What is E-Commerce?

E-Commerce or Electronics Commerce is a methodology of modern business which addresses the need of business organizations, vendors and customers to reduce cost and improve the quality of goods and services while increasing the speed of delivery. E-commerce refers to the paperless exchange of business information using the following ways.

E-commerce refers to the paperless exchange of business information using the following ways.

  1. Electronic Data Exchange (EDI)
  2. Electronic Mail (e-mail)
  3. Electronic Bulletin Boards
  4. Electronic Fund Transfer (EFT)
  5. Other Network-based technologies

To put it simply the concept of e-commerce is all about using the internet to do business better and faster.

Definitions of E-Commerce

There are many definitions and understanding about E-Commerce. They are as follows:

According 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.

Electronic Commerce is where business transactions take place via telecommunications networks, especially the Internet – E. Turban, J. Lee, D. King and H.M. Chung,

Electronic commerce or e-commerce refers to a wide range of online business activities for products and services – Anita Rosen

It pertains to “any form of business transaction in which the parties interact electronically rather than by physical exchanges or direct physical contact.” – MK, Euro Info Correspondence Centre (Belgrade, Serbia)

E-commerce is usually associated with buying and selling over the Internet, or conducting any transaction involving the transfer of ownership or rights to use goods or services through a computer-mediated network. – Thomas L. Mesenbourg

Features of E-Commerce

The following discussion will elicit the unique features of e-commerce. The unique features of e-commerce technology include:


E-commerce is ubiquitous, It is available just about everywhere and at all times by using the internet and Wi-Fi hotspots such as airports, coffee cafes and hill station places. Consumers can connect it to the Internet at any time, including at their homes, their offices, on their video game systems with an Internet connection and mobile phone devices.

E-Commerce is ubiquitous technology that is available everywhere Moreover, individuals who have cell phones with data capabilities can access the Internet without a Wi-Fi connection.

Global Reach

The potential market size is roughly equal to the size of the online population of the world. E-Commerce Technology seamlessly stretches across traditional cultural and national boundaries and enables worldwide access to the client

An E-Commerce website has the ability to translate multilingual websites as well as allow access to visitors all over the world, purchase products and make business interactions.

Universal Standard

The technical standards of the Internet are shared by all of the nations in the world. The whole online tradition is growing and expanding its features in the world. To develop any kind of business needs Internet and communication application which make the business relationship more lovingly and attractive for secure business and successful business.


Users can access and utilize text messages and visual and audio components to send and receive information. An individual may see information richness on a company’s blog if a post contains a video related to a product and hyperlinks that allow him to look at or purchase the product and send information about the post via text message or email.


E-commerce technologies allow two-way communication between the merchant and the consumer. As a result, e-Commerce technologies can adjust to each individual’s experience. For example, while shopping online, an individual is able to view different angles of some items, add products into a virtual shopping cart, checkout by inputting his payment information and then submit the order.


Technologies within e-Commerce allow for the personalization and customization of marketing messages that groups or individuals receive. An example of personalization includes product recommendations based on a user’s search history on a Web site that allows individuals to create an account.

Information Density

The use of e-Commerce reduces the cost to store, process and communicate information, At the same time, accuracy and timeliness increase; thus, making information accurate, inexpensive and plentiful.

For example, the online shopping process allows a company to receive personal, shipping, billing and payment information from a customer all at once and sends the customer’s information to the appropriate departments in a matter of seconds.

Social Technology

E-Commerce technology has tie up the social media networking application to provide the best source of content sharing technology and e-Marketing systems. You can share your content or data easily in just one click.

User-Generated Content

Social networks use e-Commerce technologies to allow members, the general public, to share content with the worldwide community. Consumers with accounts can share personal and commercial information to promote a product or service.

When a company has a professional social networking account, a member of the same social network has the option of associating himself with the company or a product by saying he likes or recommends it. When an individual updates his status on a social networking account, he may also mention a product or company by name, which creates word-of-mouth advertising.

Functions of E-Commerce

The following are five functions you should be doing daily in your e-commerce business:

Search Engine Optimization (SEO)

  1. Generate unique relevant content. Google loves unique content that is related to what your site is all about. Ensure you are using good keywords you want to focus on.

  2. Every page should have an H1 tag around what is the focus of the page, such as a product name, category name, or static content title. Use H2 tags as well for other important page sections.

  3. Keywords in optimized page titles.

  4. Internal linking. Link keywords in your unique content to pages related to that keyword. This is huge!!!

  5. Friendly URLs with related phrases. E.g. When talking about Zobrist’s eZcommerce solution, the URL looks like this: http://www.zobristinc.com/our_solutions/eZ_Commerce/

Selecting New Products

  1. Sell what the customer wants to buy, not what you want to sell! This is a common mistake, especially when merchandisers are given a great price to sell a particular product. If nobody wants to buy that product, it doesn’t matter what price you set it at.

  2. Find out what customers want. What is your value proposition on products you sell? Capitalize on your niche!

Merchandising New Productions

  1. Pictures, pictures, pictures! It is very important to have high quality images of the products.

  2. Hero photos: if you have a big seller, feature it on a category page with a hero image of the product.

  3. Promote latest releases in your newsletters and feature them in categories or on your homepage.

  4. Market to customers who have purchased related items in the past.

Customer Service

  • Make your customers happy.
  • Delivery orders on time.
  • Ensure order accuracy.
  • Reship promptly if a package was failed to be delivered to the customer, if it came damaged, or if it was missing parts.
  • Don’t try to save every penny on an order. You may need to take a loss to make a customer happy in order to retain their loyalty to you, and therefore be very valuable for many orders to come.

Monitoring your KPIs / Analytics

  1. Monitor your analytics reports. View what items are selling and bubble them to the top of product listings so customers can find them easier. A great tool for this, if you are on IBM WebSphere Commerce, is our Smart Merchandiser product. With it, you can see analytic overlays on each product in each category to help you make smart merchandising decisions.

  2. Tackle cart abandonment. Remarket those products to the customers if you have their email addresses. Incentivize them to complete their checkout within X days.

Scope of E-Commerce

Listed below are the reasons that guarantee the future prospect of E-commerce:

Cash on Delivery (COD)

E-commerce industry has evolved over a period of time with innovations that have changed the rules of the game globally. COD is one such example. where credit card penetration is much lower than other developed markets and where e-commerce companies are still working hard to build trust among shoppers, introducing cash on delivery has been one of the key factors for the success of the segment.

At present, COD is the preferred payment mode for close to 55-60% of all online transactions in the fashion and lifestyle segment.

Delivering Experiences

E-commerce needs to focus on customer experience to build trust and confidence. Customer experience encompasses every interaction of a customer from placing an order to interacting with customer service team, to the actual delivery experience. Providing a great delivery experience is one of the core aspects to delighting customers.

This not only mean faster deliveries but also consistency and reliability. The more faith the customer has in your delivery service, the more likely he is to buy again. Besides, it builds a good brand image and word-of- mouth publicity.

Growing Opportunities

The e-commerce industry is growing at a rapid pace and changing the dynamics of the retail industry. This growth is bound to continue provided e-commerce companies focus on innovating, building strong technology infrastructure and delivering the best customer experience.


E-tailing encompasses buying consumer items like apparels, electronic devices, home and kitchen appliances, jewellery, online. Competition is intense due to low entry barrier of this segment. However, Amazon.com, flipkart, snapdeal.com,jabong.com, and myntra.com are some of the major players.

This segment is expected to grow further as people become more pressed for time. Also the choice that e-tailing sites offer to customers will drive demand for this segment. However, there will be intense price based competition in this sector and consolidations are in the order.

Online Financial Services

The financial services segment includes applying for insurance, paying online bills, and premiums and online transactions for financial services. The costs of these insurance policies are lesser with premiums being 40%-60% cheaper.

This is a win-win situation for both the insurance provider and the customers. Also the convenience provided by online portals has led to more customers choosing the online route for bill payment.


It is in a very promising stage and has lot of scope for growth. Online advertising is lot cheaper than conventional methods and unlike the latter, it is not constrained to a geographic location.

Advantage and Disadvantages of E-Commerce

These are the followings points of advantage and disadvantages of e-commerce:

Advantage of E-commerce

  1. 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.

  2. The cost of creating, processing, distributing, storing and retrieving paper-based information has decreased.

  3. The pull-type processing allows for products and services to be customized to the customer’s requirements.

  4. 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.

  5. The Internet is much cheaper than value added networks (VANs) which were based on leasing telephone lines for the sole use of the organization and its authorized partners. It is also cheaper to send a fax or e-mail via the Internet than direct dialing.

  6. Software and music/video products can be downloaded or e-mailed directly to customers via the Internet in digital or electronic format.

  7. Businesses can be contacted by or contact customers or suppliers at any time.

  8. 24/7 access: Enables customers to shop or conduct other transactions 24 hours a day, all year round from almost any location.

  9. Customers not only have a whole range of products that they can choose from and customize, but also an international selection of suppliers.

  10. 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).

  11. This can range from the immediate delivery of digitized 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 mail or courier.

  12. An environment of competition where substantial discounts can be found or value added, as different retailers view 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.

Disadvantages of E-Commerce

  1. Return-on-investment is difficult to calculate.

  2. Many firms have had trouble recruiting and retaining employees with the technological, design, and business process skills needed to create an effective electronic commerce presence.

  3. Difficulty of integrating existing databases and transaction-processing software designed for traditional commerce into the software that enables electronic commerce.

  4. Many businesses face cultural and legal obstacles to conducting electronic commerce.

  5. Lack of sufficient system security, reliability, standards and communication protocols.

  6. Rapidly evolving and changing technology, so there is always a feeling of trying to ‘catch up’ and not be left behind.

  7. Under pressure to innovate and develop business models to exploit the new opportunities which sometimes leads to strategies detrimental to the organization. The ease with which business models can be copied and emulated over the Internet increases that pressure and curtails longer-term competitive advantage.
  8. Facing increased competition from both national and international competitors often leads to price wars and subsequent unsustainable losses for the organization.

  9. Computing equipment is needed for individuals to participate in the new ‘digital’ economy, which means an initial capital cost to customers.

  10. A basic technical knowledge is required of both computing equipment and navigation of the Internet and the World Wide Web.

  11. Cost of access to the Internet, whether dial-up or broadband tariffs.

  12. 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.

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