E-COMMERCE QUESTION BANK

1. Define Electronic Commerce. Explain with an illustration from a business point of view.

Answer: 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 paperless exchange of business information using
following ways.

Electronic Data Exchange (EDI)

Electronic Mail (e-mail)

Electronic Bulletin Boards

Electronic Fund Transfer (EFT)

Other Network-based technologies

 2. Write short notes on:

2a. EDI

Answer:

EDI is often summed as Paperless Trading.

The transfer of structured data, by agreed message standards, from one computer system to another, by
electronic means.

The definition of EDI has four elements namely;

1. Structured Data

2. Agreed Message Standards

3. From one computer system to another

4. By Electronic means

2b. E-Commerce

Answer: Use of Internet and Web to transact business. More formally: Digitally enabled commercial
transactions between and among organizations and individuals

2c. B2B

Answer:

Website following B2B business model sells its product to an intermediate buyer who then sells the
product to the final customer. As an example, a wholesaler places an order from a company's website and
after receiving the consignment, sells the end product to final customer who comes to buy the product at
wholesaler's retail outlet.

B2B implies that seller as well as buyer is business entity. B2B covers large number of applications which
enables business to form relationships with their distributors, resellers, suppliers etc. Following are the
leading items in B2B e-Commerce:

i. Electronics

ii. Shipping and Warehousing

 iii. Motor Vehicles

iv. Petrochemicals

v. Paper

vi. Office products

vii. Food

viii. Agriculture

2d. B2C

Answer: In B2C model, business Website is a place where all transactions take place between a business
organization and consumer directly.

In B2C Model, a consumer goes to the website, selects a catalog, orders the catalog and an email is sent to
business organization. After receiving the order, goods would be dispatched to the customer. Following
are the key features of a B2C Model:

Heavy advertising required to attract large no. of customers.

High investment in terms of hardware/software.

Support or good customer care service.

Following are the steps used in B2C e-commerce

A consumer:

Determines the requirement.

Searches available items on the website meeting the requirement.

Compares similar items for price, delivery date or any other terms.

Gives the order.

Pays the bill.

 Receives the delivered item and review/inspect them.

Consults the vendor to get after service support or returns the product if not satisfied with the
delivered product.

Advantages & Disadvantages of B2C

Unlimited Market Place

Workflow Automation:

By using this process we can Ship, real time inventory accounting system which adjusts stock
levels and site, location availability instantaneously

Secured, automated registration verification, account entry and transaction authorization

features

Banking and accounting features customized for pre-approved third party direct sales, vendor,
consignment or internal transfer transactions.

2e. www

Answer: the most popular service that runs on the Internet; provides easy access to Web pages.

3. Elaborate Personalization & Customization as the driving force behind E-Commerce with valid
examples.

Answer: E-commerce technologies permit personalization: merchants can target their marketing messages to
specific individuals by adjusting the message to a persons name, interests, and past purchases. The technology
also permits customization- changing the delivered product or service based on a users preferences on prior
behavior. Given the interactive nature of e-commerce technology, much information about the consumers
past purchases and behavior can be stored and used by online merchants. The result is a level of
personalization and customization unthinkable with existing commerce technologies. For instance, you cannot
change the contents of the channel you have chosen. In contrast, the online version of The Wall Street Journal
allows you to select the type of new stories you want to see first, and gives you the opportunity to be alerted
when certain events happen. Personalization and customization allow firms to precisely identify market
segments and adjust their messages accordingly.

4. Define internet.

Answer: Worldwide network of computer networks built on common standards.

5. What is an Electronic Market & how does it differ from a traditional market?

Answer:

6. What is P2P technology?

Answer: Peer-to-Peer technology enables Internet users to share files and computer resources directly without
having to go through a central Web server, in E-commerce. In peer-to-peers purest form, no intermediary is
required, although in fact, most P2P networks make use of intermediary super servers to speed operations. To
date, the most widely used P2P networks are Bit Torrent (which is used for downloading large video files, and
accounts for nearly 25% of all Internet traffic) and eDonkey (used mostly for music files). Some of this downloading
and sharing is legal, but most is not. Challenge for P2P ventures is to develop viable & legal business
models.Napster, which was established to aid Internet users in finding and sharing online music files, was the most
well-known example of P2P e-commerce until it was put out of business in 2001 by a series of negative court
decisions.

