping behavior between men and
women.
Evidence of dominance by men and resistance in using the Internet by women is reported in
multiple studies. Findings from many previous studies proved that men purchase and spend
more money online than women. A research in India indicated that men have a more positive
attitude towards online shopping compared to women.
Perceived Risk
Shopping is the most favorite activity of women but prior studies (Garbarino & Strahilevitz,
2004; Rodgers & Harris, 2003) showed that women were reluctant to shop online and spent
little time on the Internet. In contrast, findings from Ha & Stoel (2004) showed that women
used the Internet more often to search information on apparel products than men and
suggested that there may be more possibility for women to become actual online purchasers
in future. For example, a study by Garbarino and Strahilevitz (2004) confirmed that women
perceived higher risk of online shopping than men. Similarly, another study (Bae & Lee,
2011) found that women were anxious about the risks of online shopping.
Trust
Lack of trust or distrust prevents users to shop online. For example, users discard their
shopping cart if any element of distrust is perceived during an online transaction. Women
consider trust as a more significant factor than men do when opting for online shopping .
Awad and Ragowsky (2008) showed that women who put more emphasis on trusting an
online seller before making an online purchase showed more dependence on networks of
people . Another study (Cho & Jialin, 2008) showed that women were reluctant in giving up
their traditional means of shopping for the online shopping technology and that they
demonstrated a lower level of self-efficacy and trust than men. Furthermore, it was found in
other research that men were more likely to trust online shopping than women (Riquelme &
Román, 2014)
Legal Framework
Women shoppers have less trust in online transactions than men shoppers because women
feel more insecure than men when shopping online. Moreover, women were found to be
more anxious than men using computers for online purchases (B. Yang & Lester, 2005).
Women were also more concerned than men in dealing with privacy and security (San Martín
& Jiménez, 2011; Sebastianelli, Tamimi, & Rajan, 2008).
4.5 E-RETAIL MIX COMMUNICATION
The E- retail mix can be defined as the total package of goods and services that a retailer or e-
retailer offers for sale to the public. E-retail mix is a shorthand term for the blend of tools and
techniques that e-retailers use to provide value for customers. It is a development of the well-
known marketing mix, more specific to retail and e-retail.
THE COMMUNICATIONS MIX FOR THE E-RETAILER
All elements of the retail mix can actually form part of the communications mix. For
example, in the case of an e-retailer, ‘Convenience’ can include the ease of finding the site,
say by paid links from other sites or search engines, communicating the existence of the site
to the potential customer.
‘Customer value and benefit’ can be reflected in the width and depth of product offered and
ease of navigating around this large range, communicating a benefit of buying online rather
than instore.
‘Cost to the customer’ can communicate price positioning in the case of a cost leadership
strategy. Alternatively, high prices with ‘round’ figures can communicate quality and
prestige.
‘Computing and category management’ can communicate added value from the
availability of a wide range of products on short delivery times.
‘Customer franchise’ is largely a communications and branding issue. For example,

improving the information value of an e-retailing site can improve image and branding.
Similarly, ‘Customer care and service’ can communicate a positive image. Although many
of the critical aspects of service are not visible until the order is fulfilled, a generous returns
policy can act as a proxy in communicating an image of good service.
Finally, ‘Communication and customer relationships’ describes the communications mix

proper, which can have a huge variety of elements from marketing research surveys to e-
mail, and from advertising to sponsorship.
4.6 SUMMARY
The complexities of the retail and e-retail mixes can be represented by a simplified, easy-to-
remember aid, ‘Sale the 7Cs’:
• C1 Convenience
• C2 Customer value and benefit
• C3 Cost to the customer
• C4 Computing and category management
• C5 Customer franchise
• C6 Customer care and service
• C7 Communication and customer relationships.
This 7Cs framework is also useful in drawing attention to the wider scope of the
communications mix as much more than just offline media plus Web advertising.
4.7 KEY WORDS

E- retail mix The total package of goods and services that a retailer
or e-retailer offers for sale to the public
Cyber Law: Cyber law is that law which is used to deal with all
cyber-crimes, i.e., crimes done on internet
4.8 SELF-ASSESSMENT QUESTIONS
1. Can e-shopping satisfy shoppers as much as bricks shopping do?

