A

PROJECT REPORT
ON

A COMPARATIVE ANALYSIS ON E BUSINESS IN ONLINE SHOPPING

WITH SPECIAL REFERENCE TO FLIPKART AND AMAZON
Submitted in partial fulfillment of the requirement
For the award of the degree of
MASTERS OF BUSINESS ADMINISTRATION.
DEPARTMENT OF BUSINESS ADMINISTRATION
SESSION (2014-2016)

Under the guidance of :

SHRUSTHI BAJPAI
(ASSISTANT PROFESSOR)

Submitted By:
CHANCHAL SINGH
Roll No.1404870037
Batch: MBA 2014-16

DAYANAND ACADEMY OF MANAGEMENT STUDIES, KANPUR

AFFILIATED TO
A.P.J.ABDUL KALAM TECHNICAL UNIVERSITY, LUCKNOW

Acknowledgement
I would like to express my sincere gratitude and regards to my internal guide MS.
SHRUSHTI BAJPAI for her constant inspiration, supervision and invaluable
guidance for making the project. of A COMPARATIVE ANALYSIS ON E
BUSINESS IN ONLINE SHOPPING WITH SPECIAL REFERENCE TO
FLIPKART AND AMAZON
At last I would also like to extend my sincere gratitude to all my faculty members
and specially for giving their valuable suggestions.
With regards

Signature of Student

EXECUTIVE SUMMARY OF E-BUSINESSES

In looking over the challenges identified above, one certainly could ask, So what
is really different about e-business? Overall, the answer that firms have faced
most of the challenges identified in the past, and that this simply represents the
latest iteration of these challenges.
Organizations have faced the challenge of integrating autonomous businesses. A
Considerable literature has grown up around all of the problems in managing
projects.
Any technology-based firm must deal with developing people skills among their
Technical managers, be they engineers, financial analysts, or software developers.
Managing across generations is certainly not a new issue. And both the job churn
and the ensuing talent shortage are inherent in any technological revolution. Thus,
again, whats new? We argue that two factors distinguish managing people in an ebusiness today from managing in a brick and mortar business.

The first factor distinguishing e-business from traditional business is the

complexity of the problem.
What seems different about managing e-businesses today stems from the
Interaction of facing all of these challenges simultaneously.
While organizations may have faced each of these challenges before, they have
probably never faced so many challenges at the same time.
This creates a level of complexity seldom experienced before.
A second, more important set of factors was noted explicitly by the respondents. In
fact, when pressed on these issues, respondents agreed as to the distinctiveness of
two of the challenges: Uncertainty and speed. Virtually every person we
interviewed first noted that the biggest change in moving to e-business is the
speed. Things happen so much more quickly,
Requiring faster organizational response than they had ever faced before. Second,
while fewer noted it specifically, the uncertainty challenge was at least implicit if
not explicit.
They noted the concern with not knowing for sure how to manage in the present
environment that was accentuated by uncertainty regarding what might happen
next. It seems that the combination of uncertainty regarding the way in which
certain factors will change in the future with the People in the E-Business WP 0011 increasing speed at which they will change presents the most formidable
management challenge unique to an e-business.
Thus, managing an e-business today requires dealing with an unusual amount of
complexity, uncertainty, and dynamicity. This certainly requires a new paradigm
for organizing in terms of how the structure, processes, and people of the firm are

managed. However, before discussing this new paradigm, we will first examine the
different evolutionary paths taken by different e-business.

Table Of Content
Cover Page............................................................................................................I
Executive Summary.II
Acknowledgement ..III
College Certificate...............................................................................................IV
1-Introduction
1.1 General Introduction about the sector...........................,.........................1--6
1.2 Literature Review..................................................................................7--19
1.3 E Business .........................................................................................19--26
Industries based Firms
Amazon..27-34
Flipkart..35--43
2- Research Methodology
2.1
E-Business Model ..............................................44---55
2.2
Statement of the Research Objectives & Strategies.............................56--66
2.3
Research Design and Methodology....................................................67--108
33.1

Analysis
Findings and Analysis of Data.109--117

4- Conclusion...118
5-Recommendation..119
Appendix
Webliography.......................................................................................................120

INTRODUCTION:
This turn towards Internet based technologies generated a new status quo in the
business world. E-business was defined by IBM back in 1997, as the
transformation of key business processes through the use of Internet technologies.
According to Chaffey (2002), e-business is described as all the electronically
mediated information exchanges, both within an organization and with external
stakeholders, supporting the range of business processes.
E-Business enables an enterprise to spread its wings to the global customer. To
extend the sales platform to a futuristic dimension, business houses have

incorporated software that can run on platforms offered by the World Wide Web.
E-business has now penetrated into consumer goods and other production and
service based industries. IPSR solutions' Web Application Division has proven
expertise in creating customised solutions that can manage web based Business
Logistics perfectly.