7. List down the components of EDI.

Answer:

8. Distinguish between Commerce & E-Commerce highlighting the ongoing trends in both.

Answer:
9. Explain the conceptual framework of E-Commerce.

Answer:
10. Discuss the merits & demerits of EDI.

Answer:

Merits of Electronic data interchange (EDI):

Save Money: The cost of paper and paper processing is incredibly high contrasted to a correctly applied
EDI program. RJR Nabisco estimates that processing a paper purchase alignment costs the business $70.
Processing an EDI purchase alignment decreases the cost to 93 cents.
End Repetition: If your selling partner likes a exact replicate of a document, instead of calling you they
easily ascertain their mailbox. These outcomes in a great time savings from not having to exact replicate
and fax/mail copies of business articles.
Save Time: EDI furthermore saves time over paper processing since the transfer of data from computer to
computer is self-acting. There is no need to re key information with EDI. And the possibility for error drops
to near none, with no data application.
Improve clientele Service: The fast transfer of enterprise documents and assessed decline in mistakes allow
you to do business faster and more efficient. Kmart is a demonstration of a retailer that applies a Vendor
Stock Replenishment (VSR) program. With VSR, the Kmart warehouse sends supply as their EDI system
accounts it and automatically bills the client. It can cut weeks from the alignment fulfillment cycle and
ensures that product is habitually on the ledge.
Elaborate Your Customer Base: Therefore with improved clientele service, you can finally elaborate your
clientele base. Many large manufacturers and retailers are ordering their suppliers to institute an EDI
program. So, when assessing a new product to carry or a new supplier to use, the ability to do EDI is a
large scale in addition to.

Demerits of Electronic data interchange (EDI):

Too Many measures: There are too numerous measures bodies developing standard documents formats
for EDI. For example your company may be following the X12 benchmark format, while your selling
colleague pursues the EDIFACT benchmark format.
Changing Standards: Each year, most measures bodies publish modifications to the measures. This
impersonates a difficulty to EDI users. You may be utilizing one type of the benchmark while your trading
partners are still utilizing older versions.
EDI is too expensive: Some companies are only doing enterprise with others who use EDI. If a business likes
to do enterprise with these associations, they have to apply an EDI program. This expense may be very
exorbitant for little companies.
Limit youre selling Partners: Some large companies are inclined to halt doing enterprise with enterprises
who don't comply with EDI. For example Wal Mart is only doing business with other companies that use
EDI. The outcome of this is a limited group of persons you can do business with.
11. Explain the application of intra organizational E-Commerce.

Answer:

E-commerce can be done not only between business partners but also within organizations. Such activity is
referred to as intra-business EC or in short, intra-business.
Intra-business can be done between a business and its employees (B2E), among units within the business
(usually done as collaborative commerce), and among employees in the same business.

I. Business-to-Its-Employees (B2E) Commerce:

Companies are finding many ways to do business electronically with their own
employees.

They disseminate information to employees over the company intranet, for example.

They also allow employees to manage their fringe benefits and take training classes
electronically.

In addition, employees can buy discounted insurance, travel packages, and tickets to events on
the corporate intranet, and they can electronically order supplies and material needed for their
work.

Also, many companies have electronic corporate stores that sell the company's products to its
employees, usually at a discount.

II. E-Commerce between and among Units within the Business :

Large corporations frequently consist of independent units, or strategic business units (SBUs), which "sell"
or "buy" materials, products, and services from each other. Transactions of this type can be easily
automated and performed over the intranet.

An SBU can be considered as either a seller or a buyer. An example would be company-owned

dealerships, which buy goods from the main company. This type of EC helps improve the internal
supply chain operations.
The major benefits of this model are :

reducing inventories along the supply chain,

reducing operating costs, increasing customer satisfaction, and

Increasing a company's competitive edge.

The challenges faced by the collaborators are software integration issues, technology selection,
trust and security, and resistance to change and collaboration.

