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3.1 INTRODUCTION

"Electronic commerce" is one of the most talked about topics since late 1990s. This was the concept that revolutionised the Internet technol and totally changed the way in which business was done. It helped a lo companies to startup and make multi-billion dollars and at the same time, m a companies went down the drain. "E-commerce" as it is called, annoure its arrival with a boom and through there was a bust, it ensured that it here to stay as long as the Internet existed. In this unit, we will discuss a about carrying out transactions on the web and also try to understand w e-commerce is really all about.

3.2 E-COMMERCE CONCEPT

Before going on to the concept of e-commerce, first let's try to understa what we mean by "commerce". Commerce, in its simplest definition is," transaction of buying and selling of goods and services". Commerce need necessarily be always related to money.

It can also be defined as the exchange of something of value betwee two entities. That "something" may be goods, services, information, money, anything else the two entities consider to have value.

Now, when the same process is done with an electronic medium, the it's called e-commerce. Thus, "electronic commerce means the transaction buying and selling of goods and services through a digital medium".

The Internet, which has been one of the most technological advancemen in recent years, has helped to fuel the out of proportion growth of e-commerc Benefits of e-commerce were initially exploited by industries which wer depending more and more on computers, telecommunications and the Intens to produce, sell and distribute goods and services. But the concept soon cau comith other business verticals and these businesses also piped on t e-commerce wagon to reap in benefits with high profit margins.https://alphaekyc.adityabirlamoney.com/?utm_source=refer&utm_medium=we114180

3.3 TRADITIONAL COMMERCE AND ELECTRONIC COMMERCE

E-commerce transactions are considered to be far different from conventional commerce transactions. It is also said that unless the existing businesses switch over to this e-commerce business, they are sure to face closure in due course. This is not the truth, but the truth is, e-commerce will definitely change the way the traditional business is done. The traditional businesses will not face extinction if they decide to ignore the e-commerce world, but eventually they will benefit little, or not at all, by ignoring the power of e-commerce.

Any traditional business essentially consists of different players at different mediums which fall into three categories of buyers, sellers and brokers.

A buyer is a customer who purchases certain goods or services. Once the buyer decides his specific need, the buyer finds the product that will match his needs. After selecting the product, the buyer finds a seller and after he is satisfied with the specific features and capabilities of the product, he agrees to buy the product. Both buyer and the seller agree on the terms and conditions and the buyer will then pay for the purchase. In the history of commerce the seller used to be a producer. But the separation between sellers and producers has been an important stage of commerce development.

A broker is an intermediary who helps buyers and sellers to complet transaction. But the broker need not exist in every transaction and may exit 1 only certain transactions like a real estate agent.

it was E-commerce started taking shape during the early 1970s and 1980s, at a very nascent stage and the only application was for Electronic F Transfer (EFT). The first known example of e-commerce is the introduction EFT between banks over secure private networks, which changed the way

financial markets did business.

Eventually, the advent of the World Wide Web in the 1990s, turned ours be a turning point in e-commerce by providing an easy to use and a cheaper doing business.

of The traditional methods of doing business started using the Inter medium to do business transactions. It also gave way to new ways and metho of doing business and helped people to think outside the box. New busine

models were started to capitalize on this new power of Internet media.

Essentially, electronic commerce is the use of technology to improve efficiency of business processes by handling them automatically and electronical

3.4 UNDERSTANDING PORTALS

List down a few names of websites that come to your mind when you

think of e-commerce. These domains should essentially offer e-commera transactions and a shopping experience from their websites. Here are a few. www.rediff.com www.indiatimes.com www.yahoo.com www.123greeting com www.barnesandnoble.com www.ebay.com

Fig. 3.1: www.rediff.com, An Example of a Portal

All these websites are "e-commerce enabled" which means these sites offer an electronic medium by which users coming to the website can buy products or services. A typical name is given to such websites. They are popularly known as

PORTALS.

A portal is a website which offers multiple services like search engine, chat, e-mail, shopping etc. under a single domain.

If you closely observe the example of the domains listed above, you will see that the first three websites offer all generic services where you can get multiple services and multiple products. But the next three domains offer similar services with the difference that they focus on a niche market. www.123greetings.com focuses only on greetings, while www.barnesandnoble. com specializes in online selling of books, whereas the USP of www.ebay.com

is to offer a website where users can buy as well as sell goods online. Such websites are called VORTALS. Thus, Vertical Portals or Vortals are websites which focus only on a vertical segment of the Industry. Another example is a website like www.sharekhan.com which focuses on giving services related to stock trading.

Another misconception about e-business is that only those companies can

do e-business who are in the business of computers or Internet. People felt that e-commerce only meant for those people who knew about the Internet and have business related to computers and Internet.

Rather, e-business is for those companies who have not yet implemented computerisation in their entire business cycle. E-business is not about starting a new business or re-inventing your existing business.