1
SHORT HISTORY OF E-BUSINESS
Despite the fact that e-business is a relatively new trend in the business sector, its
brief history is filled with controversial events. The rapid growth of the popularity
of the Web from 1995 was accompanied by a highly profitable period for ebusiness companies. Setting up a fully functional e-Business website was very easy
and cost efficient and at that time it was thought to guarantee success and profits
(OConnor and Galvin, 1998; Janenko, 2003). The number of e-businesses kept
growing in an attempt for everybody to have a share from the profit pie. On the
turn of the century, their number reached its peak and their profit opportunities and
potential financial growth was capped. This led to the huge stock market collapse
of many e-business companies which is known as dot.com bust. After a five year
period where companies had to revaluated their strategic approach towards ecommerce, growth of e-businesses started to increase again, reaching double digit
level through the current period.

LIMITATIONS OF E-BUSINESS SYSTEM:The limitations of e-business can be classified as two factors which areas below1) Technological

2) Non-technological.

2
TECHNICAL LIMITATIONS OF ELECTRONIC OMMERCE:
Lack of sufficient system
communication protocols

is

standards,

reliability, security

and

Not enough telecommunication bandwidth.

"The software development tools are still evolving and changing rapidly"

Integrating the Internet and electronic commerce software with current

databases and applications difficultly

Additional cost to request special Web servers and other infrastructures, in

addition to the network servers

Possible problems of interoperability, that means some e-business software

or applications does not fit with some hardware, or is incompatible with
some operating systems or other components

NON-TECHNICAL LIMITATIONS:

 Lack of feel and touch online

Many complicated legal issues

Rapidly changing and evolving e-business

3
Lack of support services

Insufficiently large enough number of sellers and buyers

Breakdown of human relationships

Inconvenient and expensive accessibility to the Internet

OBJECTIVE OF E-BUSINESS:Improve service.

Save time.
-Time taken by customers.
-Elapsed time for process
Reduce process errors.
Reduce the cost of core service provision.
Free staff to provide value added services.

Improve morale
-give people the tools and time they need

4
ADVANTAGES:-

The benefits of implementing E-Business tools is not so much in the use of

technology, as in the streamlining of business processes and the ease in finding
new markets. Some of the advantages include:
quicker and easier communications.
strengthened marketing capabilities and reach
increased hours of operation (a website provides 24 hour 7 day information
to existing and potential customers)
access to broader information through research
reducing the cost of doing business by lowering transaction costs and
increasing efficient methods for payment, such as using online banking and
reducing stationery and postage costs.

the opportunities to adopt new business models and develop tailored customer
support.

SCOPE AND FOCUS OF THE REPORT:The scope of E-Business is as wide as an ocean & there by the implementation
hurdles. When one thinks of the Electronic Business even through final goal
remains the same as that of the traditional business, but the way in which they
function in order to improve the performance is different.
5
As information sharing is the major part of the corporate industries, networking
has given boost to E-Business.
This change in view-point has opened door for new opportunities.
Nationalized and Private banks agrees that adopting e-business as a strategy is one
of the important steps the banks has taken in its development due to the
tremendous benefits e-business adoption provides. According to them their
perceived benefits include convenience to customers, speed and quality of service,
reduction of queues in banking halls and reduction in the total overhead cost such
as reduction in employee recruitment and reduction in space for clients and
customers .These factors that pushed their drive to adopt e-business.
A) The research provides powerful, real time E-Business reporting to help
E-Business managers improve merchandising and increase sales.
B) The research is very much useful to get the lifetime value of your
customers based upon their acquisition source, and increase your
expenditures on sources that generate the best customers over lifetime.

C) It tracks the performance of all your online marketing initiatives,

including Pay - per- click keyword buys, doing transaction online, paying
bills using net banking, banner ads, e-mails and affiliate programs and
also how it is effective to implement.

D) It helps the E-Businesses to convert visitors into customer

E) It helps to determine whether online competitors can significantly

Harm your business by providing some of the value you currently
Offer customers in the traditional way. It helps the managers to improve
the business by enhancing their functionalities as compared with their
competitors.

