E-Commerce

Aniket Powar Specialization: Marketing

DPGD/JL12/0215

Welingkar Institute of Management Development &Research

Year of Submission: June, 2014

1

Acknowledgement

I wish to take this opportunity to express my sincere thanks to the people who made this project possible. I would like to sincerely thank Ms. Ankita Desai, Managing Partner, Plus Branding for the incessant support and encouragement I received.

2

(Aniket Powar )Place: Mumbai Date: 24th May 2014

Table of Content

Introduction Chapter no 1

Introduction to E-Commerce 4

Chapter no 2

History of E-Commerce 5

Chapter no 3

E-Business 6

Chapter no 4

Key Drivers 7 – 8

Chapter no 5

Activities of E-Commerce 9 – 20

Chapter no 6

Technical Aspects 21 – 22

Chapter no 7

E-Commerce Marketing 23 – 14

Chapter no 8

Understanding various Ethical, Legal& Social

15 – 17

Chapter no 9

Case Study 18 – 22

Chapter Benefits of E-Commerce 23 – 24

3

no 10Chapter no 11

Limitation of E-Commerce 25 – 26

Chapter no 12

Goals 27

Chapter no 13

E-Commerce in India 28 – 29

Chapter no 14

Future of E-Commerce 30 – 35

Chapter no 15

Summary 40

Bibliography Certificate

Introduction to E-CommerceElectronic commerce is a revolution in a business practices. If organizations are going to take advantage of new internet

4

technologies, then they must take a strategic perspective. That is, care must be taken to make a close link between corporate strategy and electronic commerce strategy.

Even today, some considerable time after the so called ‘dot com/Internet revolution’, electronic commerce (e-commerce) remains a relatively new, emerging and constantly changing area of business management and information technology. There has beenand continues to be much publicity and discussion about e-commerce.

Library catalogues and shelves are filled with books and articleson the subject. However, there remains a sense of confusion, suspicion and misunderstanding surrounding the area, which has been exacerbated by the different contexts in which electronic commerce is used, coupled with the myriad related buzzwords and acronyms.

5

History of E-CommerceAccording to the editor-in-chief of International Journal of Electronic Commerce, Vladimir Zwass, ‘Electronic commerce is sharing business information, maintaining business relationships and conducting business transactions by means of telecommunications networks’.

1948 - Vladimir Zwass maintains that in its purest form, electronic commerce has existed for over 40 years, originating from the electronic transmission of messages during the Berlin airlift in 1948. From this, electronic data interchange (EDI) wasthe next stage of e-commerce development.

1960 - In the 1960s a cooperative effort between industry groups produced a first attempt at common electronic data formats. The formats, however, were only for purchasing, transportation and finance data, and were used primarily for intra-industry transactions.

1970 - 1990 - It was not until the late 1970s that work began for nationalElectronic Data Interchange (EDI) standards, which developed wellinto the early 1990s.EDI is the electronic transfer of a standardised business transaction between a sender and receiver computer, over some kind of private network or value added network (VAN). Both sides would have to have the same application software and the data would be exchanged in an extremely rigorous format. In sectors such as retail, automotive, defence and heavy manufacturing, EDI was developed to integrate information across larger parts of an organisation’s value chain from design to maintenance so that manufacturers could share information with designers, maintenanceand other partners and stakeholders. Before the widespread uptakeand commercial use of the Internet, the EDI system was veryexpensive to run mainly because of the high cost of the private networks. Thus, uptake was limited largely to cash-rich

6

multinational corporations using their financial strength to pressure and persuade (with subsidies) smaller suppliers to implement EDI systems, often at a very high cost.

1996 - By 1996 no more than 50,000 companies in Europe and 44,000 in the USA were using EDI, representing less than 1 per cent of the total number of companies in each of the respective continents. According to Zwass, electronic commerce has been re-defined by the dynamics of the Internet and traditional e-commerce is rapidly moving to the Internet.

With the advent of the Internet, the term e-commerce began toinclude:

Electronic trading of physical goods and of intangibles suchas

information. All the steps involved in trade, such as on-line marketing,

orderingpayment and support for delivery.

The electronic provision of services such as after sales support or on-line

legal advice.

E-BusinessIn its simplest form ecommerce is the buying and selling of products and services by business and consumers over the internet. People use the term “ecommerce” to describe encrypted payments on the internet.

Sometime these transactions include the real time transfer of funds from buyer to seller and sometimes this handled manually through a POS terminal once a secure order is received by the merchant.

7

As with e-commerce, e-business (electronic business) also has a number of different definitions and is used in a number of different contexts.

One of the first to use the term was IBM, in October 1997, when it launched a campaign built around e-business. Today, major corporations are rethinking their businesses in terms of the Internet and its new culture and capabilitiesand this is what some see as e-business.

E-business is the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners.

E-business includes customer service (e-service) and intra-business tasks.

E-business is the transformation of key business processes through the use of Internet technologies. An e-business is acompany that can adapt to constant and continual change. Thedevelopment of intranet and extranet is part of e-business.

E-business is everything to do with back-end systems in an organisation.

In practice, e-commerce and e-business are often usedinterchangeably.

8

Key Drivers – E-CommerceIt is important to identify the key drivers of e-commerce to allow a comparison between different countries. It is often claimed that e-commerce is more advanced in the USA than in Europe. These key drivers can be measured by a number of criteriathat can highlight the stages of advancement of e-commerce in each of the respective countries. The criteria that can determinethe level of advancement of e-commerce can be categorised as:

1. Technological factors – The degree of advancement of the telecommunications infrastructure which provides access to the new technology for business and consumers.

2. Political factors – Including the role of government in creating government legislation, initiatives and funding to support the use and development of e-commerce and information technology.

3. Social factors – Incorporating the level and advancement in IT education and training which will enable both potential buyers and the workforce to understand and use the new technology.

4. Economic factors – Including the general wealth and commercial health of the nation and the elements that contribute to it.

9

Key Drivers – E-BusinessSince a distinction has been made in this book between e-commerceand e-business for consistency, the key drivers of e-business arealso identified.

