E-Commerce: One Mark Questions, Book Back Answers and Notes

About E-Commerce

Medium ~60 min study

When you order a book on Amazon or a phone on Flipkart, you are using e-commerce. The shop has no counter and no fixed closing time, and the buyer and seller may be in different states. This unit explains how such trade works and how it grew from the first secure online sale in 1994 to today's mobile shopping apps.

The unit follows the growth of online trade through three waves, each shaped by the technology of its time. It then sorts e-commerce by who is trading with whom, for example business-to-consumer (B2C) or consumer-to-business (C2B), and looks at the different ways websites earn money. The last part is practical: registering the business, opening a bank account, getting GST registration, adding a payment gateway and arranging shipping.

Book-back questions from this unit tend to ask you to match a model to an example, place a feature in the correct wave, or say how e-commerce differs from traditional commerce. Learn the years of each wave and the full forms of the business models, and keep one real website in mind as an example for each.

What you'll learn

• State how e-commerce differs from e-business, with an example of each.
• Give the years and main features of the three waves of e-commerce.
• Identify the business model (B2B, B2C, C2C, C2B or G2C) in a given transaction.
• Explain how affiliate sites, online shopping malls and other revenue models earn money.
• List the advantages and disadvantages of e-commerce compared with traditional commerce.
• Put in order the legal, banking and technical steps for starting an online business.

Before you start

• How the Internet and websites work, from the earlier networking units.
• The client-server idea and basic use of a web browser.

E-Commerce explained

E-Commerce Concepts, Models and Setup

E-Commerce and E-Business

E-commerce means buying and selling goods and services over the Internet, along with the money transfers that go with it. E-business is the wider term. It covers every business activity done electronically, not just sales: buying raw materials, managing stock, production, accounts and customer service. It uses networks, messaging systems, databases and payment systems together. So every e-commerce activity is part of e-business, but not every e-business activity is e-commerce.

The Three Waves of E-Commerce

The first wave (1995 to 2003) was led by American dotcom companies, so most sites were in English only. Connections were slow, and websites mostly just displayed information. The second wave (2004 to 2009) saw companies grow using their own funds rather than big outside investment, so growth was slower but steadier. Web 2.0 and social media arrived, and sites added multiple languages and currency conversion to reach buyers abroad. The third wave (2010 to the present) is driven by mobile technology. Users shop on demand from their phones, information is filtered by time and location, and Web 3.0 ideas such as the semantic web and artificial intelligence are shaping what comes next.

E-Commerce Business Models

Models are named by the two parties in the transaction: business (B), consumer (C) and government (G). In B2B, one company sells to another, usually in bulk, as when a manufacturer buys parts from a supplier. In B2C, a company sells directly to the public, like an online retail store. In C2C, consumers sell to each other through a site such as OLX. In C2B, the consumer sets the terms, for example by naming a price that businesses can accept, which works like a reverse auction. Government models include G2C, where citizens pay taxes or apply for certificates online.

Revenue Models

Websites earn money in several ways. An affiliate site links to other retailers and earns a commission on each sale it sends them. A digital publishing site earns from e-books, subscriptions and advertisements. An online shopping mall hosts many sellers on one site and takes a share of each sale. Other models include licensing fees, name-your-price sites where the buyer names the price, and group buying sites that get discounts by collecting many buyers for the same deal.

E-Commerce Compared with Traditional Commerce

Traditional commerce happens in a physical shop, the buyer can see and touch the product, and it is taken home at once. E-commerce is open 24 hours a day, reaches customers anywhere and makes price comparison easy. It also brings problems: delivery takes time and costs extra, returning a product is more trouble, the buyer cannot inspect the item before paying, and customers may worry about the privacy of their personal and payment details.

Starting an Online Business

An online business needs the same legal groundwork as any other. The owner first registers the business as a legal entity, which also allows the owner's liability to be limited. Next come a business bank account and tax registration such as GST. The website then needs a payment gateway so that card and online payments are processed automatically, and a shipping partner to pack and deliver orders.

Common mistakes to avoid

• Using e-commerce and e-business as if they mean the same thing. E-commerce covers only online buying and selling; e-business includes all business activities done electronically.
• Mixing up B2C and C2B. In B2C the business sells to the consumer; in C2B the consumer offers something, such as a price or a service, to the business.
• Placing features in the wrong wave. Slow, English-only, read-only sites belong to the first wave; Web 2.0 and social media to the second; mobile, on-demand shopping to the third.
• Writing only about the website when asked how to start an online business. Registration, the bank account, GST, the payment gateway and shipping must also be covered.

Test yourself on these with the practice test, then check the worked reasoning in the solved MCQs.

Frequently asked questions

What is the difference between e-commerce and e-business?

E-commerce is the buying and selling of goods and services over the Internet. E-business is broader: it includes every business activity done electronically, such as purchasing raw materials, managing stock, handling accounts and giving customer service. E-commerce is one part of e-business.

What are the three waves of e-commerce?

The first wave (1995 to 2003) had mostly English, American websites on slow connections that mainly displayed information. The second wave (2004 to 2009) brought Web 2.0, social media, multiple languages and currency conversion. The third wave (2010 to the present) is driven by mobile phones, on-demand and location-based services, and Web 3.0 ideas such as artificial intelligence.

How does the C2B model work?

In C2B (consumer to business), the consumer starts the transaction. The consumer states what they want and the price they are willing to pay, and businesses decide whether to accept. Because the buyer sets the price and sellers respond, it is often described as a reverse auction.

What is an affiliate revenue model?

An affiliate site places links to online retailers, often alongside product reviews or price comparisons. When a visitor clicks the link and buys the product, the retailer pays the affiliate site a commission on that sale.

Why is shipping a disadvantage of e-commerce?

In a physical shop you carry the product home at once. An online order has to be packed and transported, so it takes days, often adds a delivery charge, and the buyer cannot be sure the item will arrive on time and undamaged.

What steps are needed to start an online business?

Register the business as a legal entity, obtain tax registration such as GST, and open a business bank account. Then add a payment gateway to the website to accept online payments, and tie up with a shipping or courier partner to deliver orders.