E-business is about streamlining your current business processes to improve operating efficiencies that in turn will strengthen the value you provide to your customers value that cannot be generated by any other means, and value that will give you a serious advantage over your competition.

E-business uses the strong foundation of the core processes, which have been always used in traditional business, and merges that with the technological strengths and simplicity of the Internet medium. These new applications, called the e-business applications, let people do business in a more meaningful and profitable manner.

E-business needs investment and precise planning to implement and make it a success. But the budgets for a company to be "E" enabled may vary from a few hundred dollars to billions of dollars depending upon the need, industry and the final goal.

Banks have always been pioneers in taking e-business initiatives and giving the best services through the electronic medium to its customers. The ME IT spending forecast is the leading indicator of major technology trends across the hardware, software, IT services and telecom markets. For more than a decade, global IT and business executives have been using these highly anticipated quarterly reports to recognize market opportunities and challenges, and base their critical business decisions on proven methodologies rather than guesswork.

ME devices spending is forecast to reach US$34.2 billion in 2014, up 15.7 percent from 2013 (See table 3.1)

Table 3.1: Middle East IT spending Forecast (Billions of U.S. Dollars)

3.5.1 E-business: History and Revolution

The first known efforts in e-business were taken by www.ame The company started its online operations in July 1995 with a mission to Internet to transform book buying into the fastest, easiest, and most eng shopping experience possible. In no time did they earn immense popula started getting huge business over the Internet in multiple countries, and many other such websites that mushroomed during the same time the concept of shopping. People started coming up with wild ideas of different products online. This was a new experience even for the bu could now buy anything from books, shoes, cassettes and even cans, too all from the quiet privacy and convenience of their home.

Entrepreneurs could come up with a unique idea and gave it

design a logo with a slogan, join the "dot com" community and soon ba proud owner of a brand new e-business. It did not require heavy invest put up a website and neither did it need an existing brand name.

With the success of such small companies, the bigger and c companies also decided to try their hands at e-business. Such compani were called "Brick and Mortar" companies soon launched their own "C Portal" business models.

"Brick and Mortar" companies are those companies who have a

presence in a shop or an office, while "Click and Portal" companies companies that operate virtually and do most of their business tra online.

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3.6 TYPES OF E-BUSINESS WEBSITES

The "dot com" boom had set a buzzword that generated a lot of terminologies for the websites doing business over the Internet

We can classify websites under e-business depending upon the seller who is selling his products and services and the buyer who is buying from the website. Business organisations as well as a consumer can do both the buying and the selling. Based on this we can classify e-business websites into four major categories. Refer to Table 3.2.

Table 3.2: E-business Classification

BUSINESS TO CONSUMER

BUSINESS

CONSUMER TO CONSUMER

CONSUMER

CONSUMER

Buyer:

Seller:

Let us now look at these types in a little more detail.

1. B2B-Business to Business

A business organisation is involved here in commercial transactions with another business organisation. In short, the seller is a business organisation and the buyer is also a business organisation.

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Payer

seller

Today global competition is increasing day by day and every corporate company is looking at different ways and means to cut costs and increase profits. Business relations and inter-business processes are changing drastically and many organisations have adapted to B2B trading technologies and methods. A few of the pioneering companies in B2B websites have been Cisco, Dell. General Electric, etc. Different verticals are making use of B2B and forming their own network. We have many directories of online B2B categories focusing on different industries. A few of the industries that have benefited are automobile. clothing and textiles, food processing, supply chain management etc.

An example of a B2B website is www.steelrx.com. This website caters to a varied audience of people worldwide comprising of steel professionals, technocrats, government officers, steel manufacturers, steel processors, steel end users, academicians, planners as well as various steel and allied associations.

om A business organisation is involved here in commercial transa directly with a consumer. In short, the seller is a business organisation selling its products and services to a consumer over the Internet. With the B2C network well established, the end-consumer has bene

a lot as he gets a good price advantage. The company is directly dealing

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the end customer, so the middle agents and commissions are reduced and

price advantage can be directly passed on to the customer. The pionee company in B2C has been www.amazon.com. The markets soon picked uş its success and now we have many companies offering B2C services such online banking, travel services, online auctions, health information, real est sites etc.

Dell has been one of the most successful companies which encoun B2C selling over the web www.dell.com. Dell directly sells its products o the Internet to the end customers without a reseller in between. 

C2B-Consumer to Business

A consumer is involved here in commercial transactions with a business organisation. In short, the seller is an individual consumer who is offering his products or services to a business organisation over the Interner

The C2B market is not a well-established market as yet, as the consumers

do not have enough resources to cater to the online business organisations. But the Internet medium helps the consumer to expand the reach by making an online web presence and does not need to invest heavily in marketing or establishing contacts. The areas where C2B market is flourishing are those areas where individual consulting is needed such as tax consultants, electrical contractors, medical practitioners, actors, etc.

www.junewalkeronline.com is a website of an individual tax consultant offering services to business organisations. 