These are mainly at the level of the firm and are influenced by the macro-environment and e-commerce, which include:

Organisational culture: Attitudes to research and development (R&D); its willingness to innovate and use technology to achieve objectives.

Commercial benefits: In terms of cost savings and improved efficiency that impact on the financial performance of the firm.

Skilled and committed workforce: That understands, is willing and able to implement new technologies and processes.

Requirements of customers and suppliers: In terms of product and service demand and supply.

Competition: Ensuring the organisation stays ahead of or atleast keeps up with competitors and industry leaders.

10

Activities of E-Commerce Web site design:The websites are the first interface between the customers andthe seller, your visit card, your best assistant, in short, the perceived image of your company. So your website needs to be designed in such a way that it should be easily handled andworked upon by customers without any hassles or confusion. A good design is a great way to communicate and get your point across and so it is definitely very important. Some websites, though, are unconventional, creatives, rich in visual effects.

Maintenance:Regular maintenance of an online store is needed to keep product information up to date and to address problems and issues that might arise. It can be time-consuming, but it's animportant part of having an eCommerce site.

11

Building and launching your eCommerce website should be seen as part of a continuing process. You'll need to set aside time- or perhaps appoint someone - to handle the different kinds of maintenance required.

o Updating and refreshing:The products on offer in your online shop will no doubt change, as will the prices, and you need to make these changes as soon as they become relevant. Product descriptions and photographs will also benefit from being updated regularly.

o Making corrections:If there are any problems within the site - broken links, spelling errors, out-of-date information and so on - they should be addressed as soon as they are found.

o Ongoing protection:You need to keep on top of continuing threats from hackers,viruses, scams and other online security risks. Be aware ofany issues that might threaten the security of your site, and put in place the appropriate controls to deal with them.

o Taking advantage of new opportunities:Social media and mobile internet devices have increased theopportunities for eCommerce. Facebook eCommerce (selling through Facebook - also called 'F-commerce') and m-commerce(selling through smartphones and tablet computers) open up new ways to sell products and services.

These systems of electronic commerce can stand alone, or beintegrated into your eCommerce website as part of the maintenance procedure.

12

o SEO maintenance:Part of your continuing eCommerce site maintenance involvesreviewing and adding to the search terms on your site, to improve your chances of being reached by potential customers.

o Who needs to do maintenance?

Maintenance needs to be done regularly, which is something you should take into account when your eCommerce store is being created. If you don't have time to do it yourself, you can either get it done by the website designer (which might be expensive) or by one of your employees, which might require some specialist training.

An eCommerce content management system (CMS) offers the most straightforward way of making changes.

o Maintenance or overhaul?One final point is that you should factor into your calculations the need for major site overhauls, which you should consider doing at regular intervals. This will ensure your site stays fresh and interesting, keep it at the forefront of technology, and get rid of any minor niggles that may have crept in over a period of time.

Order processing:Order processing is defined as the handling of customer orderswithin the distribution center. Order processing includes all of the activities related to filling a customer's purchase of your product or service. These orders may be from:

o Call centers

13

o E-Commerce websiteso Shopping cart systemso Web formso Email

Order processing is a multi-step process that most often includes:

o Capturing and checking the order, prices and terms collecting payment

o Producing an invoiceo Picking the goods from a warehouseo Packing the goodso Shipping goods to the customer

Ecommerce order processing will also utilize:

o Secure credit card processingo Electronic data interchange (EDI)o Shipping confirmation fileso Secure electronic transaction system

Ecommerce marketing:E-commerce marketing is all about enticing web surfers to your site and, once there, to entice them into becoming a customer. While overall similar to marketing a physical business, e-commerce marketing has some unique ingredients. For instance, marketing a physical store requires substantial enticement to move a customer to take the effort to physically come by your store location. It also means that the customer has an “investment” in the visit. They have expended time, energy and money to get to the location. 

14

On the web, “visiting” your store requires far less effort. A single mouse click and there they are. Unfortunately, the minimaleffort to get to your site also means that the customer has nothing invested in the visit. It took almost no time or effort to get to your site so there is no “client side” investment in the process. They can just as easily move to another site. In fact, they can visit a dozen sites in as many minutes.

Customers who “invest” in visiting a physical location can generally be said to have a “higher motivation” for making a purchase. The specific need of the customer was great enough to overcome the investment of time, energy and money necessary to make the visit. This investment means that they are far more likely to make a purchase. After all, if they don’t purchase fromyou they will have to increase their investment by going to another location. The need must be relatively higher for this to occur.

Conversely, the online customer has almost no investment in the visit. Going to your site requires one click of a mouse. Leaving your site requires one click of the mouse.

Many e-commerce marketing companies look at this and use it to justify increased spending on getting new traffic to the web site. For the small and medium business the cost of increasing traffic to the site is substantial and will continue to increase.Just five years ago it cost almost nothing to bring new visitors to your site. As the competition has increased, however, this hasfast become the most costly aspect of having an e-commerce web site. 

E-commerce Marketing Priorities

Web site marketing can be divided into three primary divisions:

1. Enticing visitors (non-customers) to come to the siteo Search engine registration (natural search results)

o Pay-per-click 

15

o Public relations – news releases, articles and stories

o Online advertising (banners, links / cross-links, directories, newsletter placement, etc.)

2. Converting visitors (non-customers) into customers

o In-site promotions

o Sales / Special Offers

o In-store Coupons

o Associated Products

o Customer Recommendations

o Opt-in Email Promotions

3. Site Effectiveness

o Enticing appropriate visitor behaviour

o Establishing emotional context

o Building relationships

o Increasing per-customer purchases

o After sale marketing

o After sale relationship building

Enticing visitors and converting visitors work hand in hand. One without the other dramatically reduces the opportunities for creating new customers. You have to get the new visitor to the site and you have to provide sufficient incentive to turn that visitor into a buying customer.

In many cases the visitor has almost no investment in visiting your e-commerce web site. With no investment your site needs to provide sufficient and immediate enticement/reward to keep the visitor from clicking the back button and going to another site. This requires a very close relationship between the keywords they

16

used in their search (or the information in the advertising) to the content on the web page they view. The closer the relationship the more chance you have of enticing the visitor to continue looking at your site.