2. How can the mechanistic process of e-shopping satisfy shoppers’ social motive?
3. What can e-retailers do to provide enjoyment and social benefits for e-shoppers?
4.10 FURTHER READINGS
Education, Inc.
Inc.
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 The Tech Faq,(2008), “Top reasons why people shop online,” http://www.thetechfaq.
com/2008/09/29/ top-reasons-why-people-shop-online/, Thetechfaq.com. Verisign, (2009),
 Wang, C.L., Ye, L.R., Zhang, Y. and Nguyen, D.D., (2005), “Subscription to fee-based online
services: What makes consumer pay for online content?” Journal of Electronic Commerce
Research, vol. 6, no. 4, pp.301-311.
 Whysall, P., (2000), “Retailing and the internet: a review of ethical issues”, International
Journal of Retail & Distribution Management, vol. 28, no. 11, pp.481-489.
 Yu, T. and Wu, G, (2007), “Determinants of internet shopping behavior: An application of
reasoned behavior theory”, International Journal of Management, vol. 24, no. 4, pp. 744-762,
823.
UNIT 5 SEARCH ON WEB
Structure
5.1 Introduction
Objectives
5.2 Difference Clicks and Bricks
5.3 Shopper search behavior
5.4 Search Engines
5.5 Web Visibility
5.6 Summary
5.7 Keywords
5.8 Self-Assessment Questions
5.10 References
5.11 Further Reading
5.1 INTRODUCTION
Searching for information on the Web is, for most people, a daily activity. Search and
communication are by far the most popular uses of the computer. Not surprisingly, many
people in companies and universities are trying to improve search by coming up with easier
and faster ways to find the right information.
Objectives:
After completing this chapter you will have an understanding of:
 The difference between the clicks and bricks experiences
 Shoppers search behavior on the web
 Search engines
 Ways to increase the web visibility
5.2 DIFFERENCE CLICKS AND BRICKS
In the previous chapters we have highlighted some of the differences between click and
bricks. These differences arise from the totally different technologies which are used in a
click store compared to the brick store, and the totally different approach is used by the
shoppers to find goods and services, to compare prices and to generally browse around.
The essential concept is search the process by which e-shoppers finds information about
products and services. Today in click formats, applications of information retrieval involve
multimedia documents with structure, significant text content, and other media. Popular
information media include pictures, video, and audio, including music and speech.
The usual search scenario involves someone typing in a query to a search engine and
receiving answers in the form of a list of documents in ranked order. Although searching the
World Wide Web (web search) is by far the most common application involving information
retrieval, search is also a crucial part of applications in corporations, government, and many
other domains.
5.3 SHOPPER SEARCH BEHAVIOR
From the consumer perspective, the Internet has changed the relationship between buyers and
sellers because of the unprecedented increase in the number of choices and levels of control
over the message. It has also changed the decision-making environment by the amount, type,
and format of information available to consumers because it provides tools for information
storage, for information search and for decision analysis.
Tools such as bookmarks, search engines, and decision-aids (e.g., shopbots) are likely to
influence consumer information search behavior. Personal factors such as domain (ability to
identify information in the product category) and system expertise (skills of using computers
and WWW for information search) as well as system factors such as information load and
interruptions impose certain search costs on consumers and influence online information
search.
Information Search- Information search is a stage of the decision making process in which
consumers actively collect and utilize information from internal and/or external sources to
make better purchase decisions. Internal search occurs when consumer’s access information
previously stored in memory. It is the primary source used for habitual and limited decision-
making.
On the other hand, external search, which is the focus of this article, involves searching for
information from sources outside of memory because the required information was not
previously acquired or cannot be recalled from memory. Sources such as friends,
advertisements, and magazines such as Consumer Reports are often utilized by consumers to
facilitate their decision-making. Lately, the Internet has joined other traditional media and
become a major source of information for many products and services for consumers because
of its abundance of information and convenience.
5.4 SEARCH ENGINES
A search engine is the practical application of information retrieval techniques to large-scale

text collections. Search engines come in a number of configurations that reflect the
applications they are designed for.
Web search engines, such as Google and Yahoo!, must be able to capture, or crawl, many
terabytes of data, and then provide sub second response times to millions of queries
submitted every day from around the world.
Enterprise search engines—for example, Autonomy—must be able to process the large

