Introduction to E-Commerce

By Notes Vandar

Traditional Commerce: 

  • Commerce is simply the process of buying, selling and exchanging products and services between  and among organizations and individuals.  
  • Every commercial transaction involves following three main components or dimensions.
    Product or Service
    -Delivery agent (or intermediary)
  • The commerce in which all the above components are physical is called traditional commerce.
  • For example, if we go to super market, we purchase some fruits, vegetables and other physical  products, pay bill at counter.  
  • Traditional commerce normally buys, sells or exchange products and services within a single  industry and in some cases within a specific geographical area. 
  • It relies on operating business hours during a specific period of time and requires housing  inventory or occupying retail store. 
  • The traditional commerce is based on the following facts:
    – It needs to hire sales executives, sales managers, accountants and other staffs.
    – It operates at business hours within a certain period of time.
    – It does not share your information with the competitors.
    – It often relies on face-to-face interaction with consumers and its success is based on word  of mouth, networking and customer referrals.


  • The commerce in which all or at least one of the above components (product or services, process, delivery agent) is digital is called e-commerce. 
  • In its broadest definition, E-Commerce is digitally enabled commercial transactions between and  among organizations and individuals.  
  • Digitally enabled means, for the most part, transactions that occur over the Internet and World  Wide Web (WWW). 
  • E-Commerce is a modern business methodology that addresses the needs of organizations,  merchants, and consumers to cut or reduce costs while improving the quality of goods and services and increasing the speed of service delivery.  
  • More commonly, e-commerce is associated with the buying and selling of information, products,  and services via digital networks. 
  • Electronic commerce can take several forms depending on the degree of digitization (the transformation from physical to digital) involved. 
  • The degree or digitization can relate to:
    – The product (service) sold
    – The process
    – The delivery agent (for intermediary).
  • A product can be physical or digital, the process can be physical or digital, and the delivery agent can be physical or digital. 
  • For example, buying a shirt at Walmart Online, or a book from is partial E Commerce, because the merchandise is physically delivered. 
  • However, buying an e-book from or a software product from is pure E Commerce, because the product, its delivery, payment, and transfer agent are all done online.
  • The E-commerce is based on the following facts.
    – It needs to deploy a sophisticated web site to facilitate order, payment, and delivery or at least any one of these dimensions.
    – It operates at any time.
    – It shares information such as price of products with the competitors.
    – It often relies on efficient services provided to customers and its success is based on reduction in cost by lowering overheads.

   How E-Commerce Differs from Traditional Commerce? 

  1. Core Strategy Decisions are Technology Based:
    Core strategic decisions such as virtual storefront, customer service, content of web site etc. are  highly integrated with technology in case of E-commerce and such decisions are not tightly  integrated with technology in case of traditional commerce.
  1. Real-time Competitiveness:
    With E-Commerce, speed of decision making can be reduced to a minute from a month and  organizations can engage in dynamic dialogues with customers which is not possible in traditional  commerce.
  1. The Store is Always Open:
    The web store is always expected to be open which has great significance for customers and  suppliers. Buyers can gather Information, search products, compare prices, and order products at  any time. This is almost impossible with traditional commerce.
  1. Technology Based Customer Interface:
    E-commerce supports screen-to-face interaction which has the potential to increase sales and  decrease cost. Human Intervention in the process of buying and selling may be eliminated or at  least reduced. On the other hand, human intervention is necessary in traditional commerce which  may take more time and may also increase.
  1. Customer Controls the Interaction:
    E-Commerce largely adopts the self-service model. Customers themselves search products,  compare prices, and make the decision of purchasing. But, in traditional E-Commerce sells  persons may influence the decisions of customers.
  1. Knowledge of Customer Behavior:
    E-Commerce systems can store Information about purchasing behavior of customers and use it  to provide customized offerings, making recommendations for them etc. which is not possible  with traditional commerce.

E-commerce Terminologies and Fundamentals: 

 Electronic Business: 

  • Electronic Business is commonly referred to as “E-Business” or “e-business” and is defined as the  application of information and communication technologies to support all the activities of  business.
  • It is not only the buying and selling of goods, but also serving customers and collaborating with  business partners.
  • Commerce constitutes the exchange of products and services between businesses, groups and  individuals and can be seen as one of the essential activities of any business.  
  • Electronic business methods enable companies to link their internal and external data processing  systems more efficiently and flexibly, to work more closely with suppliers and partners, and to  better satisfy the needs and expectations of their customers. 
  • Actually, e-business is more than just e-commerce. While e-business refers to more strategic focus  with an emphasis on the functions that occur using electronic capabilities, e-commerce is a  subset of an overall e-business strategy.  
  • E-commerce seeks to add revenue streams using the World Wide Web or the Internet to build  and enhance relationships with clients and partners and to improve efficiency.  
  • For example, a company’s online inventory control mechanisms are a component of e-business  and online selling of company products is e-commerce. 