Telephone support:A new report published by leading call tracking provider explainsthat an easily accessible and seamless telephone support system isn’t only helpful to your business’s online customers, it is essential.

Currently, the majority of e-commerce businesses don’t offer fully realised telephone support. If they do have a telephone number, its function is often to collect voice mails until such atime that the site owner can get in touch with those who have rang. For high ticket goods especially, or items which have far reaching consequences (like washing machines or cars), having a well staffed support centre can mean the difference between a happy e-commerce customer making it through the checkout and a customer who leaves nothing but an abandoned shopping cart in their wake.

Insisting on having telephone support might seem to break the first rule of e-commerce. A customer making their journey throughyour online checkout should require as little assistance with theprocess as possible. Generally, this is how the customers like it, quick, clean and as simple as possible. In an ideal world thecustomer will be presented with the information they need, as andwhen they need it, all the way to the checkout. However, as the cost of the item goes up, the number of questions a customer has will increase exponentially. This will continue until it reaches a point where the website simply cannot provide the personalised information customers require to part with their hard earned cash. Google carried out an interesting study on this behaviour. 

17

The research also discovered that as many as one in three online shoppers would like to have a conversation with someone over the telephone before completing their purchase. This figure leaps even higher (to 41%) in the 55+ demographic, perhaps a throwback from the age of mail order catalogues. What is interesting here is that it doesn’t seem to be the actual act of making a phone call which puts these customers’ minds at rest. Simply knowing that they have the option of making contact with a human customersupport representative if they were to have questions about theirorder, or if there is a problem with the product, is usually enough to quell any doubts. 57% of the 2000 consumers surveyed aspart of the study stated that a customer service phone number with accessible opening times adds an additional layer of trust and authority to an online retailer, and 56% stated that they aremore likely to shop again with a retailer which they know offers this support.

Customers of online businesses have made their opinion clear, thetelephone is still relevant to their online shopping experience. This paints a picture of the telephone support line as a vital part of the experience your website delivers, and implementing this should be as important to you as it is to your customers. But is it as easy as that – hire a customer support employee to resolve issues or process telephone sales and watch the additional revenue pour in? Unfortunately not.

While the availability of telephone support and sales undoubtedlyreflects well on your business, it also presents a new host of marketing problems for you to contend with. The inability to track telephone conversions with the same level of detail available online makes it difficult to connect telephone customers with things like abandoned shopping carts, website journeys and, crucially, your online marketing activities. Out ofthe 250 marketing managers interviewed as part of research, 82% said that they feel the inability to link online and offline activities in their analytic data is vital to their understandingof customer journeys, but 52% of them only have a limited picture

18

of which of their online activities are generating calls to theirbusiness.

Product handling & shippingOne of the key components and biggest costs for many online retailers and e-commerce sites is shipping and fulfillment. Selling the merchandise and getting it out to the customer in a timely, cost-effective manner will be crucial for success.  Poor fulfillment and slow deliveries can really make your customers unhappy and diminish the prospect of getting repeat business.  So, making sure you can execute and get your products delivered in a timely fashion should be a key element of your marketing strategy.

It might seem like you’d have limited options for managing your shipping and fulfillment but there are more options available to you than you might think.  Start by thoroughly researching your options. Different shipping carriers and fulfillment houses have rates and service levels that will vary widely.

Compare Carriers and Fulfillment Options

The recent gyrations in fuel prices putting a squeeze on Internetretailers of late has made comparing carriers and fulfillment options more important than ever.  Since many online merchants rely so heavily on parcel shipping, when fuel prices rise, shipping costs go up, and profits can be deeply affected. Carriers such as DHL, FedEx and UPS pass along those fuel price increases in the form of fuel surcharges to their customers. Fuel surcharges can vary dramatically with carriers pricing calculations fluctuating monthly or even weekly at times.Many e-commerce companies offer free delivery on orders made overa certain sales threshold – “Free Shipping on All Orders Above Rs1000”, for example.  With transportation costs so uncertain, manyonline retailers will need to rethink their shipping and promotional strategies.  Deliveries to outlying rural areas can incur particularly high surcharge costs as well.

19

With fuel prices fluctuating so greatly, will it be too risky to keep offering free shipping as an incentive?It’s no secret that shipping and handling charges have been profit centers for many e-commerce companies for years. Padding the shipping and handling charge has modestly improved the profitper order for many online retailers, but rising shipping costs can cut into this profit source significantly.

One has to compare carriers and fulfillment options carefully andbe savvier than ever when it comes to monitoring your shipping and fulfillment costs.  Now, more than ever, e-tailers have to make sure that higher transportation costs don’t carve too deeplyinto their bottom line.Rate ShoppingMany of the largest e-commerce merchants have partnerships with multiple carriers, allowing them to quickly rate shop between shippers. They set up guidelines and use software to optimize thecost of each individual delivery and quickly choose a carrier, based on the service level required, destination and weight.  Smaller online retailers will simply have to compare rates the old fashioned way.

No matter what the size of your online retailing operation, all merchants have to keep a close eye on their shipping costs.  Smaller merchants get too overwhelmed to track and reconcile their shipping costs regularly for each so they just end up paying the bill, without ever looking closer.

Use The Free Calculators/EstimatorsFor starters, many of the major carriers provide calculators thatwill easily calculate shipping and postage costs giving e-commerce site owners a clearer view of the costs associated with each carrier. You can go right to the individual websites and enter the package dimensions, address information, and other package details to pull up price estimates.

Here’s a list of calculators from the most widely recognized shipping, fulfillment and delivery companies:

FedEx – Rates and Transit Times 20

UPS – Shipping Time and Costs DHL – Shipping Management Visit each site and create a spreadsheet that you can use to compare price and service. This will save you a lot of time when calculating what your best options for shipping and the required service level.

Don’t Forget the FeesWhen establishing your shipping rates, don’t forget to include the cost of fees for shipping extras. Carriers charge additional fees for services such as Delivery Surcharges, Residential Delivery Surcharges, Delivery Confirmation, and Insurance Fees. Keep these extras in mind when calculating what kind of merchandise you are shipping and where the customer you are shipping to lives.