variety of information sources in a company and use company-specific knowledge as part of
search and related tasks, such as data mining. Data mining refers to the automatic discovery
of interesting structure in data and includes techniques such as clustering.
Desktop search engines, such as the Microsoft Vista™ search feature, must be able to rapidly
incorporate new documents, web pages, and email as the person creates or looks at them, as
well as provide an intuitive interface for searching this very heterogeneous mix of
information. There is overlap between these categories with systems such as Google, for
example, which is available in configurations for enterprise and desktop search.
Open source search engines are another important class of systems that have somewhat
different design goals than the commercial search engines. There are a number of these
systems, and the Wikipedia page for information retrieval provides links to many of them.
The “big issues” in the design of search engines include the ones identified for information
retrieval: effective ranking algorithms, evaluation, and user interaction. There are, however, a
number of additional critical features of search engines that result from their deployment in
large-scale, operational environments. Foremost among these features is the performance of
the search engine in terms of measures such as response time, query throughput, and indexing
speed. Response time is the delay between submitting a query and receiving the result list,
throughput measures the number of queries that can be processed in a given time, and
indexing speed is the rate at which text documents can be transformed into indexes for
searching.
Table 5.1: Search engine design and the core information retrieval issues
5.5 WEB VISIBILITY
Almost all search engine results consist of two types, organic and sponsored. The organic or
natural results are those the search engines display on their own. The sponsored results are
paid for by an advertiser. The sponsored results typically appear at the top and side of the
organic results. Search engine optimization directly affects only the organic results. However
it does have an indirect effect on paid search results.
Table 5.2: Search engine results

5.6 SUMMARY
E-shoppers are avid users of the web and use web search engines and directories to guide
their search. E-retailers can set up the web pages on their sites to make them more attractive
to e-shoppers to focus their search. It can be arranged that the web page addresses appear in
relevant directories.
It can also be arranged that the web page addresses are picked up by the search engines used
by the majority of e-shoppers. Use of web logins and other systems can help to determine
how often the web pages get accessed.
5.7 KEYWORDS
A search engine It is practical application of information retrieval

techniques to large-scale text collections
E-Commerce Digitally enabled commercial transactions

between and among organizations and
individuals
Electronic retailing or e-tailing The direct sale of products, information and

service through virtual stores on the web,
usually designed around an electronic catalogue
format and auction sites
1. What strategies can an e-retailer adopt to get its website noticed?
5.10 FURTHER READINGS