Electronic Market: 

  • Electronic market or electronic market place is a place where shoppers and sellers meet  electronically.  
  • In electronic markets, sellers and buyers negotiate, submit bids, agree on an order, and finish the  execution on-line or off-line.  
  • There are many different types of marketplaces operating today. We may divide e-marketplaces into  those controlled by sellers, those controlled by buyers and those controlled by neutral third  parties.  
  • Services offered by e-marketplaces include electronic catalogues for online purchasing of goods  and services, business directory listings and online auctions.  
  • Electronic market is also referred to from many other terms like electronic exchanges/internet  exchanges/ online exchanges, or electronic hubs/trading hubs or trading exchanges etc.
  • An electronic exchange can trade different types of materials.
  • The materials that are used in production, such as paper in books, are called direct material.  On the other hand, the materials that are used for supporting productions, such as light bulbs,  office supplies etc., are called indirect materials.  
  • Purchasing goods and services as they are needed at an existing market price is called spot sourcing.  In this case price is normally determined by supply and demand. Stock prices at stock exchanges,  commodity exchanges such as oil, sugar etc. are examples of spot sourcing.  
  • On the other hand, purchasing goods and services on the basis of long-term contracts is called  systematic sourcing or strategic sourcing. 
  • The market that deals with products as services in one industry segment is called vertical  market. E.g.: steel, chemical 
  • And the market that deals with products and services required for all types of industries is called a horizontal market. E.g.: PCs 
  • If strategic sourcing of direct material is done, market makers collect buyers, sellers or both and  provide a platform for negotiation and contract. Such exchanges are called vertical distributors. E.g.:
  • On the other hand, if systematic sourcing of indirect material is done, market makers aggregate  catalogues from many sellers and connect to the order processing system. Buyers can browse items  provided by sellers and compare prices. Such exchanges are called horizontal distributors. E.g.:


  • A portal is a Web site that offers a broad array of resources and services, such as e-mail, online  discussion groups, search engines, and online shopping malls.  
  • There are general portals and specialized or niche portals.  
  • Leading general portals include Yahoo! Netscape, Microsoft, and America Online.  Examples of niche portals include (for gardeners), (for investors), and (for network administrators).

 Electronic Catalogue: 

  • Electronic catalogue is a list of products and services offered by the sellers. Some catalogues list  product information on a general level, others are very detailed.  
  • Some are quite informative while others are more promotional. Some carry pictures and others  do not.  
  • Catalogues facilitate the search for products and suppliers in industries with a wide range of  products and producers.  
  • Prices published in a catalogue are generally fixed and often not disclosed to customers prior to  registration since different buyers might have agreed on different prices. 

Electronic Auction 

  • Online auctions are computerized versions of traditional auctions where buyers bid against each  other.  
  • Main power of electronic auction is that vast numbers of businesses or individuals can bid allowing  sellers or buyers to get the best price.  
  • For e.g.:, etc. are examples of auction sites.  
  • And at the same time smart buyers can cut the time and cost of procurement.  
  • The two main types of auctions are: forward auctions, and reverse auctions.  
  • Forward auctions are electronic auctions, which can be used by sellers to sell their items to many  potential buyers. Sellers and buyers can be individuals, organizations etc.  
  • Items are commonly placed at a special site for auction. Here the highest price bid acceptable to  the seller wins.


  • Reverse auctions are auctions where the bidder is the seller and not the buyer. The bid reflects  how much the buyer is being asked to pay.  
  • In this case bidder with lowest amount is winner.  
  • Web-based reverse auctions have become extremely popular for purchasing large amount of  goods or services at the corporate level.  
  • E-procurement is most often used to describe those business-to-business reverse auctions.


Electronic Store-front:  

  • Electronic store-front or e-shop is a single company’s Web site where products and services are  sold.  
  • Mechanisms of e-storefronts for conducting sales include electronic catalogs, search engine that  helps to find products in the catalog, electronic cart for holding items until check-out etc.  The Web website of Walmart is an example of an electronic store-front.  
  • (Bhatbhateni) is another example of electronic store-front. Electronic-mall: 
  • An online shopping center where many stores are located is called e-mall.  
  • These are the internet-based counterparts of physically existing shopping malls.  They can be defined as a collection of multiple online shops within the same website.  E-malls provide customers with a wide variety of services and products and they are considered to  be more convenient to search than individual electronic store-front.  
  • Multivendor e-commerce sites can also be treated as e-mall. is an example.  