Outsourcing Your FulfillmentA more suitable option for small to medium sized online retailersis the option of outsourcing your shipping and fulfillment. 

EmailEmail marketing is incredibly important for ecommerce, because itserves as a way to bring people to your website to make a purchase. You can do this by sending an email about:

- New product arrivals- Abandoned cart reminders- Waitlisted product reminders- Items you may also be interested in- Upcoming friends' birthdays--buy them a gift!- Sale announcements- Coupons

There are probably hundreds of other types of emails you can sendto re-engage your customers.Also, some quick facts from a McKinsey report regarding the importance of email marketing for ecommerce:

21

Email is nearly 40 times more effective at acquiring customers than Facebook and Twitter combined.

91 percent of all US consumers still use e-mail daily. Email prompts purchases at least 3x the rate of social media Average order value of email referral purchases is 17%

higher than social media referral purchases

Well, there have been so many new marketing channels popping around lately, yet most of the research shows that email outperforms all of them – especially when it comes down to engagement with your existing customers. You know, the most important segment of customers; the ones that love your brand andkeep coming back. Despite all these facts, email has been neglected for long time and has shared the spotlight with many newcomers. Email is proving to be extremely resilient and more and more useful for e-commerce marketers. There is a huge opportunity for the ones that take advantage of this somewhat neglected marketing channel.

With the best of breed email marketing tools becoming easier to use, simpler to segment your audience and faster to analyze your marketing efforts.

Let’s look into what’s coming up in the world of e-commerce emailmarketing.

22

MOBILE EMAIL OPENS HAVE SURPASSED 50% IN 2013

Firstly, mobile is no longer a joke. Even if you were dismissive about its importance in 2013, it’s now becoming shockingly obvious that mobile is eating … well, everything. As per reports, mobile email opens have already surpassed other opens in Novemberlast year and the growth doesn’t seem to be stopping.

Pay special attention to the growth of mobile opens versus webmail opens (as normal desktop client opens remain almost at the same levels). What this means is, that business users haven’tchanged their habits a lot (yet), but the mobile growth is eatingheavily into webmail, which has traditionally been the way consumers read their emails.

Takeaway

Double check your email templates with a tool like Litmus. If they don’t render well on mobile devices you are throwing away a great portion of potential sales. In this case, one should immediately dig a bit deeper into responsive and scalable email knowledge base and adjust yourtemplate(s).

RELEVANCY MATTERS MORE THAN EVER

Reading emails on mobile devices is bringing with it new consumerbehavior patterns. People pay less and less attention to every single email – instead, we skim through them. Mobile vendors, like Google with its Android, are making it extremely easy to quickly go through new emails and archive the ones that aren’t relevant.

So what does that bring to email marketers? What we are seeing isthat this really amplifies the already important components of successful email campaigns: subject lines, email preheaders, advanced user segmentation and, above all, individually relevant content.

Recent research done by Accenture shows that consumers not only prefer relevant content and offers but they are even willing to

23

sacrifice some of their privacy for it. Thus, personalization is quickly becoming a norm.

Let’s go through some of the facts:

Your email subscribers have given you explicit permission tosend them emails. They expect you to reach out to them and if you have something valuable to give or say, they will listen.

Every e-commerce business has a natural opportunity to get the email permission at the checkout stage.

Since many of your subscribers have already purchased something from you, they obviously like something about yourbrand.

It’s a widely known fact that more than 40% of e-commerce revenue comes from existing customers. Email is the only channel to reach them all directly.

Consumer privacy:

In today’s digital economy generating consumer information is inevitable. Though some companies use the personal information they obtain to improve and provide more services to consumers, many companies use the information in an irresponsible manner. 

In countries that do provide legal protection for consumer privacy, it is never protected as an absolute right. Consumer privacy is not considered an absolute right for three reasons:

1. What constitutes consumer privacy is culturally, contextually, individually defined

2. Consumer privacy often conflicts with other market rights 3. The ownership of a consumer's private information is debated

— as consumer's believe they own the information and businesses believe they own the information. 

24

In order to understand consumer privacy it is useful to outline the privacy expectations and strategies of both consumers and businesses, and to also examine the protection measures taken by firms to safeguard consumer information. The major privacy concerns held by consumer's can be broken down into three main domains:

1. Consumers want to be informed about the type of information that is being collected from them. 

2. Consumers need to know that they a certain degree of controlover the personal information that is being collected. 

3. Consumers need to be assured that their personal informationwill be secure and will not be abused or stolen.

Though privacy has been defined by many as the "right to be let alone", its application in today’s modern world is not that straightforward. We live in a world where our purchasing behavior, both online and offline, is shared and used invisibly. For instance, if an individual uses a social networking site, it is possible for a third party application to access personal information that is shared. Similarly, if an individual uses a warranty card or loyalty card during a purchase, it is possible for third parties, like data brokers, to collect and use the individuals' personal information. 

For instance,15 consumer privacy groups have filed a complaint against Facebook for limiting user's ability to browse anonymously. The complaint was regarding the fact that users onlyhad the choice to designate personal information as publicly linkable, or to not provide information at all. Though Facebook claims to ensure users control over their personal data by allowing users to choose their privacy settings, it does not clarify that these setting can change at any given point.Moreover, the latest privacy embarrassment that hit Facebook proves again that Facebook does not protect users’ privacy. Facebook admitted to passing personal information of its users onto different gaming applications. These gaming applications have in turn passed the information on to advertisers who otherwise could not have accessed the information.

25

Breach of Privacy in Information Collection

Internet users often fear the loss of personal privacy, because of the ability businesses and their websites have to collect, store, and process personal data.  For example, sites extract information from consumers through a form, and then record data about their user’s browsing habit.  After collecting user information, the sites match the data with their personal and demographic information to create a profile of the user’s preferences, which is then used to promote targeted advertisements or provide customized services. The sites might also engage in web lining through which they price a consumer according to their profiles. 

Online there are two main ways in which sites collect user information: 

1. Sites collect information directly through a server software. Sites often use automatic software logs to do this.

2. A third party extracts information from the site without theconsumer’s knowledge. Sites often place cookies on websites to extract user information. 

Automatic software logs and third party cookie placement are two overlooked aspect of information collection.  Cookies work by collecting personal information while a user surfs the net, and then feeds the information back to a Web server. Cookies are either used to remember the user, or are used by network advertising agencies to target product advertisements based on long term profiles of user’s buying and surfing habits. An example of a website that uses cookies is 'double click'. Web bugs are used by advertising networks to add information to the personal profiles stored in cookies. Web bugs are also used in junk email campaigns to see how many visits the site gets. Cookies and web bugs are just two out of hundreds of technologiesused to collect personal information.

26

Case Study (Consumer Rights): The ongoing conflict between RIM (Research in Motion) and the Government of India.

The Government of India has issued a warning against RIM saying that it would suspend its blackberry operations if they do not adhere to the Indian laws and regulations. The Ministry of Home Affairs is demanding that RIM allow access to encrypted content that flows in and out of India. In other words the Government of India wants RIM to allow the security forces to have access to  data sent using Blackberries by reducing  encryption levels, or by providing the government with the decryption keys. The demand by the government is somewhat ironic as Blackberry manufacturers have developed the Blackberry encryption key to protect the consumers’ privacy during any business deal, so that information is not compromised. On the other side of the debate, the government is demanding access to Blackberry communications, because their inability to decrypt thecodes makes countering the threats to national security difficult. This is especially true for a country like India, which is constantly facing threats from Maoists, and extremist Islamic groups. 

This example highlights an important question:  what is more important — national security or consumer privacy? In 2010, RIM agreed to negotiate access to consumer messages only where accessrequests are within local laws. Blackberry also agreed to not make any specific deals with consumers, and to make its enterprise systems security and confidentiality non-negotiable.Conclusion:

Though, consumer privacy is very important especially in a world of digital technology, however, when we speak of national security, I feel that individuals must set aside someof their civil liberties  — at least to the extent that it is necessary to prevent societal damage.

27

Technical Aspects

Finding A Good Web Host

You need to be very vigilant while choosing your Web Hosting Company because it acts as the ambassador for your website in theonline world.Web hosting simply gives an access to your website to be on the internet. Web hosting companies give space to clients as well as Internet connectivity. You will have to keep in mind your requirement before choosing a web hosting company.If you are hosting your own website it’s a different thing, though the most choose to go with a web hosting service provider.This is cost effective as well as you have somebody to take care of all the technical work.

Getting a Merchant

To start an eCommerce, the foremost thing you need is an InternetMerchant Bank Account. These accounts are specifically tailored for online transactions mostly through credit/debit cards.Merchant Account act as a third party between you and your customer or let’s say between the merchant and the credit card company. The job is to make sure that no policies are violated onboth sides. Credit card companies have very strict rules due to online thefts making sure the transaction is fully verified and happens to be a reliable source.

28

 The transaction is not held for longer periods and can be transferred on daily or weekly basis depending upon your merchant. If you are selling something internationally, make sureyou have an International Merchant available.

Payment Options

Now to charge any of your customers you would have to provide them options. Despite the fact of many choices available, most ofthem would opt to pay via their credit cards, as its hassle free and quicker than the rest. To allow your customers to pay via Credit cards you will have to set up a Merchant account as mentioned above. Your Merchant can either be an institute which can process online payments or can be a bank.Other online transaction options are: Debit Cards Net Banking

These are two well known payment methods but you will have to addsoftware to your website or you can get your website linked to a payment processing service.

Digital Certificate

Let us say it’s your company’s identity card in the virtual worldand works as the proof of ownership of a public key.A digital certificate is a file which has all the information of the company i.e. name of the company, its email/web address alongwith your public key.You can get your Digital Certificate issued by the Certificate Authorities in no time. The CA is endorsed to provide Certificates by signing it as well as enabling your customers to view which company is the issuer. Alongside their signature also guarantees that the certificate has not been altered by a third party.

29

Shopping Cart Software

Your website will certainly be providing various products or services and while your customers are selecting different products on your website, they would need a Shopping Cart.This is another imperative venture for your Ecommerce. Ecommerce Shopping Cart is simply a scripting series which tracks the itemschosen by your customer to buy till they reach the final checkout.Once the customer is ready to make the payment, the software willpush the request and transfers related financial networks, including the Internet merchant account with your bank. It will then send back verification to the shopping cart software. Upon successful verification, the transaction will be completed.This is the simplest and fastest way of getting your website equipped with Ecommerce.

GoalsFast loading pages:

30

Compact, efficient code and images are all essential to fast loading pages that allow visitors to see what they came to the site for quickly before hitting the back button.

Clean, product centric layout:

We want your visitors to be able to find the products that they want quickly and in as little number of steps as possible. This means dynamically generating web pages based on user metrics so that they are presented with the best possible product mix on their visits. It also means an emphasis on displaying products and not on gimmicks.

Efficient and intuitive navigation structure:

Customers should be able to browse your site as easily as possible so that they can find what they came for and even what they may not be aware of.

Checkout oriented usage flow:

The site should be as simple to use as possible and inspire confidence in the user so as to lead them from product selection through payment as painlessly as possible.

Search engine friendly code:

The site should be as search engine friendly as possible so that potential customers can find your site when searching for the goods or services which you carry. To accomplish this the pages should be created in such a way to emphasize specific keywords. Other strategies can include creating multiple landing pages for specific products or services that different end users might be searching for using different terms.

31

E-Commerce in IndiaIndia has an internet user base of about 137 million as of June 2012. The penetration of e-commerce is low compared to markets like the United States and the United Kingdom but is growing at amuch faster rate with a large number of new entrants. The industry consensus is that growth is at an inflection point. Unique to India (and potentially to other developing countries), cash on delivery is a preferred payment method. Indiahas a vibrant cash economy as a result of which 80% of Indian e-commerce tends to be Cash on Delivery. Similarly, direct imports constitute a large component of online sales. Demand for international consumer products is growing much faster than in-country supply from 32ersonaliz distributors and e-commerce offerings.For most of us, a life without e-commerce may seem preposterous. Be it online bill payment or sending gifts to loved ones, e-commerce forms the core of our activities nowadays. Although e-commerce trends have been oscillating in India over the past 15 years or so, we now have a suitable ecosystem in place and business is literally booming.

E-commerce in India is thriving, thanks to a booming online retail industry that defies slow economic growth and 32ersonali inflation. According to an Assocham survey, the Indian e-commerceindustry has grown to $16 billion in 2013, showing a staggering growth rate of 88% from the $8.5 billion in the previous year. The trend, when analysed over the years, shows that the e-commerce industry faced barriers, had a five-year-long dip and finally showed a positive growth rate by overcoming the

32

drawbacks. Here’s a quick look at the major milestones and the shape of things to come.

1995: The Internet waveWith the advent of the Internet in 1995, India witnessed the setting up of B2B portals, matrimonial sites, job search directories and online stores through Rediff.com and Indiatimes.com. However, these smaller initiatives did not thrivedue to several factors, such as low Internet penetration, slow Internet speed, small user base for online shopping, inadequate logistics infrastructure, low consumer acceptance of e-commerce and the lack of a tangible revenue model. More than a thousand e-commerce businesses collapsed due to the IT downturn in 2000.

2005: Low-cost carriers and e-ticketingIn 2005, low-cost carriers entered the aviation sector and drove the online travel industry, leading to the e-ticketing sites. TheIndian Railways also implemented e-ticket booking and accepted digital payments through credit cards. Eventually, consumers got accustomed to e-tickets and the 33ersonaliz regarding online usage of credit cards reduced considerably. The change in consumer lifestyle, the rise in disposable income of the middle class and the need for convenience acted as catalysts and thus began the era of e-tailing. This period saw a sharper focus on revenue generation.

2007 onwards: The New Age e-commercePost 2007, a number of start-ups stepped into the Indian e-commerce market to make it big. These included companies such as Flipkart, Infibeam, Myntra and Snapdeal. These portals gained customers through rigorous marketing and also by offering services such as group buying and the daily deal discount models.Heavy discounts were offered as incentives to gain customer loyalty. The forward and backward linkages of these sites were

33

strengthened as well.

2014: The current scenarioIndia’s e-commerce market was worth about $2.5 billion in 2009. It went up to $6.3 billion in 2011 and further to $16 billion in 2013. It is now expected to grow as much as $56 billion by 2023, which will be 6.5% of the total retail market, as quoted by eMarketer. A major growth in online shopping was witnessed since the introduction of cash on delivery (COD) and free return options. The price war among sites also brought another feature of comparison to customers where they could review product characteristics and prices featured on different sites.

A new trend of social commerce has also come up in the e- commerce market. Entrepreneurs have given a personal touch to their businesses by making their presence felt in the social media for branding, feedback and advertising of upcoming productsand services. And just like Facebook, Pinterest, too, is said to provide great options for promoting one’s post (about products, services, etc.) to a larger base.

The way forwardMobile AppsTo fully 34ersona the e-commerce opportunity in the future, players will leverage the growing number of mobile devices in thecountry by developing mobile-compatible sites and applications.

Technological innovationsTechnological innovations will be crucial for e-commerce firms tostay in the highly competitive market. For instance, eBay has already announced a virtual window shopping facility where customers can go through products as if they were in a store.

34

Focus on smaller townsIndian e-commerce sites are gradually shifting their focus from metro cities tier II and smaller towns in sync with the Internet and mobile penetration. While bigger brands are not physically present in tier II and tier III cities of India, e-commerce makesthese brands available to people hailing from those places and thus, has been highly accepted in the smaller towns.

Innovative logisticsOrganisations may streamline or re-invent logistics for their e-commerce portals to thrive. Also Flipkart, like Amazon, has come up with several delivery schemes. Amazon, too, has filed patent for an anticipatory delivery model, where it aims to dispatch a product to a customer even before he has ordered it, thus decrease shipping time.

Brand consolidation The industry has already seen a number of consolidations. However, new alliances will be coming up. Most of the e-commerce companies have been bleeding and consolidation will happen to control the financial losses. Also, when international players like Alibaba enter the market, it will be easier to sell them a bouquet of brands then scattered brands.

Personalised catalogueKeeping customer satisfaction in mind, retail portals will35ersonal user accounts where each person’s choices will be recorded through dynamic programming for future access. Product35ersonalization, sale of unique items, resale and multiple payment options will all cater to driving e-commerce across consumer segments.

The journey of e-commerce in the future may be rough and may require more efforts from both entrepreneurs and investors. To

35

stand the test of time, Indian companies need a mixed-approach implementation that is influenced by globally tested strategies, along with local elements. It might have failed in the past decade but this time around, it is here to stay and grow more speedily than ever.

Future of E-CommerceImmersive:

The ecommerce experience is due to become decidedly more physical, sensory and immersive and many would argue it’s a shiftthat’s long overdue. After all, despite even Amazon’s tremendous success, its e-commerce interface remains not much more than a

36

sophisticated digital catalogue of goods, offering little in the way of a shopping experience.Virtual reality technologies akin to Oculus Rift (recently acquired by Facebook) and Sony’s Morpheus – both virtual reality displays, worn like goggles, are indicative of how we, as consumers, may soon quite literally step into more life-like shopping and service experiences online. During this year’s London Fashion Week, for example, retailer Topshop allowed selectfans to experience a virtual front-row seat for a live, 15-minutefashion show! The fans, as shown in this video, were equipped with the Oculus Rift headsets and headphones and were able to experience both the action on the catwalk, as well as see the celebrities they were seated next to –  all while sitting in a Topshop store!What this suggests, in theory, is that by simply donning a relatively inexpensive virtual reality headset, shoppers could soon be able to transport themselves to any store in the world, browsing and buying in a very natural, intuitive and highly experiential way.  The Champs-Elysee, New York’s Fifth Avenue or Turkey’s Grand Bazaar – all accessible from the comfort of one’s own living room.This video from U.K. retailer Tesco provides a sense of just how lifelike these virtual shopping trips may seem. 

Tactile: One of the inherent drawbacks of online shopping is the inability to touch and feel items that you’re considering buying.That’s likely to change.  Through the work of University of Pennsylvania mechanical engineering professor Katherine Kuchenbecker, touch is something we may soon widely replicate with technology. Professor Kuchenbecker and her research team have been successfully mapping patterns of vibration in order to accurately simulate the feel of various materials, allowing usersto sense, through a glide pad and stylus, the unique tactility ofdifferent surfaces and textures.  Soon, feeling something online before you buy it will likely be commonplace.

37

Using haptography, vibrations are transmitted into a stylus to accurately simulate the feeling of denim.

Contextual: 

Wearable, smart technologies like Google Glass in combination with location-based augmented reality applications like this

38

one from Layar will enable us to see and interact with digital information overlaid on the world around us, making entire citiesand the things in them clickable.  By simply saying, “O.K. Glass,scan this.” The Layar program immediately detects any digital data present in the field of vision.  Once detected, it initiatesthat content and allows the user to interact with it.For example, by instructing Google Glass to scan a street lined with shops, hotels and restaurants, the user may then be able to interact with data attached to those various physical places. It may be possible to browse hotel reviews, make reservations at a restaurant or download coupons or offers from stores.

Layar for Google Glass enables a user to see which apartments on the street are available for rent by enabling augmented reality content.Accessing this new phy-gital data layer will allow us to move seamlessly between real world and online commerce, when and whereit makes the most sense to do so.Online retailers therefore, will have to begin thinking in more contextual terms, placing digital opportunities to buy products not simply in online catalogues but also throughout the physical world, where it makes the most geographic and contextual sense for consumers.  For example, an electronics retailer could easilygive conference attendees the ability to order from an assortmentof the most commonly needed electronic accessories directly from an augmented reality store located right at the conference center?So, in combination it’s not hard to see how technologies like these will bring e-commerce infinitely closer to feeling alive and experiential.  And just as many retailers in the big box channel have struggled in a post-Internet world, it’s reasonable to assume that even Amazon, eBay and other digital behemoths could find themselves being challenged by a new breed of competition – competition born out of a new generation of technologies.

39

IMPACT OF ELECTRONIC COMMERCE

E-commerce and e-business are not solely the Internet, websites or dot com companies. It is about a new business concept that incorporates all previous business management and economic concepts. As such, e-business and e-commerce impact on many areasof business and disciplines of business management studies. For example:

Marketing – issues of on-line advertising, marketing strategies and consumer behaviour and cultures. One of the areas in which itimpacts particularly is direct marketing. In the past this was mainly door-to-door, home parties (like the Tupperware parties) and mail order usingcatalogues or leaflets. This moved to telemarketing and TV selling with the advances in telephone and television technology and finally developed into e-marketing spawning ‘eCRM’ (customer relationship management) data mining and the like by creating newchannels for direct sales and promotion.

Computer sciences – development of different network and computing technologies and languages to support e-commerce and e-business, for example linking front and back office legacy systems with the‘webbased’ technology.

Finance and accounting – on-line banking; issues of transaction costs; accounting and auditing implications where ‘intangible’

40

assets and human capital must be tangibly valued in an increasingly knowledge based economy.

Economics – the impact of e-commerce on local and global economies; understanding the concepts of a digital and knowledge-based economy and how this fits into economic theory.

Production and operations management – the impact of on-line processing has led to reduced cycle times. It takes seconds to deliver digitized products and services electronically; similarlythe time for processing orders can be reduced by more than 90 percent from days to minutes.Production systems are integrated with finance marketing and other functional systems as well as with business partners and customers (see Intel mini-case).

Case Study:Intel launched their on-line business in summer 1998 when their sales shot from zero to $1 billion per month in the first month of operation. The reason for this is that they totally re-engineered their processes to include small and medium-sized businesses. Previously only Intel’s larger customers were connected to them by expensive EDI networks, leaving the small and medium-sized companies sending faxes or phoning in orders or requirements. Intel concentrated on procurement and customer support for a range of their products (including computer chips and microprocessors), developing an extranet (which is the linking of a number of intranets using Internet technology with added security creating virtually private networks). By using theextranet, authorised small and medium-sized business partners could place orders, track the orders and look at product documentation on the site. The savings for Intel and their customers were large – they eliminated 45,000 faxes in a quarter to Taiwan alone – saving on time, telephone charges and fax paper. Eleven of the larger Intel companies were connected toanother system which let Intel link to customer plants across theInternet to track part consumption.

Production and operations management (manufacturing) – moving from

41

mass production to demand-driven, mass customisation customer pull rather than the manufacturer push of the past. Web-based Enterprise Resource Planning systems (ERP) can also be used to forward orders directly to designers and/or production floor within seconds, thus cutting production cycle times by up to 50 per cent, especially when manufacturing plants, engineers and designers are located in different countries. In sub-assembler companies, where a product is assembled from a number of different components sourced from a number ofmanufacturers, communication, collaboration and coordination are critical – so electronic bidding can yield cheaper components andhaving flexible and adaptable procurement systems allows fast changes at a minimum cost so inventories can be minimised and money saved.

Management information systems – analysis, design and implementationof e-business systems within an organisation; issues of integration of front-end and back-end systems.

Human resource management – issues of on-line recruiting, home working and ‘intrapreneurs’ working on a project by project basisreplacing permanent employees.

Business law and ethics – the different legal and ethical issues thathave arisen as a result of a global ‘virtual’ market. Issues suchas copyright laws, privacy of customer information, legality of electronic contracts, etc.