LITERATURE REVIEW:
INFORMATION IS POWER
This is one of the most widely accepted statements and applies for every aspect of
human activity. Internet is an unlimited pool of information and benefits anyone
who uses it properly.

According to Porter and Millar (1985) information gives competitive advantage to

a company in three different ways:
a) By changing industry structure and changing the rules of competition.
b) By providing companies with new ways to outperform their competitors.
c) By creating new businesses, even from within a companys existing operations.

7
The authors continue by discussing the strategic significance that Information
Technology has obtained for companies, by affecting the value chain, thus the
technological and economic activities that a company performs to do business. Not
only it transforms the value chain, but also transforms the product or the service
that the company produces. Additionally, authors suggest five ways for
Information Technology to be successfully implemented in business processes.
This can be done by:

a) Assessing the intensity of information.

b) Determining the role that Information Technology will have in the industry
structure.
c) Understanding the ways that it can create competitive advantage for their
companies.
d) Investigating the possibilities of new businesses.
e) Developing a strategic plan to take advantage of Information Technology.

SUCCESS AND FAILURE FACTORS OF E-BUSINESS

E-business and E-service will move to the forefront of technology priorities. To
take full advantage of the E-service, you need to look at your organization from an
alternative perspective. The question is how to deal with these changes, at what
cost, and at what speed. This is not the time to worry about "disintermediation". It
is the time for cooperation, integration, and the consideration of customer loyalty,
profitability and competition advantage.
8
As we have seen, e-Business has noticed remarkable growth and success over the
last years. Despite the numerous examples of successful e-Businesses there are
many examples where e-Business failed to succeed. By looking at those
characteristic examples, this report tries to understand the factors that lead to a
successful e-Business but also to figure out the dangers that may lead to failure.
These factors would form a helpful guideline, which would help in making the IT
employment website as successful as possible.

HYPOTHESIS:
E-business offers buyers and sellers a new form of communication and provides an
opportunity to create new marketplaces.
Theoretical studies suggest in general that the development of e-business results in
higher firm performance as a result of lower search and head-to-head comparison
costs.

However, there are a number of recent theoretical studies, which demonstrate that
the growth of e-commerce may lead to monopolistic pricing behaviour so that
firms engaging in e-commerce need not perform better compared to more
Traditional enterprises.
To date, there exists little empirical evidence on the impact of information
technology on economic performance. This paper is the first that uses a large
representative data set of Belgian firms to study empirically the impact of ebusiness on corporate performance.

COLLECTION OF DATA (PRIMARY & SECONDARY DATA)

Data source
Secondary

Primary
Questionnaire
Survey
Observation
Experimental

Internet

Internal
External
Sales records
Marketing activities
Cost information
feedback

Published data
printed

Electronic

Newspaper
Books
Private studies

E-BUSINESS TRANSACTION MEDIUM

Most e-commerce is done over the Internet. But EC can also be conducted on
private networks, such as value-added networks (VANs, networks that add
communication services to existing common carriers), on local area networks
(LANs) or wide area networks (WANs).

E-BUSINESS TRANSACTION TYPES

(E-commerce transactions can be done between various parties.)

Business-to-business (B2B)
Collaborative commerce (c-commerce)
Business-to-consumers (B2C)
Consumers-to-businesses (C2B)
Consumer-to-consumer (C2C)
Intra-business (intra-organizational) commerce
Government-to-citizens (G2C)
Mobile commerce (m-commerce)
12
HOW IS E-BUSINESS DIFFERENT
Reduction in physical boundaries and distance.
Serve larger customer base more efficiently.
Target specific customer groups.
The Internet is an interactive marketing medium.
More detailed information on customer transactions.

 Improved transaction efficiency.