Education, Inc.
Inc.
5.11 REFERENCES
 Amin, S., (2009),Why do so many people shop online?
http://www.articlesbase.com/print/1335596, Articlebase.com.
 Anonymous, (2009),“How to shop online more safely,” http://www.microsoft.com/
protect/fraud/finances/shopping_us.aspx, Microsoft.com.
 Bigné-Alcañiz, E., Ruiz-Mafé, C., Aldás-Manzano, J. and Sanz-Blas, S, (2008), “Influence of
online shopping information dependency and innovativeness on internet shopping adoption”,
Online Information Review, vol. 32, no. 5, pp. 648-667.
 Bourlakis, M., Papagiannidis, S. and Fox, H, (2008), “E-consumer behaviour: Past, present
and future trajectories of an evolving retail revolution”, International Journal of E-Business
Research, vol. 4, no. 3, pp.64-67, 69, 71-76. 73
 Broekhuizen, T. and Huizingh, E, (2009), “Online purchase determinants: Is their effect
moderated by direct experience?” Management Research News, vol. 32, no. 5, pp. 440-457.
 Butler, P. and Peppard, J, (1998), “Consumer purchasing on the internet: Processes and
prospects”, European Management Journal, vol. 16, no. 5, pp.600-610.
 Chen, R. and He, F, (2003), “Examination of brand knowledge, perceived risk and
consumers’ intention to adopt an online retailer”, Total Quality Management & Business
Excellence, vol. 14, no. 6, pp. 677.
 Childers, T.L., Carr, C.L., Peck, J. and Carson, S., (2001), “Hedonic and utilitarian
motivations for online retail shopping behavior,” Journal of Retailing, vol. 77, no. 4, pp.511-
535.
 Comegys, C., Hannula, M. and Váisánen, J., (2009), “Effects of consumer trust and risk on
online purchase decision-making: A comparison of Finnish and United States students”,
International Journal of Management, vol. 26, no. 2, pp. 295-308.
 Constantinides, E., (2004), “Influencing the online consumer’s behaviour: The web
experiences”, Internet Research, vol. 14, no. 2, pp.111-126.
 Dickson, P.R., (2000). “Understanding the trade winds: The global evolution of production,
consumption and the internet”, Journal of Consumer Research, vol. 27, no. 1, pp. 115-122.
 Federal Trade Commission, (2001), “Privacy Leadership Initiative,” http://www.ftc.gov/
bcp/workshops/glb/supporting/ harris%20results.pdf, FTC.gov.
 Federal Trade Commission, (2003), “Holiday shopping online?” http://www.ftc.gov/opa/
2003/11/holidayshop.shtm, FTC.gov.
 Goldsmith, R.E. and Flynn, L.R., (2005), “Bricks, clicks, and pix: apparel buyers’ use of
stores, internet, and catalogs compared”, International Journal of Retail & Distribution
Management, vol. 33, no. 4, pp.271-283.
 Hermes, N., (2000) “Fiscal decentralisation in developing countries”, Review of medium_
being_reviewed title_of_work_reviewed_in_italics. De Economist, Vol. 148, No. 5:690-692.
 Hofacker, C.R., (2001), Internet Marketing, 3rd ed., Wiley, New York. Junhong, C., (2009),
“Would you shop online for groceries?” http://www.asiaone.com/Business/News/
My%2BMoney/Story/A1Story20090810-160169.html, Asiaone.com.
 Keeney, R.L., (1999), “The value of internet commerce to the customer”, Management
Science, vol. 45, no. 4, pp. 533-542.
 Koo, D.M., Kim, J.J. and Lee, S.H., (2008), “Personal values as underlying motives of
shopping online”, Asia Pacific Journal of Marketing and Logistics, vol. 20, no. 2, pp. 156-
173.
 Korgaonkar, P.A. and Karson, E.J., (2007), “The influence of perceived product risk on
consumers’ e-tailer shopping preference”, Journal of Business and Psychology, vol. 22, no. 1,
pp. 55-64.
 Laudon, K.C. and Traver, C.G., (2009), E-Commerce Business. Technology. Society, 5th
edition, Prentice Hall, New Jersey. 74
 Liang, T.P. and Lai. H.J., (2002), “Effect of store design on consumer purchases: An
empirical study of on-line bookstores”, Information & Management, vol. 39, no. 6, pp.431-
444.
 Lim, H. and Dubinsky, A.J., (2004), “Consumers’ perceptions of e-shopping characteristics:
An expectancy-value approach”, The Journal of Services Marketing, vol. 18, no. 6, pp. 500-
513.
 Liu, C. and Guo, Y., (2008), “Validating the end-user computing satisfaction instrument for
online shopping systems”, Journal of Organizational and End User Computing, vol. 20, no. 4,
pp.74- 96.
 Maignan, I. and Lukas, B., (1997), “The nature and social uses of the internet: A qualitative
Investigation”, The Journal of Consumer Affairs, vol. 31, no. 2, pp. 346-371.
 Parks, S., (2008), “7 Reasons why people shop online,” http://www.articlesbase.com/ home-
business-articles/7-reasons-why-people-shop-online-554620.html, Articlebase.com.
 Prasad, C. and Aryasri, A., (2009), “Determinants of shopper behavior in e-tailing: An
empirical analysis”, Paradigm, vol. 13, no. 1, pp.73-83.
 Rox, H., (2007), “Top reasons people shop online may surprise you,” http://www.
associatedcontent.com/article/459412/top_reasons_people_shop_online_may.html?cat=3,
Associatecontent.com.
 Seock, Y.K. and Norton, M., (2007), “Attitude toward internet web sites, online information
search, and channel choices for purchasing”, Journal of Fashion Marketing and Management,
vol. 11, no. 4, pp.571-586.
 The Tech Faq,(2008), “Top reasons why people shop online,” http://www.thetechfaq.
com/2008/09/29/ top-reasons-why-people-shop-online/, Thetechfaq.com. Verisign, (2009),
 Wang, C.L., Ye, L.R., Zhang, Y. and Nguyen, D.D., (2005), “Subscription to fee-based online
services: What makes consumer pay for online content?” Journal of Electronic Commerce
Research, vol. 6, no. 4, pp.301-311.
 Whysall, P., (2000), “Retailing and the internet: a review of ethical issues”, International
Journal of Retail & Distribution Management, vol. 28, no. 11, pp.481-489.
 Yu, T. and Wu, G, (2007), “Determinants of internet shopping behavior: An application of
reasoned behavior theory”, International Journal of Management, vol. 24, no. 4, pp. 744-762,
823.