4. C2C - Consumer to Consumer

A consumer is involved here in commercial transactions directly w another consumer. In short, the seller is an individual consumer who is offerin his products or services to another consumer over the Internet. The C2C portals are becoming very popular as the consumers get a firs

hand experience to do business right from the comfort of their own house. Th C2C website is normally just an interface between the consumers to initia and help in closing their transactions. Online bidding for different products is good example of a C2C website where consumers put their products online an any other consumer can bid for the product to buy it. C2C websites also offe services which are in the form of information, like an online forum communi website where consumers share experiences about travel, hobbies, professin etc.

Ebay, www.ebay.com, has been one of the most successful websites the C2C category and they have developed a business model which they implementing in every country to target local consumers. 

Other types of e-business websites

The government is also taking a lot of initiative to encourage e-business transactions. The Indian Government has launched websites which will offer e-business solutions to business organisations as well as consumers. Such websites can be categorised under G2B and G2C websites.

1. G2B-Government to Business

The government offers varied business solutions and services that can be of benefit for business organisations. This IT initiative taken by the government encourages business organisations to practice paperless transactions for smoother and faster business experience. The most popularly accepted effort by the government has been their online tendering facility.

If you visit www.maharashtra.gov.in, you will be able to read all the important information about the current tenders, you can download tender forms and can get in touch with other departments of the Maharashtra government. This creates a crystal clear relationship between the business organisations and the government. 

G2C-Government to Consumer

The consumers needed a way by which they could communicate with government in a faster way. The common man of India needed an alternat to reduce the day-to-day hassles of communicating with various governme bodies. The most successful effort that has been highly appreciated by a lot people has been that of the Indian Railways.

The Indian Railways website, www.indianrail.gov.in, gives the details the train timings, booking status, online ticket booking options, etc. for all trains across India. It gives you the option to do your bookings online and the tickets delivered at your doorstep. It saves a lot of time for the Railw department as well as for the consumers. 

An Example of a G2C Website

These are the different ways by which most of the e-business websites are categorised popularly. Thus, e-business gave multiple dimensions and options for doing business, not just for the traditional business houses, but also for a lot of new ideas and entrepreneurial efforts in the Internet world. E-business is supposed to be saving multimillion dollars for all those companies worldwide who have accepted the e-business way.

Vertical Portals or Vortals are websites which focus only on a vertic segment of the Industry. Another example is a website like ww sharekhan.com which focuses on giving services related to stock trading

Summary

E-commerce is based on the foundation of the Internet and the web the traditional commerce and electronic commerce are equally impon for businesses to grow and gain more profits.

The concept tof portals and vortals introduced us to The interestineb sites have been differentiated into popular types like B2C, C2B and C2C. The government has also taken make e-commerce a success. e-busines initiative

A buyer is a customer who purchases certain goods or services. Onces buyer decides his specific need, the buyer finds the product that will ma his needs. After selecting the product, the buyer finds a seller and after is satisfied with the specific features and capabilities of the product, agrees to buy the product.

A broker is an intermediary who helps buyers and sellers to comple transaction.

Capital budgeting is the process businesses use to assess potential long-term investments, ensuring they allocate their resources wisely. It helps companies decide whether to accept or reject projects based on their expected profitability.

Limited capital: Businesses have a finite amount of funds for investment, so choosing the right projects is crucial.
Long-term impact: Capital budgeting decisions can affect a company's success for years to come.
Considering future cash flows: It goes beyond the initial cost and looks at the project's entire cash flow cycle.
Discounting Methods:

Recognize the time value of money: A core principle in finance is that a dollar today is worth more than a dollar tomorrow. Discounting methods account for this by bringing future cash flows back to their present value using a discount rate.
More comprehensive analysis: By considering the entire cash flow stream and its timing, these methods provide a more accurate picture of an investment's profitability.
Common discounting methods:Net Present Value (NPV): Calculates the total present value of all future cash flows after subtracting the initial investment. A positive NPV indicates a profitable investment.
Internal Rate of Return (IRR): Determines the discount rate that makes the NPV of an investment equal to zero. If the IRR is greater than the company's cost of capital, the project is considered profitable.
Non-discounting Methods:

Simpler to use: These methods don't involve complex calculations and are easier to understand.
Don't consider time value of money: They assume that a dollar received today has the same value as a dollar received in the future, which can lead to misleading results.
Limited applicability: Due to this shortcoming, non-discounting methods are generally less preferred than discounting methods.
Common non-discounting methods:Payback Period: Focuses on how long it takes for an investment to recover its initial cost. Faster payback periods are generally preferred, but this method ignores cash flows beyond the payback period.
Accounting Rate of Return (ARR): Compares the average annual profit from an investment to the initial investment cost. It's a simple profitability metric but again, doesn't account for the time value of money.

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