Unique Features of E-Commerce Technology: 

The features that set E-Commerce technology apart from others used in traditional commerce are: 

  • Ubiquity: Anytime, anywhere availability 24/7/365 
  • Global Reach 
  • Universal Standards: Technical standards of the internet are universal. 
  • Richness: Any type of messages and data formats can be used. 
  • Interactivity 
  • Information Density: Information plentiful, cheap and accurate 
  • Personalization/Customization


Benefits of E-Commerce: 

  • E-Commerce helps in facilitating and redefining the relationships between or among  organizations, and between organizations and Individuals for value creation.  
  • E-Commerce advantages can be broadly classified in three major categories:
     Benefits to Organizations
    – Benefits to Consumers
    – Benefits to Society

– Benefits to Organizations: 

  • E-Commerce helps to expand the marketplace to national and international markets. It decreases the cost of creating, processing, distributing, storing and retrieving paper-based information. 
  • It allows reduced inventories and overhead by facilitating pull-type supply chain management. In  pull type supply management, a business process starts when a request comes from a customer  and it uses just-in-time manufacturing. 
  • The pull-type processing allows for customization of products and services which provides  competitive advantage to its implementers. 
  • E-commerce helps organizations to provide better customer services and hence improves the  brand image of the company. 
  • It supports business processes reengineering (BPR) efforts and provides organizations with  integrated departments and increased flexibility. 
  • E-commerce lowers telecommunications cost by enabling other forms of communication such as  email. 

– Benefits to Consumers: 

  • Enables consumers to shop or do other transactions 24 hours a day, all year round from almost  any location. 
  • E-Commerce applications provide users more options and quicker delivery of products and services  especially with digitized products. 
  • E-Commerce applications provide user more options to compare and select the cheaper and  better option. 
  • A customer can put review comments about a product and can see what others are buying or see  the review comments of other customers before making a final buy. 
  • Consumers can receive relevant and detailed information in seconds, rather than in days or  weeks.  
  • Commerce increases competition among the organizations and as a result organizations provide  substantial discounts to customers. 

– Benefits to Society: 

  • Enables more individuals to work at home, and to do less traveling for shopping, resulting in less  traffic on the roads, and low air pollution.  
  • E-Commerce helps reduce cost of products so less affluent people can also afford the products.
  • E-Commerce has enabled access to services and products to rural areas as well which are  otherwise not available to them. 
  • E-Commerce helps the government to deliver public services like health care, education, social  services at reduced cost and in an improved way. 

Limitation of E-Commerce: 

  • Most of the limitations of electronic commerce stem from the newness and the rapidly developing  pace of the underlying technologies.  
  • These limitations will disappear as electronic commerce matures and becomes more available to  and accepted by the general population.  
  • E-Commerce disadvantages can be broadly classified in two major categories:
    Technical Limitations
    – Non-Technical Limitations

Technical Limitations: 

  • There can be a lack of system security, reliability or standards owing to poor implementation of e Commerce. 
  • Software development industry is still evolving and keeps changing rapidly. 
  • In many countries, network bandwidth might cause an issue as there is insufficient  telecommunication bandwidth available. 
  • Special types of web server or other software might be required by the vendor setting the e-commerce environment apart from network servers. 
  • Sometimes, it becomes difficult to integrate E-Commerce software or websites with existing  application or databases. 
  • There could be software and hardware compatibility issues as some E-Commerce software may be  incompatible with some operating system or any other component. 

Non-Technical Limitations: 

  • Initial Cost: The cost of creating or building an E-Commerce application in-house may be very high.  There could be delay in launching the E-Commerce application due to mistakes, lack of  experience. 
  • User Resistance: Users may not trust the site being an unknown faceless seller. Such mistrust makes  it difficult to make users switch from physical stores to online or virtual stores.  
  • Security and Privacy: Difficult to ensure security or privacy on online transactions. Lack of touch or feel of products during online shopping which makes it not suitable for some  products. For example, customers may want to purchase body spray only after smelling its smell. E-Commerce applications are still evolving and changing rapidly. 
  • Internet access is still not cheaper and is inconvenient to use for many potential customers like  one living in remote villages.


