The document defines electronic business (e-business) and e-commerce, and distinguishes between the two terms. E-business refers more broadly to the strategic use of electronic capabilities across a business's functions and value chain, while e-commerce is a subset focusing on online transactions. Effective e-business allows companies to link internal and external systems more efficiently to better satisfy customers and collaborate with partners. While e-commerce involves monetary transactions online, e-business does not necessarily require money exchanges.

1. By: Vikram.G.B
Lecturer, P.G Dept. of Commerce
Vivekananda Degree College
Bangalore

2. Meaning & Definitions:-
 Electronic business, commonly referred to as "e-
business", or an internet business, may be defined as the
application of information and communication
technologies in support of all the activities of business.
 e-business may be defined as the conduct of industry, trade,
and commerce using the computer networks.
 The term "e-business" was coined by IBM's marketing and
Internet teams in 1996.

3.  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. The internet is a public through way. Firms
use more private and hence more secure networks for more
effective and efficient management of their internal
functions.
 In practice, 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 using
the Empty Vessel strategy. Often, e-commerce involves the
application of knowledge management systems.

4.  E-Commerce refers to buying and selling of products
and services by business and consumer through an
electronic medium, without using any paper documents.
E-commerce is widely considered the buying and selling
of products over the internet, but any transaction that is
completed solely through electronic measures can be
considered e-commerce.
 E-commerce is subdivided into three categories: business
to business or B2B (Cisco), business to consumer or B2C
(Amazon), and consumer to consumer or C2C
(eBay). also called electronic commerce.

6. Differences between E-business and
E-commerce
 E-business is broader in scope and e-commerce is just an
aspect or a subset of it.
 E-business involves marketing, product design, consumer
service evaluation, and more.
 E-commerce only covers business transactions such as
buying and selling of goods and services over the internet.
 E-commerce essentially involves monetary trade while in e-
business, money transactions are not necessary.

7.  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.
 In practice, 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 using the Empty Vessel
strategy. Often, e-commerce involves the application of
knowledge management systems.

8.  E-business involves business processes spanning the entire
value chain: electronic purchasing and supply chain
management, processing orders electronically, handling
customer service, and cooperating with business partners.
Special technical standards for e-business facilitate the
exchange of data between companies. E-business software
solutions allow the integration of intra and inter firm
business processes. E-business can be conducted using the
Web, the Internet, intranets, extranets, or some
combination of these.

9. Differences b/n Traditional business and E-business
 Location's requirements:- In traditional business the
location should be in proximity to the source of raw
materials or the market for products. Whereas there is no
such specific location is required for e-business.
 Operating cost:- Operating cost is high in traditional
business due to fixed charges associated with the
investment in procurement and storage, production,
marketing and distribution facilities. But on the other hand
operating cost is low as a result of reliance on network of
relationship rather than ownership of resources.
 Nature of contact with suppliers and customers:- In
traditional business contact is through the intermediaries
and there is no direct contact with customers. But in e-
business there is a direct relation with customers.

10.  Response Time:- In traditional business it will take long
time to get a response from the customer. But the business
man gets instant response in e-business.
 Shape of organizational structure:- Traditional business
structure is vertical/tall due to hierarchy of chain of
command. But structure of e-business is horizontal/flat
due to directness of command and communication.
 Opportunity for interpersonal touch:- Traditional
business has fewer opportunities to have international
touch. But at the same time e-business have much more
opportunities to go international.

11. Virtual Communities:-
 A virtual community is a social network of individuals who
interact through specific social media, potentially crossing
geographical and political boundaries in order to pursue
mutual interests or goals. One of the most pervasive types of
virtual community operate under social networking
services consisting of various online communities.
 A virtual community is a community of people sharing
common interests, ideas, and feelings over the Internet or
other collaborative networks.
 The term virtual community is attributed to the book of the
same title by Howard Rheingold, published in 1993. The
book's discussion ranges from Rheingold's adventures on The
WELL, computer-mediated communication and social groups
and information science.

12.  Virtual Community is a collective group of entities,
individuals or organizations that come together either
temporarily or permanently through an electronic medium
to interact in a common problem or interest space.
 Examples of Virtual Communities
 VW Vortex.com is an automobile enthusiast community
who’s common interests are engine, suspension and body
repairs, modifications, upgrades and enhancements of all
models of Volkswagen automobiles. Here one can seek
advice for anything from how to change their oil, to
upgrading your engine to a VR6 Turbo with nitrous. This
website was created by VW enthusiasts for VW enthusiasts
for informational purposes.