42

43

Benefits of E-CommerceBenefits of e-commerce to organisations:International marketplace. What used to be a single physical marketplace located in a geographical area has now become a borderless marketplace including national and international markets. By becoming e-commerce enabled, businesses now have access to people all around the world. In effect all e-commerce businesses have become virtual multinational corporations.Operational cost savings. The cost of creating, processing, distributing, storing and retrieving paper-based information has decreased (see Intel mini-case).Mass customisation. E-commerce has revolutionised the way consumersbuy good and services. The pull-type processing allows for products and services to be customised to the customer’s requirements. In the past when Ford first started making motor cars, customers could have any colour so long as it was black. Now customers can configure a car according to their specifications within minutes on-line via the www.ford.com website. Enables reduced inventories and overheads by facilitating ‘pull’-type supply chain management – this is based on collecting the customer order and then delivering through JIT (just-in-time) manufacturing. This is particularly beneficial for companies in the high technology sector, where stocksof components held could quickly become obsolete within months. For example, companies like Motorola (mobile phones), and Dell (computers) gather customer orders for a product, transmit them electronically to the manufacturing plant where they are manufactured according to the customer’s specifications (like colour and features) and then sent to thecustomer within a few days.Lower telecommunications cost. The Internet is much cheaper than value added networks (VANs) which were based on leasing telephonelines for the sole use of the organisation and its authorised

44

partners. It is also cheaper to send a fax or e-mail via the Internet than direct dialling.Digitisation of products and processes. Particularly in the case of software and music/video products, which can be downloaded or e-mailed directly to customers via the Internet in digital or electronic format.No more 24-hour-time constraints. Businesses can be contacted by or contact customers or suppliers at any time.

Benefits of e-commerce to consumers:24/7 access. Enables customers to shop or conduct other transactions 24 hours a day, all year round from almost any location. For example, checking balances, making payments, obtaining travel and other information. In one case a pop star set up web cameras in every room in his house, so that he could check the status of his home by logging onto the Internet when hewas away from home on tour.More choices. Customers not only have a whole range of products that they can choose from and customise, but also an international selection of suppliers.Price comparisons. Customers can ‘shop’ around the world and conduct comparisons either directly by visiting different sites, or by visiting a single site where prices are aggregated from a number of providers and compared (for example www.moneyextra.co.uk for financial products and services).Improved delivery processes. This can range from the immediate delivery of digitised or electronic goods such as software or audio-visual files by downloading via the Internet, to the on-line tracking of the progress of packages being delivered by mailor courier.

45

An environment of competition where substantial discounts can be found or value added, as different retailers vie for customers. It also allows many individual customers to aggregate their orders together into a single order presented to wholesalers or manufacturers and obtain a more competitive price (aggregate buying),

Benefits of e-commerce to society:Enables more flexible working practices, which enhances the quality of life for a whole host of people in society, enabling them to workfrom home. Not only is this more convenient and provides happier and less stressful working environments, it also potentially reduces environmental pollution as fewer people have to travel towork regularly.Connects people. Enables people in developing countries and rural areas to enjoy and access products, services, information and other people which otherwise would not be so easily available to them.Facilitates delivery of public services. For example, health services available over the Internet (on-line consultation with doctors ornurses), filing taxes over the Internet through the Inland Revenue website.

Limitations of E-Commerce Limitations of e-commerce to organisationsLack of sufficient system security, reliability, standards and communication protocols. There are numerous reports of websites and databases

46

being hacked into, and security holes in software. For example, Microsoft has over the years issued many security notices and ‘patches’ for their software. Several banking and other business websites, including Barclays Bank, Powergen and even the Consumers’ Association in the UK, have experienced breaches in security where ‘a technical oversight’ or ‘a fault in its systems’ led to confidential client information becoming available to all.Rapidly evolving and changing technology, so there is always a feeling of trying to ‘catch up’ and not be left behind.Under pressure to innovate and develop business models to exploit the new opportunities which sometimes leads to strategies detrimentalto the organisation. The ease with which business models can be copied and emulated over the Internet increase that pressure and curtail longer-term competitive advantage.Facing increased competition from both national and international competitors often leads to price wars and subsequent unsustainable losses for the organisation.Problems with compatibility of older and ‘newer’ technology. There are problems where older business systems cannot communicate with webbased and Internet infrastructures, leading to some organisationsrunning almost two independent systems where data cannot be shared. This often leads to having to invest in new systems or aninfrastructure, which bridgesthe different systems. In both cases this is both financially costly as well as disruptive to the efficient running of organisations.

Limitations of e-commerce to consumersComputing equipment is needed for individuals to participate in the new ‘digital’ economy, which means an initial capital cost tocustomers.A basic technical knowledge is required of both computing equipment and navigation of the Internet and the World Wide Web. Cost of access to the Internet, whether dial-up or broadband tariffs.Cost of computing equipment. Not just the initial cost of buying equipment but making sure that the technology is updated regularly to be compatible with the changing requirement of the Internet, websites and applications.

47

Lack of security and privacy of personal data. There is no real control ofdata that is collected over the Web or Internet. Data protection laws are not universal and so websites hosted in different countries may or may not have laws which protect privacy of personal data.Physical contact and relationships are replaced by electronic processes. Customers are unable to touch and feel goods being sold on-line or gauge voices and reactions of human beings.A lack of trust because they are interacting with faceless computers.

Limitations of e-commerce to societyBreakdown in human interaction. As people become more used to interacting electronically there could be an erosion of personal and social skills which might eventually be detrimental to the world we live in where people are more comfortable interacting with a screen than face to face.Social division. There is a potential danger that there will be an increase in the social divide between technical haves and have-nots – so people who do not have technical skills become unable to secure better-paid jobs and could form an underclass with potentially dangerous implications for social stability.Reliance on telecommunications infrastructure, power and IT skills, which in developing countries nullifies the benefits when power, advanced telecommunications infrastructures and IT skills are unavailable or scarce or underdeveloped.Wasted resources. As new technology dates quickly how do you dispose of all the old computers, keyboards, monitors, speakers and other hardware or software?Facilitates Just-In-Time manufacturing. This could potentially cripple an economy in times of crisis as stocks are kept to a minimum anddelivery patterns are based on pre-set levels of stock which lastfor days rather than weeks.CASE

STUDY

48

CERTIFICATE FROM THE GUIDE

49

This is to certify that the Project work titled MARKET

RESEARCH

Is a bonafide work carried out by Aniket Powar

................................Roll

No.....................................................

A candidate for the /Post Graduate Diploma examination of the

Welingkar Institute of Management under my guidance and

direction.

SIGNATURE OF GUIDE:

NAME: Ankita Desai

DESIGNATION: Managing Partner

ADDRESS:

50

DATE:

PLACE:

Business Hibu.co.uk , Ecommerce

Book, Wikipedia

Business Insider

51