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UNIT 1 E-COMMERCE

1.2 CONCEPT OF E-COMMERCE

Communication Perspective: According to this perspective, E-commerce is the delivery of

SEVEN UNIQUE FEATURES OF E-COMMERCE TECHNOLOGY

Dimension of E-commerce Technology Significance in Business

1.3 E-COMMERCE PRACTICES V/S TRADITIONAL PRACTICES

1. Heavy dependency on information 1. Information sharing is made easy via

2. Communication/transactions are 2. Communication or transactions can

3. It is difficult to establish and 3. A uniform strategy can be easily

4. Communications of business 4. In e-commerce, there is no human

5. Unavailability of a uniform platform, 5. E-commerce websites provide the

1.4 DEFINITIONS AND TYPES OF E-COMMERCE

Electronic commerce is the process of conducting commercial transactions electronically

• Business to business e-commerce (B2B)

Business to Business E-commerce (B2B)

This includes internet-enabled initiatives of an enterprise to form commercial linkages with

Innovative methods of enhancing B2B and B2C levels of e-commerce include:

Business to Consumers E-commerce (B2C)

Consumer to Consumer E-commerce (C2C)

Consumer-to-Business E-commerce (C2B)

E-commerce, by empowering the customer, has been strategically redefining business. An

Business to Employees E-commerce (B2E)

1.5 THE SCOPE AND LIMITATIONS OF E- COMMERCE

THE TECHNICAL LIMITATIONS OF E-COMMERCE

• There is no fixed physical location for the internet.

7. Cyber Laws: Another important problem is lack of comprehensive cyber laws so as to

 Confidentiality - Information should not be accessible to an unauthorized person. It

Measures to ensure Security

Major security measures are the following:

E-Commerce: Digitally enabled commercial transactions between and among

1.9 SELF ASSESSMENT QUESTIONS

1. What is e-commerce? Discuss various characteristics of e-commerce.

1.10 ANSWER TO SAQ’S

Refer the relevant text in this unit for answer to SAQ’s.

1.11 SUGGESTED READINGS

After studying this unit, the student will be able to understand:

2.2 ADVANTAGES AND DISADVANTAGES OF E-RETAILING

 Attractive business-to-consumer (B2C) e-commerce portal

E-Catalog – It is a database of products with prices and available stock.

BENEFITS OF E-RETAILING TO ORGANIZATIONS

The benefits to organizations are as follows:

The benefits of E-retailing to consumers are as follows:

• E-retailing makes it possible to participate ate in virtual auctions.

• E-retailing facilitates competition, which results in substantial discounts..

The benefits of E-retailing to society are as follows:

2.3 E- RETAIL MIX

What are the 7Cs of e-retail mix?

C1 – Convenience for the customer

C2 – Customer value and Benefits

C3 – Cost to the Customer

C4 – Communication and Customer Relationships

C5 – Computing and Category Management Issues

C7 Customer Care and Service

2.4 GROWTH AND PROSPECTS

Evolution of E-tailing in India

1991: Introduction of E-Commerce

2002: IRCTC taught India to Book ticket online

2003: Introduction of Low Cost Airline with Air Deccan

2007: The Deep Discounted model of Flipkart

Growth Factors of E-Retailing in India

a. Provision of Anywhere Anytime Services:

b. Rising trend of cyber cities:

d. Increased use of Net banking/credit cards/ debit cards: