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E-Commerce and Governance (IT-721)

College Name, Bhopal

Department of Information Technology

Subject: E-Commerce and Governance (Elective-II)

Subject Code: IT-721

Semester: VII

Session: Jul to Dec – 2013

Prepared by:


Asstt. Prof.

Department of I.T.


Course: E-Commerce and Governance (IT-721)

Unit I:

Introduction to e-commerce: History of e-commerce, e-business models B2B, B2C, C2C, C2B, legal; environment of e-commerce, ethical issues, electronic data interchange, value chain and supply chain, advantages and disadvantages of e-commerce.

Unit II:

Electronic Payment Systems: Credit cards, debit cards, smart cards, e-credit accounts, e-money, Marketing on the web, marketing strategies, advertising on the web, customer service and support, introduction to m-commerce, case study: e-commerce in passenger air transport.

Unit III:

E-Government, theoretical background of e-governance, issues in e-governance applications, evolution of e-governance, its scope and content, benefits and reasons for the introduction of e-governance, e-governance models- broadcasting, critical flow, comparative analysis, mobilization and lobbying, interactive services / G2C2G.

Unit IV:

E-readiness, e-government readiness, E- Framework, step & issues, application of data warehousing and data mining in e-government, Case studies: NICNET-role of nationwide networking in e- governance, e-seva.

Unit V:

E-Government systems security: Challenges and approach to e-government security, security concern in e-commerce, security for server computers, communication channel security, security for client computers.


  • Gary P. Schneider, “E-commerce”, Cengage Learning India.

  • C.S.R. Prabhu, “E-governence: concept and case study”, PHI Learning Private Limited.

  • V. Rajaraman, “Essentials of E-Commerce Technology”, PHI Learning Private Limited.


1.1 Introduction to e-commerce: Electronic commerce, commonly known as e-commerce, refers to the buying and selling of products or services over electronic systems such as the Internet and other computer networks. However, the term may refer to more than just buying and selling products online. It also includes the entire online process of developing, marketing, selling, delivering, servicing and paying for products and services. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at one point in the transaction's life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices and telephones as well.

A large percentage of electronic commerce is conducted entirely in electronic form for virtual items such as access to premium content on a website, but mostly electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailors and online retail is sometimes known as e-tail. Almost all big retailers are now electronically present on the World Wide Web.

E-commerce is basically the use of the Internet and the Web to transact business. More formally, we focus on digitally enabled commercial transactions between and among organizations and individuals. Each of these components of our working definition of e-commerce is important. Digitally enabled transactions include all transactions mediated by digital technology. For the most part, this means transactions that occur over the Internet and the Web. Commercial transactions involve the exchange of value (e.g., money) across organizational or individual boundaries in return for products and services. Exchange of value is important for understanding the limits of e-commerce. Without an exchange of value, no commerce occurs.

The five general E- Commerce categories are business-to-consumer, business-to-business, business-to-process, consumer-to-consumer, and business-to-government.

Creating an e-commerce solution mainly involves creating and deploying an e-commerce site. The first step in the development of an e-commerce site is to identify the e-commerce model. Depending on the parties involved in the transaction, e-commerce can be classified into four models.
These are:

  • Business – to – Business (B2B) model

  • Business – to – Consumer (B2C) model

  • Consumer – to- Consumer (C2C) model

  • Consumer – to – Business (C2B) model

1.2 History of E-commerce: Electronic commerce was identified as the facilitation of commercial transactions electronically, using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT). These were both introduced in the late 1970s, allowing businesses to send commercial documents like purchase orders or invoices electronically. The growth and acceptance of credit cards, automated teller machines (ATM) and telephone banking in the 1980s were also forms of electronic commerce.

From the 1990s onwards, electronic commerce would additionally include enterprise resource planning systems (ERP), data mining and data warehousing. In 1990, Tim Berners-Lee invented the World Wide Web browser and transformed an academic telecommunication network into a worldwide everyman everyday communication system called internet. Commercial enterprise on the Internet was strictly prohibited by NSF until 1995.

Although the Internet became popular worldwide around 1994 with the adoption of Mosaic web browser, it took about five years to introduce security protocols and DSL allowing continual connection to the Internet.

By the end of 2000, many European and American business companies offered their services through the World Wide Web. Since then people began to associate a word "e-commerce" with the ability of purchasing various goods through the Internet using secure protocols and electronic payment services.