E-Commerce Framework: 

  • Only those organizations can survive that have a strong fundamental framework based on sound  business and market understanding.  
  • Framework tells about the details of how e-commerce takes place. It defines how e-commerce can be implemented, how online trading or business can be done. It defines important  components that should be present to do some transactions. 
  • Commerce framework is the combination of following three basic elements.
    Supportive infrastructure
    – Business applications
    – Public Policies and Technical Standards



  • E-Commerce applications will be built on the existing technology infrastructure which is a combination of a myriad of computers, communication networks, and communication software.  An infrastructure is defined as “the foundation of a system.” 
  • The hardware backbone of computers, routers, servers, fiber optics, cables, modems, and other  network technologies provides half of the technology equation.  
  • The other half includes the software and communications standards that run on top of the  hardware, including the core protocols for the Web.  

Building blocks of the infrastructure consist of following components: 

– Common Business Service: 

  • This infrastructure includes different methods for facilitating online buying and selling  processes.  
  • In online commerce, the buyers send an electronic payment as well as some remittance  Information to the seller.  
  • Settlement occurs when the payment and remittance Information are authenticated by the seller  and accepted as valid.  
  • In order to enable online payment for information and ensure its sale delivery, the payment  services Infrastructure needs to develop encryption and authentication methods that ensure  security of contents traveling on the network. 

– Messaging and Information Distribution: 

  • The Information content transferred over the network consists of text, numbers, pictures, audio  and video.  
  • Once contents have been created and stored on a server, messaging and Information distribution  methods carry that content across the network.  
  • Messaging vehicle is called middleware software. Messaging and information distribution include  translators that interpret and transform data formats.  
  • Different applications used for this purpose includes EDI, email, P2P file transfer etc. Multi-media Content and Network Publishing: 
  • The Information Superhighway is the transportation foundation that enables the transmission of  content.  
  • The most prevalent architecture that enables networking publishing is the World Wide Web.  The web allows small businesses and Individuals to develop content in the form of Hypertext  Markup Language (HTML) and publish it on a web server. 

– Information Superhighway Infrastructures 

  • It is the path through which actual Information flows and moves between sender and receiver.  Information Superhighway consists of telecommunication companies that provide telephone  lines, Cable TV systems that provide coaxial cables and direct broadcast satellite networks,  Wireless companies that provide mobile radio and satellite networks, Computer networks Include  private networks and public data networks like the Internet.  
  • All these modes of communication are interconnected. They are connected with routers,  switches, bridges, gateways etc.


Business Applications: 

  • These are the web applications that are accessed by customers for the purpose of buying and selling products or services.  
  • It includes both inter- and intra-organizational and electronic markets. Some of E-Commerce  applications are listed below: 
  • Online Shopping and Advertising: With the use of e-commerce, one can do online shopping. Unlike the traditional model, a customer need not go to a store, he or she can visit any website and find all  the information regarding any product on the screen of his computer and place the order. 
  • Online Banking: Online Banking means one can operate his or her account while sitting at their  home. That is, customers can manage their account from somewhere else. They need not go to the bank to manage their account. 
  • Supply Chain Management: Supply Chain Management is a term that encompasses the coordination of various departments of a company. It includes order generation, order taking,  order fulfillment and distribution of products or services or information.  
  • Video on demand (display) (VOD): These are systems which allow users to select and watch/listen  to video or audio content when they choose to, rather than having to watch at a specific broadcast  time. IPTV technology is often used to bring video on demand to televisions and personal  computers. 
  • Online Gaming: Online gaming can refer to any type of game that someone can play through the  Internet or over a computer network. Most of the time, it refers to video games played over the  Internet, where multiple players are in different locations across the world. 
  • E-Procurement: E-procurement is the business-to-business purchase and sale of supplies and  services over the Internet. Typically, e-procurement Web sites allow qualified and registered users  to look for buyers or sellers of goods and services. 

Public Policy and Technical Standards: 

  • These are the main components of the framework of e-commerce. By following all these, trade can  be done efficiently on the network. 
  • Public Policy and Technical Standards are two support pillars for all e-commerce applications and  infrastructure. 
  • Public Policy: It is related to e-commerce encompasses issues such as universal access, privacy and  information pricing. It should take into consideration of:
    – Cost of accessing information
    – Regulation to protect consumers from fraud and protect their right to privacy.
    – Policing global information traffic to detect information pirating and obscene sites.
  •  Technical Standards: It dictates the specifics of information publishing tools, user interfaces and  transport. Standards are essential to ensure compatibility across the entire network of the world.

Elements of E-commerce Applications: 

  • All E-Commerce applications basically follow a client server model.
  • Clients are the machines requesting services and servers are machines providing services to the  client.
  • Basically, every E-Commerce application has four basic elements:
    – Consumer Access Devices
    – Multimedia Content
    – Network Service Provider and
    – Information Delivery Servers

Multimedia Content: 

  • Multimedia content can be considered both fuel and traffic for electronic commerce applications.  The technical definition of multimedia is the use of digital data in more than one format, such as  the combination of text, audio, video, images, graphics, numerical data, holograms, and  animations in a computer file/document.  
  • Multimedia is associated with Hardware components of different networks.  
  • The Accessing of multimedia content depends on the hardware capabilities of the customer.

Consumer Access Devices: 

  • Consumer access devices are client machines used for accessing the ecommerce applications.  Some examples of consumer access devices are personal computers, mobile phones, PDAs  (personal digital assistants), two-way televisions. 
  • Such televisions are equipped with devices called set-top boxes. Out of these access devices  interactive TV is considered as an information access device of the future.
  •  The reason behind this is that almost everyone has a TV and everyone is far more comfortable with using  a TV than a PC.
  • Consumer access devices are used for entertainment on demand including video, games, news  on-demand, electronic retailing via catalogs etc. 

Network Service Providers:

  • Network is the backbone of E-Commerce. It needs a network infrastructure to transport the contents.  • Such network infrastructure is provided by a combination of telecom networks, cable TV networks,  wireless networks such as satellites, microwaves, private networks etc.
  • Basically, E-Commerce needs a high capacity (broadband) interactive (two way) electronic pipeline  for simultaneously supporting a large number of E-Commerce applications. 

Information Delivery Servers: 

  • E-Commerce needs different servers to store and distribute large amounts of digital content to  consumers.  
  • These servers capture, process, manage, and deliver text, images, audio and video.  There may be different servers for providing services like game server, multimedia server,  government server, etc.  
  • These servers must be able to handle thousands of simultaneous users and are made up of high end symmetric multiprocessors, clustered architecture and massive parallel systems. 


  • M-commerce (mobile commerce) is the buying and selling of goods and services through wireless  handheld devices such as cellular telephone and personal digital assistants (PDAs).  This definition is not able to include all factors of modern M-Commerce.  
  • A more generalized definition of M-Commerce can be given as: Mobile Commerce is any  transaction, involving the transfer of ownership or rights to use goods and services, which is  initiated and/or completed by using mobile access to computer-mediated networks with the help  of an electronic device. It is known as next-generation e-commerce.  
  • M-commerce enables users to access the Internet without needing to find a place to plug in. As  content delivery over wireless devices becomes faster, more secure, and scalable, there is wide  speculation that m-commerce will go beyond wire line e-commerce as the method of choice for  digital commerce transactions.  
  • The industries affected by m-commerce include:
    Financial Services, which includes mobile banking (when customers use their handheld  devices to access their accounts and pay their bills) as well as brokerage services, in which  stock quotes can be displayed and trading conducted from the same handheld device.
    Telecommunications, in which service changes, bill payment and account reviews can all  be conducted from the same handheld device.
    Service/retail, as consumers are given the ability to place and pay for orders on-the-fly.
    – Information Services, which include the delivery of financial news, sports figures and traffic updates to a single mobile device.


Features of Mobile Commerce 

Mobile Commerce is characterized by some unique features that equip it with certain advantages against  conventional forms of commercial transactions, including Electronics Commerce  

  • Ubiquity: Ubiquity means that the user can avail of services and carry out transactions largely  independent of his current geographic location (anywhere features). This feature can be useful in  many situations, e.g., to cross-check prices while standing in a supermarket. 
  • Immediacy: It means real-time availability of services (anytime feature). This feature is  particularly attractive for services that are time-critical and demand a fast reaction e.g. stock  market information for a broker. Additionally, the consumer can buy goods and services, as and  when he feels the need. The immediacy of the transaction helps to capture consumers at the moment  of intention so that sales are not lost in the discrepancy between the point of intention and that  of the actual purchase.  
  • Localization: Positioning technologies, such as the Global Positioning System (GPS) allow  companies to offer goods and services to the user specific to his current location. Location based  services can be, thus, offered to meet consumers’ needs and wishes for localized content and  services.  
  • Instant connectivity: Ever since the introduction of the General Packet Radio Service (GPRS)  mobile devices are constantly online, i.e., in touch with the network (always-on feature). Pro-active Functionality: Due to immediacy and localization features, new avenues for push  marketing are created. Services like Opt-in advertising can be offered, so that a user may choose  the products, services and companies which he wants to be kept informed about. The Short  Message Service (SMS) can be used to send brief text messages to consumers informing them of  relevant local offerings that best suit their needs. This feature ensures that the right (relevant)  information can be provided to the user at the right place at the right time.  
  • Simple Authentication Procedure: Mobile telecommunication devices function with an electronic  chip called Subscriber Identity Module (SIM). The SIM is registered with the network operator and  the owner is thus unambiguously identifiable. The clear identification of the user in combination  with an individual Personal Identification Number (PIN) makes any further time-consuming  complicated and potentially inefficient authentication process unnecessary.  

These unique features of Mobile Commerce can provide the user with some concrete and specific  advantages. These are: 

  • Context-specific Services: Mobile Commerce makes it possible to offer location-based services,  which are specific to a given context (e.g., time of the day, location and Interests of the user).  Such services offer new opportunities for personalized push marketing in close proximity to the  vendor thereby increasing the probability of sales. It enhances brand presence and thus  encourages consumers to remain loyal to brands they are acquainted with. 
  • Time-critical Situations: The ubiquity and immediacy of Mobile Commerce allows the user to  perform urgent tasks in an efficient manner, e.g., fast reaction to stock market developments  irrespective of his current geographic location. It is also useful in emergency situations. 
  • Spontaneous Decisions and Needs: Spontaneous needs are not externally triggered and generally  involve decisions that do not require a very careful consideration, e.g., purchase decisions  involving small amounts of money. An example of such a service would be reserving a place in a  restaurant or cinema spontaneously. Users may also be provided with access to entertainment  content, e.g., horoscope, music or sports news while on the move and with free time on hand.
  •  Efficiency Increase: Mobile Commerce helps increase the productivity of the workforce by  increasing the efficiency of their daily routines. Time-pressured consumers (employees) can use  ‘dead spots’ in the day, e.g., during the daily travel to and from the workplace, more effectively.

Limitations of M-Commerce 

Despite the fact that the use of M-Commerce is growing rapidly there are still limitation that causes limited  use of M-Commerce 

  • Bandwidth: The limited bandwidth that can be supported by mobile devices currently is very small  which causes web developers to reduce the usage of rich data. 
  • Screens Size: The screen size of a mobile device is very limited. This also limits the viewing capacity  of the user. 
  • Less Powerful Processors: Due to the slow processing speed, web developers would have to use  server-side scripting which will bring more load to the servers. 
  • Cost of Wireless Connection: As wireless connection of a mobile device to the internet is still a  relatively new technology, the cost of using such connection is also expensive as the technology  is still under heavy development. 

Applications of M-Commerce 

  • Mobile Banking: This application makes it possible to complete bank related transactions, e.g., checking account status, transferring money and selling stocks, via mobile devices, independent  of the current user location. 
  • Mobile Entertainment: On one hand, this application contains services that provide the user  digital data with entertainment value on mobile devices, e.g., ringtones, music and videos. On  the other hand, it opens an array of interactive services, e.g., betting gaming, dating and chatting. 
  • Mobile Information Services: This term refers to mobile services that provide subscribers with  content of informational character. Examples of such services are news updates of any nature  (finance, politics, sport etc.), travel information, access to search engines and Mobile Office (e-mails, appointments etc.). 
  • Mobile Marketing: This term refers to services based on mobile communication technologies that  provide firms with new, innovative instruments, e.g., to increase sales, win and retain customers,  improve after-sales services, build and sustain a positive and modern image/brand and carry  market research. 
  • Mobile Shopping: This application bundles services that allow for mobile processing of  transactions involving purchase of goods of daily use. The user can purchase products by choosing  them from a catalog accessible from a mobile device. The products need not be of a digital  nature. 
  • Mobile Ticketing: This application ensures that the user can purchase a right to utilization/entry  (ticket) via a mobile device, replacing the conventional paper ticket. The ticket is sent in digital  form to the mobile device.


E-Commerce Vs M-Commerce 

  • The adjective electronic, used within the specific contexts of Electronic Business or Electronic Commerce, signifies an anytime access to business processes managed by computer-mediated networks.  
  • Furthermore, the access to such networks is, in this case, stationary.  
  • The services are therefore not available independent of the geographic location. The access takes  place using mobile communication networks, making the services independent of the geographic  location of the user. 
  • It would be useful to differentiate between the terms: mobile and wireless.  As opposed to the term mobile that signifies an anytime, anywhere access to computer-mediated  networks, wireless is just a method of communication between electronic devices, e.g., with the  help of infrared interfaces.  
  • Every wireless device may not be suitable for feasible mobile applications. 
  • For example, Wireless Local Area Networks (WLAN) with a limited range of maximum 300 meters cannot support feasible mobile applications. 

Types of E-Commerce: 

There are many different ways to categorize E-Commerce. It can be categorized on the basis of  transaction types or on the basis of relationship between entities involved in the transaction.   E-commerce can be classified on the basis of transaction partners as below:
– Business-to-business (B2B)
– Consumer-to-consumer(C2C)
– Consumer-to-business(C2B)

B2B E-Commerce 

  • B2B e-commerce is simply defined as e-commerce between companies. This is the type of e-commerce that deals with relationships between and among businesses.  
  • About 80% of commerce is of this type, and most experts predict that B2B e-commerce will  continue to grow faster than other types of E-commerce Website following a B2B business model that sells its product to an intermediate buyer who then sells the product to the final customer.  
  • As an example, a wholesaler places an order from a company’s website and after receiving the  consignment, sells the end product to the final customer who comes to buy the product at the wholesaler’s retail outlet.

  • As we know, is an online bookstore that sells books from various publishers  including Wrox, O’Reilly, Premier Press, and so on.  
  • In this case, the publishers have the option of either developing their own site or displaying their  books on the Amazon site (, or both.  
  • The publishers mainly choose to display their books on as it gives them a larger  audience. Now, to do this, the publishers need to transact with Amazon, involving business houses  on both the ends.  
  • Thus, we can say that is an example of a web site that adopts a B2B business  model. 
  • Another example is


  • Following are the architectural models in B2B e-commerce:

    Sell-side Marketplace: B2B model in which organizations sell to other organizations from  their own private e-marketplace and/or from a third-party site. The key mechanisms in  the sell-side model are: Electronic catalogs that can be customized for each large buyer  and Forward auctions.
    Buy-side Marketplace: B2B model in which organizations buy needed products or services  from other organizations electronically often through a reverse auction.
    Electronic Exchanges: Refers to e-market places where there are many buyers and many sellers, open to all business organizations. Also known as e-hubs or portals.

Benefits of B2B E-Commerce 

  • Transaction Costs: There are three cost areas that are significantly reduced through the conduct  of B2B e-commerce.
    – First is the reduction of search costs, as buyers need not go through multiple  intermediaries to search for information about suppliers, products and prices as in a  traditional supply chain.
    – Second is the reduction in the costs of processing transactions (e.g., invoices, purchase  orders and payment schemes), as B2B allows for the automation of transaction processes  and therefore, the quick implementation of the same compared to other channels.  o Third, online processing improves inventory management and logistics.
  • Disintermediation:
    Through B2B e-markets, suppliers are able to interact and transact directly  with buyers, thereby eliminating intermediaries and distributors. However, new forms of  intermediaries are emerging. For instance, e-markets themselves can be considered as  intermediaries because they come between suppliers and customers in the supply chain.
  •  Transparency in Pricing: Among the more evident benefits of e-markets is the increase in price  transparency. The gathering of a large number of buyers and sellers in a single e- market reveals  market price information and transaction processing to participants. The Internet allows for the  publication of information on a single purchase or transaction, making the information readily  accessible and available to all members of the e-market.
  • Economies of Scale and Network Effects: The rapid growth of B2B e-markets creates traditional  supply-side cost-based economies of scale. Furthermore, the bringing together of a significant  number of buyers and sellers provides the demand-side economies of scale or network effects.  Each additional incremental participant in the e-market creates value for all participants in the  demand side. 

B2C E-Commerce 

  • The B2C model involves transactions between business organizations and consumers.  It applies to any business organization that sells its products or services to consumers over the  Internet.  
  • These sites display product information in an online catalog and store it in a database.  The B2C model also includes online banking, travel services, and health information.  Website following B2C business model sells its product directly to a customer.  A customer can view products shown on the website of a business organization. The customer can  choose a product and order the same.  
  • Website will send a notification to the business organization via email and the organization will  dispatch the product/goods to the customer. 


  • The real example of the Website that adopts the B2C model is , in which the  consumer searches for an item on their site and places an order, if required.  
  • The B2C model of e-commerce is more prone to security threats because individual consumers  provide their credit card and personal information on the site of a business organization.  In addition, the consumer might doubt that his information is secured and used effectively by the  business organization.  
  • This is the main reason why the B2C model is not very widely accepted. Therefore, it becomes  very essential for the business organizations to provide robust security mechanisms that can  guarantee a consumer for securing his information.  
  • Common B2C e-business models include e-shops and e-malls.


E-Shop: It is sometimes referred to as an e-store or e-tailer, is a version of a retail store  where customers can shop at any hour of the day without leaving their home or office.  These online stores sell and support a variety of products and services. The online  businesses channeling their goods and services via the Internet only, such as, are called pure plays. The others are an extension of traditional retail  outlets that sell online as well as through a traditional physical store. E.g., 

E-Mall: It consists of a number of e-shops; it serves as a gateway through which a visitor  can access other e-shops. An e-mall may be generalized or specialized depending on the  products offered by the e-shops it hosts. Revenues for e-mall operators include  membership fees from participating e-shops, advertising, and possibly a fee on each  transaction if the e-mall operator also processes payments. E-shops in e-malls benefit  from brand reinforcement and increased traffic as visiting one shop on the e-mall often  leads to browsing “neighboring” shops. An example of an e-mall is 

Types of services typically covered under B2C e-commerce include Auction stores, online stores, and  online services. 