III. E-Commerce between and among Corporate Employees :

Many large organizations allow employees to post classified ads on the company intranet, through which
employees can buy and sell products and services from each other. This service is especially popular in
 universities, where it has been conducted since even before the commercialization of the Internet. The
Internet is used for other collaborations as well, such as scheduling of employee athletic and social events.

12. What are the basic building blocks of an EDI system?

Answer:

I. APPLICATION LAYER

It consists of the actual business applications that are going to be connected through the EDI systems for
exchange of electronic information.

These applications may use their own electronic record formats and document formats for storing, retrieving
and processing the information within the company systems.

For EDI to operate, they need to convert the internal company document format to a format that can be
understood by the system used by the trading partner. When the trading partners are small in number, then
the converters for various partner formats can be built.

But, as the number of partners with different internal formats increase, the task of building converters for each
proprietary format to other format becomes overwhelming.

II. Standard Format Layer

The application layer relies on common agreed formats for operation. Thus, the second important and critical
building block of the EDI system is standards for the business documents/forms. Over a period of time, two
major EDI standards have evolved.
Application/ Conversion Layer

Standard Formats Layer EDIFACT or ANSI X12

Data Transport Layer Email, FTP, Telnet, HTTP, X.435 (MIME)

Interconnection Layer Dial-up lines, Internet, I-way, WAN

The first, commonly known as X12, was developed by Accredited Standards X12 committee of American
National Standards Institute (ANSI) and

The second, the International Standard was developed by United Nations EDI for Administration, Commerce
and Trade (EDIFACT) standard.

III. Data Transport Layer

The data transport layer consists of services that automate the task of electronic transfer of messages.

The Electronic Mail exchanged through the network infrastructure has emerged as the dominant means for
transporting the EDI messages.

The electronic mail is used only as a carrier for transporting the formatted EDI messages by the EDI Document
Transport Layer.ITU-T has adopted X.435 (X.400-based) standards to support electronic data interchange (EDI)
messaging.

X.435 standard consists of definition of normal EDI messages and a set of EDI "notifications" to address the
security requirement.

In order to achieve equivalence to the security control offered by the paper-based systems, it has three types of
notifications.

A positive notification It indicates that the recipient has received the document and accepts the
responsibility for it;
 A negative notification- It indicates that the recipient received but refused to accept the document. The
reason for refusal is attached with the notification. A forwarding notification- It indicates that the document
was received, but forwarded to another recipient.

IV. Inter Connection Layer

It refers to the network infrastructure that is used for the exchange of information between trading partners.

In the simplest and most basic form it may consist of dial-up lines, where trading partners dialup through
modem to each other and connect to exchange the messages as illustrated in the following:

The leased lines and I-way, Internet or any reliable network infrastructure that can provide ability of
interconnection can be used.

Through the interconnection, the EDI partners are able to achieve document exchanges between themselves:

13. What is intra organizational E-commerce & what are its potential benefits?

Answer:

14. How does E-Commerce differ from traditional commerce?

Answer:
Differences Between ecommerce and Traditional Commerce

Due to the increased popularity and availability of Internet access many traditional small business are considering
ecommerce as a valid and profitable sales channel. However, ecommerce and traditional commerce are very
different, and it's important to weight carefully the differences between ecommerce and traditional commerce in
order to decide if it would be a good fit for your business or just a costly mistake.
Direct Interaction- Traditional commerce is often based around face to face interaction. The customer has a chance
to ask questions and the sales staff can work with them to ensure a satisfactory transaction. Often this gives sales
staff an opportunity for up selling, or encourages the client to buy a more expensive item or related items,
increasing the shop profits. On the other hand, ecommerce doesn't offer this benefit unless features such as related
items or live chats are implemented.

Lower Costs- ecommerce is usually much cheaper than maintaining a physical store in an equally popular location.
Compared with costs such as commercial space rent, opening an online store can be done at a fraction of the price
for less than $50 per month. This can prove invaluable for small business owners who don't have the startup capital
to rent prime retail space and staff it to be able to sell their goods.