13

CONSUMERS TO CONSUMERS (C2C)

Abbreviation for consumer-to-consumer commerce; that is, commerce with no

middle business people The most notable examples are Web-based auction and
classified as sites. Most large venues for such models (for example, eBay and
Classifieds2000) are quickly permeated by consumers who participate so actively
and regularly that they become small businesses for them.
C2C stands for consumer to consumer electronic commerce. The Internet has
facilitated new types of C2C although it is important to note that this kind of
commerce -- in the form of barter, yard sales, flea markets, swap meets, and the

like -- has existed since time immemorial. Notably, most of the highly successful
C2C examples using the Internet actually use some type of corporate intermediary
and are thus not strictly "pure play" examples of C2C.
14

WHAT IS BUSINESS TO BUSINESS (B2B)

B2B stands for "business-to-business," as in businesses doing business with other

businesses. The term is most commonly used in connection with e-commerce and
advertising, when you are targeting businesses as opposed to consumers.
On the Internet, B2B (business-to-business), is the exchange of products, services,
or information between businesses. B2B is e-commerce between businesses. B2B
Communication using XML over HTTP B2B - the basics
Business-to-business electronic commerce (B2B) typically takes the form of
automated processes between trading partners and is performed in much higher
volumes than business-to-consumer (B2C) applications.
15

WHAT IS BUSINESS TO CONSUMERS (B2C)

Refers to businesses selling products or services to end-user consumers.

B2B stands for transaction activities involving two business entities (business-tobusiness transaction). B2C stands for transaction activities involving a business
and a consumer (business-to-consumer transaction).

Electronic commerce comprises commercial transactions, involving both

organisations and individuals. From the technical point of view e-commerce is the
processing and transmission of digitised data. E-commerce decreases the distance
between producers and consumers. Consumers can make their purchase without
entering a traditional shop.

E-BUSINESS CATEGORY
E-banks
E-trade
E-consulting
E-engineer
E-learning
E-mail

E-marketing
E-transactions

17
HOW SAFE ARE E-BUSINESS FINANCIAL TRANSACTIONS
New security technology like 128-bit SSL encryption ensures the safety and
privacy of both you and your customers, and is built into the latest e-Business
software tools. Your security and privacy is a top priority with all e-Business
providers.

18

CAN MY BUSINESS BENEFIT FROM E-BUSINESS:

Reduce administrative and operating costs.

Reduce inventory costs.
Reduce the cost of procurement.
Improve customer service and satisfaction.
Streamline procurement procedures.
Increase communication efficiency and interaction with employees,

vendors, customers and strategic partner.

Increase revenues and profit margins.

19
E-COMMERCE, E-BUSINESS, WHO E-CARE
Some analysts and on-line business people have decided that e-business isinfinitely
superior as a moniker to e-commerce. Thats misleading and distracts us from the
business goals at hand. The effort to separate the E-commerce and E-business
concepts appears to have been driven by marketing motives and is dreadfully thin
in substance.

AN E-DISTINCTION
For the purpose of clarity, the distinction between e-commerce and e-business in
this book is based on the respective terms commerce and business.
Commerce is defined as embracing the concept of trade, exchange of merchandise
on a large scale between different countries.11 By association, e-commerce can be
seen to include the electronic medium for this exchange. Thus electronic commerce
can be broadly defined as the exchange of merchandise (whether tangible or

intangible) on a large scale between different countries using an electronic medium

namely the Internet.
The implications of this are that e-commerce incorporates a whole socio-economic,
telecommunications technology and commercial infrastructure at the macroenvironmental level.
All these elements interact together to provide the fundamentals of e-commerce.
20
Business, on the other hand, is defined as a commercial enterprise as a going
concern.12 E-business can broadly be defined as the processes or areas involved
in the running and operation of an organization that are electronic or digital in
nature.
These include direct business activities such as marketing, sales and human
resource management but also indirect activities such as business process reengineering and change management, which impact on the improvement in
efficiency and integration of business processes and activities
.

21

WHAT ARE THE KEY DRIVERS:It is important to identify the key drivers of e-commerce to allow a comparison
between different countries. It is often claimed that e-commerce is more advanced
in the USA than in Europe.
These key drivers can be measured by a number of criteria that can highlight the
stages of advancement of e-commerce in each of the respective countries.

The criteria that can determine the level of advancement of e-commerce .

1 TECHNOLOGICAL FACTORS The degree of advancement of the

telecommunications infrastructure which provides access to the new technology for
business and consumers.
2 POLITICAL FACTORS including the role of government in creating
government legislation, initiatives and funding to support the use and development
of e-commerce and information technology.
3 SOCIAL FACTORS incorporating the level and advancement in IT education
and training which will enable both potential buyers and the workforce to
understand and use the new technology.
4 ECONOMIC FACTORS including the general wealth and commercial health
of the nation and the elements that contribute to it. Since a distinction has been
made in this book between e-commerce and e-business for consistency, the key
drivers of e-business are also identified. These are mainly at the level of the firm
and are influenced by the macro-environment and e-commerce, which include:

KEY DRIVERS OF E-BUSINESS:-

ORGANISATIONAL CULTURE attitudes to research and development (R&D);

its willingness to innovate and use technology to achieve objectives.
23
COMMERCIAL BENEFITS in terms of cost savings and improved efficiency
that impact on the financial performance of the firm.
SKILLED ANDCOMMITTED WORKFORCE that understands, is willing and
able to implement new technologies and processes.
REQUIREMENTS OF CUSTOMERS AND SUPPLIERS in terms of product
and service demand and supply.