13.  FreeAdvice.com is an informational website where one can go
to seek any kind of law, legal, or insurance questions or
information. It is maintained by nationally renown specialists
at dozens of leading American law firms, and by other capable
attorneys and legal professionals. This website was created for
the sole purpose of helping people understand legal situations
better, and to help them handle all sorts of legal issues.
FreeAdvice.com has been online for over 10 years now and has
over 600,000 topics and answers in their law forums.
 Overclock.net is a website is geared toward the pursuit of
computer performance. Overclocking a computer is a
technique that, when applied properly, can yield amazing
computer performance improvements. If applied improperly, it
can lead to one heck of a headache, or at worst, It’s a great
informational hotspot for novice and advanced overclockers
alike.

14. Web Portal:-
 Portal is a major visiting center for internet users.
 Portal is a single, web based interface to content data,
aggregated and customized, based on the user’s profile,
subscription and access.
 an Internet portal is a Web site that acts as a starting point for
browsing the Web. Portals typically include search engines
and large directories of websites. Some popular portals
are Yahoo, Excite, Lycos,Netscape, AltaVista, MSN,
and AOL.com. There are also many smaller portals, known as
"niche portals," for specific interests.

15. Portal v/s Website:-
 A portal is generally a vehicle by which to gain access to a
multitude of 'services'. A web site is a destination in itself.
 As such the term website refers to a location on the Internet
that is unique and can be accessed through a URL. By that
definition a web portal is in fact also a website.
A website is also a web portal if,
It transmits information from several independent sources
that can be, but not necessarily are, connected in subject;
thus offering a public service function for the visitor which is
not restricted to presenting the view(s) of one author.

16.  Customization :
Portal: You will select and organize the materials you want
to access. Organized with the materials you want to access.
Website: Searchable, but not customizable. All content is
there for every visitor.
e.g. you can navigate to yahoo mail, yahoo shopping, geo
cities, yahoo group. If you wish to use any of these services
you will either have to authenticate yourself and see things
personalized to you or you can simply visit sections that are
for everyone like yahoo news were if you are not signed in
then the default sign in is guest.
Best way can say that web portal is all about the high
featured and site is just with information. Another good
difference forum is come with lot of pages(more than 100k
pages even) where site have few pages.

17.  The Portal and website can be differentiated as :
Authentication:
Portal: It provides facility of Logging-In. Provides you
with information based on who you are.
e.g. mail.yahoo.com, gmail.com, rediffmail.com
Website: No log-in. e.g. www.yahoo.com
Personalization:
Portal: Limited, focused content. Eliminates the need to
visit many different sites.
e.g. You type in your user name and password and see
your yahoo mail only.
Website: Extensive, unfocused content written to
accommodate anonymous users needs.

18. Web Auctions:-
 In an auction, a seller offers an item or items for sale, but does
not establish a price. This is called “putting an item up for bid”
or “putting an item on the (auction) block.”
 Potential buyers are given information about the item or some
opportunity to examine it; they then offer bids, which are the
prices they are willing to pay for the item. The potential
buyers, or bidders, each have developed private valuations, or
amounts they are willing to pay for the item.
 The whole auction process is managed by an auctioneer.

19.  Online auctions are popular places for trading goods.
Individuals registered as users can buy and sale almost
anything online. Online auctions companies are, for
instances, eBay and Amazon.
 The price is normally cheaper than market price; with "past
history" functions, users can evaluate sale’s honesty and
trustworthy before buying; more information is also provided
online, or could be answered in Q&A section.
 However some vendors refuse to ship overseas and risks are
that vendors are registered but are not official businesses, the
credibility is unknown.

20. Types of auction:-
 Dutch auctions: A form of open auction in which bidding
starts at a high price and drops until a bidder accepts the
price. Because the price drops until a bidder claims the item,
Dutch auctions are also called descending-price auctions.
 First-Price Sealed-Bid Auctions: In sealed-bid auctions,
bidders submit their bids independently and are usually
prohibited from sharing information with each other. In a
first-price sealed-bid auction, the highest bidder wins.
 Second-price sealed-bid auction: The same as the first-
price sealed bid auction except that the highest bidder is
awarded the item at the price bid by the second-highest bidder.

21.  Open-outry double auctions: Buy and sell offers are
shouted by traders standing in a small area on the exchange
floor called a trading pit.
 Double auction: Buyers and sellers each submit combined
price quantity bids to an auctioneer. The auctioneer
matches the sellers’ offers (starting with the lowest price
and then going up) to the buyers’ offers (starting with the
highest price and then going down) until all the quantities
offered for sale are sold to buyers.
 Reverse auction: Multiple sellers submit price bids to an
auctioneer who represents a single buyer. The bids are for a
given amount of a specific item that the buyer wants to
purchase. The prices go down as the bidding continues
until no seller is willing to bid lower.

22. Types of online auction:-
 Online auctions are one of the fastest growing segments of
online business today. Millions of people buy and sell all types
of goods on consumer auction sites each year. Although the
online auction business is changing rapidly as it grows,
websites like eBay provides real time bidding, three broad
categories of auction web sites have emerged:
 General consumer auction.
 Specialty consumer auction.
 Business-to-business auction.

23. General consumer auction:
 In this type of auction, bidders are listed, but the bid amounts are not
disclosed until after the auction is over.
 The most successful consumer auction Web sites is eBay and the
most common format used is a computerized version of the English
auction.
 Note that in the eBay English auction sellers are allowed to set a
reserve price. In this type of auction, bidders are listed, but the bid
amounts are not disclosed until after the auction is over.
 The main difference between eBay and a live English auction is that
bidders do not know who placed which bid until the auction is over.
The eBay English auction also allows sellers to specify that an auction
be made private.

24. Specialty consumer auction:
 It is very hard to compete with a well-established rival such as
eBay in the general consumer auction market, a number of
firms have decided to identify special-interest market targets
and create specialized Web auction sites that meet the needs
of those market segments.
 Several early Web auction sites started by featuring technology
items such as computers, computer parts, photographic
equipment, and consumer electronics.
 pottery auctio.com and justbeads.com are best examples of
auction sites that cater to buyer and sellers who are
geographically dispersed but share highly focused interests.

25. Business-to-business auction:
 Unlike consumer online auctions, business-to –business online
auction evolved to meet a specific existing need. Two of three
emerging business-to-business web auction are direct
descendants of these two traditional methods for handling
excess inventory.
 In the large company model the business creates its own
auction site that sells excess inventory. In the small company
model, a third party web auction site takes the place of the
liquidation broker and auction excess inventory listed on the
site by a number of smaller sellers.
 The third business to business web auction model resembles
consumer online auction.

26. Revenue Models:-
 Revenue model describes how the firm will earn revenue,
generate profits, and produce a superior return on invested
capital.
 The terms revenue model and financial model are used
interchangeably. The function of business organizations is
both to generate profits and to produce returns on invested
capital that exceed alternative investments. Profits alone are
not sufficient to make a company “successful”.
 So, in order to be considered successful, a firm must produce
returns greater than alternative investments. Firms that fail
this test go out of existence.

27. Different Revenue Models:
 Although there are many different e-commerce revenue
models that have been developed, most companies rely on
one, or some combination, of the following major revenue
models:
 the advertising model,
 the subscription model,
 the transaction fee model,
 the sales model, and
 the affiliate model.

28.  Advertising revenue model, a Web site that offers its users
content, services, and/or products also provides a forum for
advertisements and receives fees from advertisers.
 Those Web sites that are able to attract the greatest
viewership or that have a highly specialized, differentiated
viewership and are able to retain user attention (“stickiness”)
are able to charge higher advertising rates.
 In the subscription revenue model, a Web site that offers
its users content or services charges a subscription fee for
access to some or all of its offerings.
 Experience with the subscription revenue model indicates
that to successfully overcome the disinclination of users to
pay for content on the Web, the content offered must be
perceived as a high-value-added, premium offering that is
not readily available elsewhere nor easily replicated.

29.  Transaction fee revenue model, a company receives a fee
for enabling or executing a transaction.
 For example, eBay provides an online auction marketplace and
receives a small transaction fee from a seller if the seller is
successful in selling the item.
 Sales revenue model, companies derive revenue by selling
goods, information, or services to customers. Companies such
as Amazon (which sells books, music, and other products),
LLBean.com, and Gap.com, all have sales revenue models.
 Affiliate revenue model, sites that steer business to an
“affiliate” receive a referral fee or percentage of the revenue
from any resulting sales.
 For example, MyPoints makes money by connecting
companies with potential customers by offering special deals
to its members. When they take advantage of an offer and
make a purchase, members earn “points” they can redeem for
freebies, and MyPoints receives a fee.

30. REVENUEMODEL E XA M P L E S REVENUESOURCE
Advertising Yahoo Fees from advertisers in
exchange for advertisements
Subscription WSJ.com Fees from subscribers in
Consumerreports.org exchange for access to content or
services
Transaction Fee eBay Fees (commissions) for
E-Trade enabling or executing a
Transaction
Sales Amazon Sales of goods, information, or
LLBean services
Gap
JCPenny.com
Affiliate MyPoints Fees for business referrals