The e-commerce revolution is just beginning. For instance:

  • Online consumer sales expanded by more than 23% in 2005 to an estimated $142–$172 billion ( and Forrester Research, 2005).

  • The number of individuals online in the United States increased to 175 million in 2005; up from 170 million in 2004 (The total population of the United States is about 300 million.) (U.S. Census Bureau, 2005).

  • On an average day, 70 million people go online. Around 140 million send e-mail; 8 million have created a blog, 4 million share music on peer-to-peer networks, and 3 million uses the Internet to rate a person, product, or service (Pew Internet & American Life Project, 2004).

  • The number of people who have purchased something online expanded to about 110 million, with additional millions shopping (gathering information) but not purchasing (Pew Research Center, 2005).

It is important to realize that the rapid growth and change that has occurred in the first ten years of e-commerce represents just the beginning: what could be called the first thirty seconds of the e-commerce revolution. The same technologies that drove the first decade of e-commerce continue to evolve at exponential rates. Changes in underlying information technologies and continuing entrepreneurial innovation promise as much change in the next decade as seen in the last decade. The twenty-first century will be the age of a digitally enabled social and commercial life, the outlines of which we can barely perceive at this time. It appears likely that e-commerce will eventually impact nearly all commerce, or that most commerce will be e-commerce by the year 2050.

1.3 E-Commerce Models.
Creating an e-commerce solution mainly involves creating and deploying an e-commerce site. The first step in the development of an e-commerce site is to identify the e-commerce model. Depending on the parties involved in the transaction, e-commerce can be classified into 4 models.
These are:

  • Business – to – Business (B2B) model

  • Business – to – Consumer (B2C) model

  • Consumer – to- Consumer (C2C) model

  • Consumer – to – Business (C2B) model

1.3.1 Business-to-Business (B2B) Model

The B2B model involves electronic transactions for ordering, purchasing, as well as other administrative tasks between houses. It includes trading goods, such as business subscriptions, professional services, manufacturing, and wholesale dealings. Sometimes in the B2B model, business may exist between virtual companies, neither of which may have any physical existence.

In such cases, business is conducted only through the Internet.
Consider a hypothetical example. ABC Company sells automobile parts and XYZ Company assembles this part and then sells the automobile to customers. XYZ Company comes across the Web site of ABC and finds it suitable. XYZ therefore, requests for more information about ABC and finally, decides to purchase automobile parts automobile from ABC. To do this, XYZ places an order on the Web site of ABC. After ABC receives the order details, it validates the information.

As soon as the order is confirmed, the payment procedures are settled. Finally, ABC sends an

Acknowledgement of payment to XYZ and delivers the goods as per the shipment details decided between the two organizations.
The advantages of the B2B model are:

  • It can efficiently maintain the movement of the supply chain and the manufacturing and procuring processes.

  • It can automate corporate processes to deliver the right products and services quickly and cost-effectively.

  • The B2B model is predicted to become the largest value sector of the industry within a few years.

  • This is said to be the fastest growing sector of e-commerce.

1.3.2 Business-to-Consumer (B2C) Model
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 services online banking, travel services, and health information.
Consider a hypothetical example in which a transaction is conducted between a business organization and a consumer. A business house, LMN Department Store, displays and sells a range of products on their Web site. The details information of all their products is contained in the huge catalogs maintained by LMN Department Stores. Now, a consumer, William Ward, wants to buy a gift for his wife. He therefore, logs on to the site of LMN Department Stores and selects a gift from the catalog. He also gets the detailed information about the gift such as, the price, availability, discounts, and so on from their catalog. Finally, when he decides to buy the gift, he places an order for the gift on their Web site. This information is then validated by LMN Department Store and stored in their database. On verification of the information the order is processed. Therefore, as you can see, the B2C model involves transactions between a consumer and one or more business organizations.

The example of the site also involves the B2C model in which the consumer searches for a book on their site and places an order, if required. This implies that a complete business solution might be an integration solution of more than one business model. For example, includes the B2B model in which the publishers transact with Amazon and the B2C model in which an individual consumer transact with the business organization.

The B2C model of e-commerce is more prone to the security threats because individual consumers provide their credit card and personal information n 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.
1.3.3 Consumer-to-Consumer (C2C) Model
The C2C model involves transaction between consumers. Here, a consumer sells directly to another consumer. Web sites 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 the auction site. 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.

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 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 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 purchase 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.

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