Reach -With an online shop you can do business with anybody living on a country you are able and willing to send
mail to, unlike traditional commerce where you are restricted to people who actually come to your shop. This also
opens the door to many other forms of marketing that can be done entirely online, which often results in a much
larger volume of sales and even foot traffic to the store. An online store has no capability limits, and you can have
as many clients as your stock can serve.

Returns Rate -In a traditional store, the customer will be purchasing the product in person, which has some
benefits for both him and the store. The customer will be able to touch and check the items, to make sure they are
suitable, and even try them on, which reduces the number of returned items or complaints due to an item not being
as advertised on a catalogue or promotional leaflet. Expect a significantly higher rate of returns if you start trading
online, as many will just order and try the items at home, and won't hesitate to return them as they can do it by
post without having to talk with anybody in person.

Credit Card Fraud -The remote nature of Ecommerce makes much more difficult to detect fraud, which means
stores can lose money due to fraud. While traditional commerce is not totally secure, it's easier for a sales
attendant to verify that the person buying something is actually the owner of the credit card, by asking for
photographic ID. However, the fight against card fraud is well underway and banks and responsible ecommerce
owners work together to verify that all card use is legitimate.

Selling online means learning new ways of dealing with customers, marketing your products and fulfilling your
orders, but the benefits are great. You can keep your costs lower, reach a wider audience and do business 24/7,
having time to focus on improving your products and services and your customer experience instead of being on the
store floor waiting for clients. Some products sell better online than others: selling jewelry for cash online is much
easier than trying to sell houses or cars. However, having an online store can increase the customers on your
traditional commerce as well, as people are now able to find you online and see what products you are offering.
15. Mention & explain an example of B2B E-com model.

Answer:

Website following B2B business model sells its product to an intermediate buyer who then sells the
product to the final customer. As an example, a wholesaler places an order from a company's website and
after receiving the consignment, sells the end product to final customer who comes to buy the product at
wholesaler's retail outlet.

B2B implies that seller as well as buyer is business entity. B2B covers large number of applications which
enables business to form relationships with their distributors, resellers, suppliers etc. Following are the
leading items in B2B e-Commerce:

i. Electronics

ii. Shipping and Warehousing

iii. Motor Vehicles

iv. Petrochemicals

v. Paper

vi. Office products

vii. Food

viii. Agriculture

Alibaba.com is one of the most popular B2B E-commerce sites. B2B e-commerce platform in collaboration with
Alibaba.com gives your company maximum exposure to global markets.
17. Differentiate between E-Business & E-Commerce.

Answer:
E-Commerce E-Business

E-commerce is any transaction completed over a E-business is broader than e-commerce; including the
computer-mediated network that involves the transaction based e-commerce businesses and those who
transfer of ownership or rights to use goods and run traditionally but cater to online activities as well.
services.

Transactions aren't required to have a price and An e-business can run any portion of its internal processes
include both sales and items like free downloads. online, including inventory management, risk management,
finance, human resources

E-commerce includes transactions made on the For a business to be e-commerce and e-business, it must
internet, Intranet, Extranet, World Wide Web, by both sell products online and handle other company
email and even by fax. activities or additional sales offline.

18. What are the features of E-commerce?

Answer:

Features

E-Commerce provides following features

Non-Cash Payment E-Commerce enables use of credit cards, debit cards, smart cards, electronic fund transfer
via bank's website and other modes of electronics payment.

24x7 Service availability E-commerce automates business of enterprises and services provided by them to
customers are available anytime, anywhere. Here 24x7 refers to 24 hours of each seven days of a week.

Advertising / Marketing E-commerce increases the reach of advertising of products and services of businesses. It
helps in better marketing management of products / services.

Improved Sales Using E-Commerce, orders for the products can be generated anytime, anywhere without any
human intervention. By this way, dependencies to buy a product reduce at large and sales increases.

Support E-Commerce provides various ways to provide pre sales and post sales assistance to provide better
services to customers.
 Inventory Management Using E-Commerce, inventory management of products becomes automated. Reports
get generated instantly when required. Product inventory management becomes very efficient and easy to
maintain.

Communication improvement E-Commerce provides ways for faster, efficient, reliable communication with
customers and partners.

19. Discuss the forces effecting E-Commerce.

Answer:

20. Describe world wide web & its significance in todays business environment.

Answer:

21. Discuss the application of EDI in a manufacturing unit

Answer: EDI in a manufacturing unit: Retail Industry

While the retail sector has been at the forefront of EDI adoption for more than 30 years and has replaced many
paper-based processes with electronic documents, there is still a great deal of potential for EDI to deliver even more
value.
The retail sector has enjoyed the benefits of EDI for decades. Yet, many companies still use some form of paper-
based processes within their order, invoice and dispatch advices. This shows that there is still a great deal of
potential for EDI to deliver more to the retail industry, a fact that has not escaped the attention of many retail
business managers who see EDI as pivotal to creating competitive value for their organizations.

Pioneered by the likes of Walmart and Proctor & Gamble in the 1980s, vendor managed inventory (VMI) has
become a driving force for the industry to cut costs while increasing customer service. It is the concept at the core
of the grocery industrys quick response approach to product flow across the supply chain.

There are a number of key EDI document standards used within the retail industry:

Tradacoms

Tradacoms was a very early EDI standard that was heavily adopted within the retail industry. Initiated in 1982, the
standard was effectively rendered obsolete in 1995 when it was superseded by EDIFACT EANCOM. No further
development has taken place on the standard. Unfortunately, someone forgot to inform the retail industry about
this and the vast bulk of retail EDI traffic still uses Tradacoms.

Voluntary

Inter-industry Commerce Solutions (VICS) Association (now part of GS1 US) the VICS association has worked to
increase the efficiency and effectiveness of the retail supply chain. VICS pioneered the implementation of the quick
response (QR) standard to simplify the flow of product information for retailers and suppliers. VICS EDI handles the
maintenance of the VICS standards including its supply chain collaborative, planning, and forecasting and
replenishment (CPFR) standard.

ECOM

A group of standards that address common standards in the supply chain that is very well-suited to the retail
industry. The vast majority of eCOM standards in use today are based on EDI. However, new generations of XML
eCOM standards are emerging although market adoption has been minimal.

There are a number of industry bodies that are helping to shape the deployment of EDI within the retail sector:

GS1

The organization tasked with managing global implementation of the UPC barcode, the organizations standards
have expanded beyond the barcode to encompass other areas of the supply chain, including EDI message
definitions, radio frequency identification (RFID) and product data synchronization.

Global Data Synchronization Network (GDSN)

GDSN allows the secure and continuous data synchronization of product and location information. Retailers and
suppliers connect to a selected data poolmanaged by a GS1 memberwhich connects to the GS1 Global Registry.
Suppliers transfer product data and location information to the data pool. Retailers subscribe to only the
information they require.

Global Standards Management Process (GSMP)

A forum where GS1 standards are defined and maintained by GS1 and its members especially retail trade
companies. GSMP defines requirements and best practices before establishing industry standards to support
electronic commerce and data synchronization.

Global Commerce Initiative (GCI)

GCI is a global user group of manufacturers, retailers and service providers. It established the business rules for a
globally standardized model: the global product classification (GPC) model. The model improves the supply chain
performance between manufacturers and retailers by the voluntary adoption of industry standards for product
group identification.

Association for Retail Technology Standards (ARTS)

ARTS is a standards body dedicated to the Retail industry. Whereas GS1 standards concentrate on B2B standards,
ARTS focuses on application-to-application (A2A) standards, including the Retail Data Model, Unified Point of
Service, IXRetail and IXRetail XML standards. UnifiedPOS addresses the need to exchange data between point-of-
sale devices and back-office systems.

22. Discuss E-Commerce on private network.

Answer:

The largest Web-based form of B2B commerce .

Private B2B extranets that focus on continuous business process coordination between a small group of
companies for collaboration and supply chain management. Wal-Mart uses its own private network to
coordinate more than 15,000 suppliers to its stores.
23. Briefly explain the different types of E-Commerce with examples.

Answer:

24. Explain with a business model the workings of B2B & B2C E-Commerce models.

Answer:

25. Categorize E-Com transactions based on entities involved.

Answer:

26. Discuss various business applications on internet.

Answer:

27. List down the applications of E-Commerce with reference to the framework & give examples of each.

Answer: