E-commerce is defined as trading of goods, services, information or anything else of value between two entities over the internet. It works through shopping cart software that processes customer orders, payments through payment gateways, and logistics to deliver products. Key factors for success include providing value, service, an attractive website, incentives for customers, personal attention, and reliability/security through a sound business model. The virtual value chain parallels the physical supply chain by adding value through information interactions over networks rather than direct contact.

1. WHAT IS E-COMMERCE?
The term commerce is define as trading of
good & services or if ‘e’ for ‘electronic’ is
added to this, the definition of e – commerce
is defined as trading of goods, services,
information or anything else of value between
two entities over the internet.

2. HOW DOES E-COMMERCE WORKS?
• When the customer has browsed through your e-commerce
websites and decided that they would like to buy, there has to be a
process that accepts their order. The software that runs this
process is called a shopping cart.
• The shopping cart performs several other tasks:
-computation of taxes and other levies
-processing of coupons and other discounts
-capturing the billing and delivery address of the
customer
-ensuring user acceptance of terms of service and other
conditions of sale
-creation of codes, such as invoice numbers, order
number, tracking number and the like presenting customers with
delivery options and adding the corresponding fee forwarding
customers to the payment gateway (in the case of downloadable
digital goods) redirecting paid customers to the download page.

3. We Need a Payment Mechanism
• There are some ecommerce websites, especially in the business-tobusiness space that might provide credit for purchases. In most cases,
an ecommerce transaction involves transacting money. This process is
conducted by a piece of software called the payment gateway.
• The payment gateway:
-presents a customers with payment options
-accepts identification details, such as credit card numbers
-authenticates customers using a password, CVV code,
or multiple factors of authentication.

4. Effective logistics is the key to a successful ecommerce business.
As a result, ecommerce businesses need to ensure that the right product
is delivered to the customer, in good condition, and within the period that
the customer expected. Since logistics is a specialized function, several
ecommerce businesses outsource it to third party logistics providers.
Reverse Logistics Need to Be Managed
There is no such thing as an error-free product. As a result, some
products will be damaged or stop functioning right. Sometimes the
wrong product will be delivered. Such error or damage triggers
the reverse logistics process. In the usual mode, goods move from
the ecommerce business to the customer. In reverse logistics, the flow is
in the opposite direction.

5. Strategy Shaping Characteristics of e-commerce
environment
• Impact on competitive rivalry
-internet widens the geographical market and reduces the
geographical barriers
• Impact on barriers to entry
-entry barriers are relatively low
-internet technology eliminates and minimizes the need for several
resources that otherwise is quite costly
• Impact on bargaining power of buyers
-can get to know about actual company cost
-with just few clicks, buyers can compare competing offerings
• Impact on supplier bargaining power and supplier-seller collaboration
-internet makes it feasible for companies to find the best suppliers
providing better quality , prices.

6. E-commerce business models and strategies
o Pure Dot-com strategies
-Innovative , fresh and Entertaining websites
-Innovative marketing technique that are efficient in reaching
targeted audience
- delivering unique value to buyers and make online buying
very appealing
o Brick and click strategies
- is a business model by which a company integrates both
offline (bricks) and online (clicks).
- A popular example of the bricks and clicks model is when a
chain of stores allows the customer to order products either online or
physically in one of their stores, also allowing them to either pick-up their
order directly at a local branch of the store or get it delivered to their
home.

7. Continued…
• Merchant model - transferring an old retail model to the ecommerce using internet
• Brokerage model – brings sellers and buyers together on web
and collects a commission on the transactions,
ex e-bay which can generate additional revenue by
selling banner advertisement on their sites.
• Advertising model – traditional advertisement, such as radio and
television. Search engines charge advertises for
putting ads or
leasing spots on their sites
• Informediary model – collect information on consumers and
businesses and sell this information to interested
parties.
• Subscription model – an e-business might sell digital products
to its customers ex. AOL America On Line offers access
to an internet whose service is provided by the private
network which is leased from the public value added
network service.

8. Internet Strategies for Traditional Business
Gather real-time data on customer tastes and buying habits, doing real-time
market research, and use results to respond more precisely to customer
needs and wants
 Operating Website to handle Transactions
-provides existing and potential customers with extensive product
information
-handles order and transactions
 Using Online Sales
- achieving incremental sales
-gaining online sales experience and doing market research
 Employing Brick-and-Click Strategy
-employ this strategy to compete with the traditional wholesalers and
retailers
-ex. Software developers use internet as highly effective distribution
channel
 Greater Use of Build-To-order Manufacturing
-ex. Most vehicle manufacturers have software on their internet site
that permits shoppers to select model, color, etc
-delivery time is reduced to 5 to 10 days from 30 to 60 days.

9. Key Success Factors in E-commerce
 Providing Value to Customers
-offering product line that attracts the customers at a
competitive price
 Providing Service and Performance
-offering a responsive and user friendly experience
 Providing Attractive Website
-use of tasteful colors, animation, photographs, fonts,
etc
 Providing Incentive for customers to buy and to return
-providing coupons, special offers and discounts.
 Providing Personal Attention
-Personalized special offers and purchase suggestions
Providing Reliability and Security
- parallel servers, fail safe technology, information
encryption and firewall
 Constructing Commercially Sound Business Model

10. Virtual Value Chain
 The virtual value chain is the digital , networked, virtual world of
information, which parallels the tangible world of goods and services
or the physical supply chain.
 The ‘virtual’ indicates that the value adding steps are performed with
information.
 Value creation through interactions over the network rather than
through direct contact as per the traditional value chain.
VVC only apply to informational business

11. Physical Value Chain
Inbound
Logistics
Gather
Operations
Organize
Outbound
Logistics
Select
Marketing
and Sales
Synthesize
Virtual Value Chain
Service
Distribute
Value
Value

12. Objectives of Virtual Value Chain
• Building Direct cost-effective connections among value chain
members and customers
• Providing end user customers with specific value service benefits
• Ensuring value delivery continuity.

13. THANK YOU
By Shruti Shinde