  • Online Stores: It may be done either to promote the company and its products and services or to  actually sell the products or services through this virtual store. One of the best examples of an e store is, which started selling books online and gradually extended to other product  categories. 
  • Online Services: This is another area where companies can exploit the Internet. Many companies are  using the Internet to provide customer service. In the service sector, banking and stock trading is one such  example. Companies like have brought the ease of trading stocks to customer’s PC.  Another interesting example is offers individuals the  opportunity to set-up, transfer and cancel utilities such as gas, electric and local phone; and  services such as long distance and wireless telephone, cable television, Internet service providers,  paging, newspapers, magazines, and more when customers shift from one location to another. 
  • Auction Stores: Electronic auctions (on the Internet) offer an electronic implementation of the  bidding mechanism also known from traditional auctions. This can be accompanied by multimedia  presentations of the goods. Usually, they are not restricted to this single function. They may also  offer integration of the bidding process with contracting, payments and delivery.,, etc are examples of online auction sites. 

C2C E-Commerce 

  • The C2C model involves transactions between consumers. Here, a consumer sells directly to another consumer.  
  • Websites like,, etc. are common  examples that provide a consumer to advertise and sell their products online to another  consumer.
  • However, it is essential that both the seller and the buyer must register with these sites. While  the seller needs to pay a fixed fee to the online auction house to sell their products, the buyer can  bid without paying any fee. The site brings the buyer and seller together to conduct deals.
  • Websites following the C2C business model helps consumers to sell their assets like residential  property, cars, motorcycles etc. or rent a room by publishing their information on the website.  Websites may or may not charge the consumer for its services. 
  • This type of e-commerce comes in at least three forms:
    Auctions facilitated at a portal: Such as eBay, which allows online real-time bidding on items being sold in the Web.
    Peer-to-peer systems: Such as the Napster model (a protocol for sharing files between users used by chat forums similar to IRC) and other file exchange and later money exchange models.
    Classified ads at portal sites: Such as Excite Classifieds and eWanted, (an interactive, online marketplace where buyers and sellers can negotiate). 

  • Let us now look at the previous figure with respect to eBay.  
  • When a customer plans to sell his products to other customers on the Web site of eBay, he/she  first needs to interact with an eBay site, which in this case acts as a facilitator of the overall  transaction.  
  • Then, the seller can host his product on, which in turn charges him for this. Any buyer can now browse the site of eBay to search for the product he is interested in. If the buyer comes across such a product, he places an order for the same on the Web site of  eBay.  
  • eBay now purchases the product from the seller and then sells it to the buyer.  In this way, though the transaction is between two customers, an organization acts as an interface  between the two organizations.


C2B E-Commerce 

  • The C2B model involves a transaction that is conducted between a consumer and a business  organization.  
  • In this kind of a transaction, the consumers decide the price of a particular product rather than  the supplier.  
  • This category includes individuals who sell products and services to organizations.  For example, is a Web site on which a consumer can post his bio-data for the  services he can offer. Any business organization that is interested in deploying the services of the  consumer can contact him and then employ him, if suitable.  
  • It also includes the transactions where a consumer approaches a website showing multiple business  organizations for a particular service and places an estimate of amount he/she wants to spend  for a particular service.  
  • Business organization that fulfills the consumer’s requirement within a specified budget  approaches the customer and provides its services.  

E-Commerce in Nepal: 

  • Nepal’s E-Commerce Business is set to grow at a fast pace year on year, a recent estimate shows.  This may have been possible through the rollout of 3G and 4G services, and the boom in the ISP industry. The relative success and popularity of online payment sites such as eSewa, Khalti, ConnectIPS also  have encouraged many to tap the e-commerce opportunity.  
  • If you want to buy a new cloth, a book, a mobile phone or even order your lunch online from your  home? Yes, it is possible in Nepal and there are a lot of companies offering these services. Though problems like lack of proper payment gateway, transportation and internet reliability are  existent in Nepal; many innovators have developed some innovative e-commerce services in  Nepal.  
  • Here is a list of some e-commerce sites in Nepal. Some of them are used primarily by Nepalese  living abroad who wish to send gifts to Nepal.
    – etc.


Important Questions
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