COMPETITION ensuring the organization stays ahead of or at least keeps up

with competitors and industry leaders.

24

DEMAND FOR PEOPLE WITH SKILLS IN E-BUSINESS

INTRODUCTION
This chapter introduces an e-Business Skills Triangle framework, reflecting the
importance to e-Business of three main types of skill business, creative and
technical.
It argues that e-Business predominantly needs people with a mix of types of skill, a
proportion of them with a fairly even balance between two or all three types of

skill. It goes on to look in more detail at the skills and work content associated with
the main types of skill.
Based on the analysis, four main e-Business occupations are identified, and the
demand for new people and re skilling of existing members of the workforce is
explored for each one.
Key findings are that:
Business Studies programmed should have a significant Information Technology
content.
Business Studies programmed should have an e-Business orientation that
permeates all subjects studied.
There is a need for Business Schools to have a proportion of Information Systems
programmed. with a fairly equal mix of business and information technology
content.
25
There is a requirement for the existing population of managers and management
advisors to understand the business implications of e-Business.
Every business with a web site will need a webmaster.
E-Business has boosted demand for people with technical IT skills.
There is a need to update the skills of technical people using dated technology.
There is a major increase in demand for designers to work on web design, and for
people with a strong mix of design and technical skills.

 Many of those already working in print design need to acquire web design skills,
As available bandwidth increases, the requirement for people to produce live
action and animated content will increase.
Everyone entering employment should have IT skills.
Third level graduates should ideally have an understanding of the business uses
of
Information technology.
Industry needs to make existing employees IT literate, perhaps at an overall rate
of about 2% of employment per annum.

26

INTRODUCTION
Ever since internet has been introduced to the world, it has made
a huge impact on impactpeople; business is one of such example
where internet has made the difference. In July 1995 Amazon.com

started selling books online and the response they received was
unexpected as in short timespan books sold online in all 50 states
of USA and 45 countries. Amazon presently offers music, movies,
toys, electronics and home equipment, there are seven different
international websites of Amazon with distributed customer
service centers in seven countries and over 17,000 people work in
Amazon worldwide. Today there are over 100 popular e-commerce
websites are providing online services worldwide. An e-commerce
opens the global market to the customer, it helps the customer by
providing huge options while buying a product or a service, the
online searching and comparing facilities enables customer to
select right product or service, another major advantage of ecommerce is that it is 24x7 available to the customer the
customer can shop almost anything within his/hers comfort zone
just by sitting at home, office, during travel or almost from any
place at any time. E-commerce is trading of services and products
with the help of internet. E-commerce introduced in the end of
70s and became popular during the 90s in western countries like
USA and UK. E-commerce introduced new possibilities in trading
and attracted attention of many traders.

27
Industry Background
Amazon.com started out to be the Worlds Biggest Bookstore. It has become that
and much, much more. It can now be classified as a broad sector retail business,
providing items in the areas of books, music, movies, clothing, jewelry, home and
garden, tools and automotive as well as other items. Amazon is a special type of
retail business, which is completely online. They have no brick and mortar retail
stores nor any outlets or centers. Yahoo Finance lists Amazon under the Catalog
and Mail Order sector of retail.
Amazon was created to take advantage of the increasing use and popularity of the
Internet as a retail medium. Amazon chose books as its first commodity for many

reasons, one being that online booksellers would have virtually unlimited shelf
space to store their wares. U.S. booksellers were relying on large superstores to
do most of their selling but even then, they were limited in what they could carry at
any one time. Amazon realized that it could offer a much larger selection of books,
in fact all of the books in print, and not have to worry about over-stocking or any
storage issues. With agreements with other booksellers, Amazon could offer the
books and then get them from third-party resellers to ship to their customers. The
cutting down of storage and purchasing costs could allow Amazon to provide
lower costs to their customers.
Another lower cost would be in advertising. The traditional advertising avenues,
print and visual media, would still be available but Amazon, being online, could
have website advertising with links directly to their website or the products
themselves. Amazon would get its name out there in the world of bookselling as
well as have a place for others to sell their books. Amazon also saw an opportunity
and offered their basic website structure and processes to private individuals and
other booksellers, such as Borders. Borders customers could arrive at a website for
Borders, see that it is run by Amazon and then have another avenue for purchasing
books. Amazon would than be paid either as a web space provider or as a
bookseller.
Amazon also has an advantage over brick-and-mortar booksellers is that they can
offer its extensive product lineup at the time its convenient to the customer.
Amazons website is open 24 hours a day, 7 days a week. No one needs to go to a
store to look for books and order them if not in stock. The customer can easily
look for and order a book at 10 am or at 3 am, as the need or desire strikes them.
With the ease of ordering comes the ease of payment. Amazon takes credit cards,
checks, money orders and even purchase orders from companies and institutions.
Once you set up an account, most books and other products are but a mouse-click

away.
Unlike other Mail Order or Catalog retail companies, Amazon can take
advantage of the Internet and use email as a form of communication, both to
confirm orders and purchases as well as to contact customers with delivery
information. Being an online retailer, Amazon has taken advantage of the ease of
use of the Internet in its business dealings. Instead of relying on the mail service to
send out catalogs, Amazon can let customers arrive at its home through word of
mouth and can also contact former customers via email to entice them back to
purchasing. The Internet is certainly the way for catalog selling to move, because
it has many advantages and can still maintain its character of ease and
convenience. In creating a database for Amazon, we need to keep this ease and
convenience in mind as we design and create a flexible, easy to use, adaptable
database.
29

5 Competitive Forces Model Industry Analysis

One of the major methods of analyzing a business strength within its industry is to
use what is known as the 5 Competitive Forces Model, created by Michael Porter
in 1979. It looks at forces that affect a business and the business' ability to
withstand those challenges. This type of analysis is an outside-in look at the
company and is necessary in gauging what the competitive environment is like
within an industry such as Amazons. In applying this method we must first
identify the five principal competitive forces which include; competitive rivalry
within the industry; the threat of new entrants in the industry; firms offering

substitute products; the bargaining power of suppliers; and the bargaining power of
buyers. Our next task will include pinpointing these forces and determining how
strong each force is, weak being very minimal in exerting pressure on the
organization and fierce illustrating a great amount of pressure from players in the
market. Analyzing the information gathered by this model may serve to pinpoint
whether opportunities exist within an industry and furthermore what powers
command it. While Amazon must deal with all of these forces it has thus far been
able to withstand them successfully and profitably.
Rivalry. Rivalry among competing sellers is strong. There are some major
competitors in the online retail business, especially in the area of book, audio CD,
and video/DVD movie sales. Amazon must compete with Barnes & Noble for
books, Columbia House for music and videos, and EBay for the other products that
Amazon might provide.

These three top competitors create a challenge for

Amazon in attracting customers to its online site to get sales. In addition, many
brick-and-mortars have followed Amazons lead and taken their businesses online
in hopes of similar success and increased market share. While rivalry in this
industry is strong, Amazon to a large degree has built up such a collection of
books that many small-scale booksellers cannot compete given the required
economies of scale. Overall, Amazon has set out to offer access to all books that
are in print and has succeeded in doing just that. This ability to sell most books
certainly rivals Barnes and Nobles efforts to provide books while Amazons
affiliate program has brought would-be competitors such as Borders onboard to
share in a strategy which has proved effective in competing within the industry.
Amazon, by starting in the 90s to sell online, has created a large supply chain,
which has earned a strong space in the book retail market, a strong brand name,
and a loyal customer base.

New Entrants. The threat of new entrants is strong due to low barriers to entry. It
is important to note however that while many individuals and small businesses can
conduct sales online with very little start-up costs they cannot expect to compete
with a large player such as Amazon. Companies who do pose a threat to Amazon
are candidates who have resources, which allow them to adequately compete if
they chose to take the business online. In such cases, low barriers to entry may
cause concerns when industry members are looking to expand their market but
taking approaches, which have allowed Amazon.com success in this particular
industry.
Substitutes. The threat of substitute products offered by firms in other industries
is fierce. Convenient and desirable substitute products exist and offer customers
many incentives if chosen in lieu of online shopping. Buying products through
online marketplaces warrants acceptance by customers while traditional practices
are readily available and more widely accepted. In addition, many good substitutes
offer attractively priced items and immediate gratification for buyers who may not
wish to wait for an order to arrive. Amazon has combated this threat by
maintaining its focus on its brand name while strengthening its image by meeting
customer expectations. While online shopping is continually gaining acceptance
worldwide, the threat of substitutes will continue to exert pressures on the
organization to provide better incentives, faster turnarounds, and overall customer
satisfaction.
Suppliers. Competitive pressures from supplier bargaining and supplier-seller
collaboration are relatively weak. While in many cases suppliers can create a
challenge for a company by forcing them to accept higher costs for materials,
Amazon began small and built up its supply chain to work with multiple suppliers.

With multiple suppliers, each suppliers strength weakens against that of

Amazons. For example, if one book supplier wants to get a 5-cent charge on each
book ordered but Amazon can get most of the same books from supplier #2 for
only 3 cents per book, supplier #1 wont get a contract with Amazon. Amazon has
created a broad supply chain to keep its suppliers from acquiring too much strength
and forcing prices too high. Therefore, Amazon has been able to pass those saving
on to the customer, creating a bargaining chip against industry rivals and creating a
hedge against supplier dependency.
Buyers. Buyer power is relatively strong within this industry. Given that
switching costs between competing brands or substitutes is generally low,
consumers may, without incurring any loss, choose one service over another if
desired. Additionally, buyers may postpone purchases from online sellers such as
Amazon if they do not agree with the prices available at the present time. Such
pressures require Amazon to discover new ways of passing on savings to their
customers without decreasing the profits necessary to maintaining their current
economic standing and market position. Therefore, while the power of buyers in
this industry is strong Amazon has found effective methods to retain attractive
prices for consumers.

S
uN
pe
pw
l
eE
rn
st
r
a
n
t
s

R
i
B
uv
ya
el
rr
sy

S
u
b
s
t
t
u
t
e
s

A visual model of Porters 5 Forces Model

E-commerce offers products and services through websites, a customer simply has
to visit an e-commerce website and browse various offering through browser
catalog, a customer can select multiple offerings and can add them to the shopping
cart, once the shopping is done the customer can checkout and proceed to payment
section where various online payment options are available like internet banking,
credit card, debit card etc. Once the payment is done the customer is notified about
the order and order is shipped on the postal address provided by the customer.
33
REVIEW OF LITERATURE
The first approach on how to support query operations on encrypted data with
bucketization, after the data is encrypted, the ciphertext is concatenated to a bucket
number, which is assigned to a specific range that includes the data. When a user
requests a query operation, the server uses the bucket numbers to execute the query
operation. For example, if a client program wants to Abhijit Mitra. (2013), ECommerce in India-A Review, International Journal of Marketing, Financial
Services & Management Research. Concluded that The E-Commerce has broken
the geographical limitations and it is a revolution-commerce will improve

tremendously in next five years in India. D.K.Gangeshwar. (2013), ECommerce or Internet Marketing: A Business Review from Indian Context,
International Journal of u- and e- Service, Science and Technology. Concluded that
the E-commerce has a very bright future in India although security, privacy and
dependency on technology are some of the drawbacks of E-commerce but still
there is a bright future to E-commerce. Martin Dodge. (1999),Finding the
source of Amazon.com: examining the hype of the earths biggest book store,
Center for Advanced Spatial Analysis. Concluded that Amazon.com has been one
of the most promising E-commerce companies and has grown rapidly by providing
quality service.
E-COMMERCE IN INDIA
The e-commerce introduced to India in mid-1990s, many of them were either
matrimonial or job portals, the major reason behind the slow response to ecommerce in India was,
1) Limited availability of internet
2) Weak online payment system
3) Lack of awareness in customers
Due to the above reasons the e-commerce progressed very slowly in Indian
market. In mid-2000 the e-commerce industry in India grown rapidly offering
online services like travelling, many airline companies started providing the travel
services online to customers, even today online travel booking holds a major share
of ecommerce space. Today almost everything is sold online in India.
34

INTRODUCTION OF FLIPKART
Flipkart was founded in 2007, by Sachin and Binni Bansal, students of IIT Delhi
who were the ex-employees of Amazon.com. Flipkart is an e-commerce company
based in Singapore, it operates in India. According to alexia internet, Flipkart is
one of the most popular website visited in India. Flipkart sells goods in India
through a company called WS retail. The other third-party traders or companies

can also sell goods through the platform of Flipkart. Initially in 2008 Flipkart sold
books but soon it established itself wide and started selling products like consumer
electronics, clothing, home decoration products, appliances, beauty and fashion
products etc. Due to the powerful network all over India and effective customer
relationship management, Flipkart has earned a topmost position in India. Flipkart
allows payment methods such as cash on delivery, net banking, debit or credit card
transactions, e-gift voucher and card swipe on delivery The founders of Flipkart
Sachin and Binny Bansal, now has taken the combined net worth in excess of $1
billion, reaching closer to that of Narayana Murthy and Nandan Nilekani of
Infosys.
The value of Bansals combined stake has crossed over Rs. 6000 due to the fresh
$1 billion fund raise. The Murthy family has a net worth of near Rs. 8,700 crore
being Indias second largest it services company, while the Nilekani family's net
worth holds at Rs 6,500 crore. Infosys took about four decade to reach market cap
of about $30 billion while Flipkart raised the valuation of $7 in just seven years,
and according the Flipkart officials the company has a set future goal of becoming
$100-billion e-commerce Company.
35
BUSINESS STRUCTURE
In a report dated November 25, 2014, a leading media outlet reported that Flipkart
were operating through a complex business structure which included nine firms,
some registered in Singapore and some in India. In 2012 Flipkart co-founders sold
WS Retail to a consortium of investors .

ACQUISITIONS

2010: WeRead, a social book discovery tool.

2011: Mime360, a digital content platform company.

2011: Chakpak.com, a Bollywood news site that offers updates, news,

photos and videos. Flipkart acquired the rights to Chakpak's digital catalogue
which includes 40,000 filmographies, 10,000 movies and close to 50,000
ratings. Flipkart has categorically said that it will not be involved with the
original site and will not use the brand name.

2012: Letsbuy.com, an Indian e-retailer in electronics. Flipkart has bought

the company for an estimated US$25 million.Letsbuy.com was closed down
and all traffic to Letsbuy has been diverted to Flipkart.

2014: Acquired Myntra.com in an estimated 20 billion (2,000 crore,

about US$319 million) deal.

2015: Flipkart acquired a mobile marketing start-up Appiterate as to

strengthen its mobile platform.

INVESTMENTS

In 2015, Flipkart bought a minority stake in a Navigation and route

optimization startup MapmyIndia to help improve its delivery using
MapmyIndia assets.

36
FINANCE
Initially, they had spent 400,000 only for making website to set up the
business.Flipkart has later raised funding from venture capital funds Accel
India (US$1 million in 2009)and Tiger Global (US$10 million in 2010 and US$20
million in June 2011). On 24 August 2012, Flipkart announced the completion of
its 4th round of $150 million funding from MIH (part of Naspers Group) and
ICONIQ Capital. The company announced, on 10 July 2013, that it has raised an
additional $200 million from existing investors including Tiger Global,
Naspers, Accel Partners and Iconiq Capital.
Flipkart's reported sales were 40 million in FY 20082009, 200 million
in FY 20092010 and 750 million for FY 20102011 In FY 20112012, Flipkart is
set to cross the 5 billion (US$100 million) mark as Internet usage in the country
increases and people get accustomed to making purchases online. Flipkart projects

its sales to reach 10 billion by year 2014. On average, Flipkart sells nearly 10
products per minute and is aiming at generating a revenue of 50 billion (US$0.81
billion) by 2015.
On November 2012, Flipkart became one of the companies being probed for
alleged violations of FDI regulations of the Foreign Exchange Management Act,
1999
Flipkart reported a loss of 281 crore for the FY 2012-13. In July 2013, Flipkart
raised USD 160 million from private equity investors.
In October 2013, it was reported that Flipkart had raised an additional $160 million
from new investors Dragoneer Investment Group, Morgan Stanley Wealth
Management,Sofina SA and Vulcan Inc. with participation from existing investor
Tiger Global.
On 26 May 2014, Flipkart announced that it has raised $210 million from Yuri
Milners DST Global and its existing investors Tiger Global, Naspers and Iconiq
Capital.
In early July 2014, it was also highly speculated that Flipkart was in negotiations to
raise at least $500 million, for a likely listing in the US for 2016.

37
On 29 July 2014, Flipkart announced that it raised $1 billion from Tiger Global
Management LLC, Accel Partners, and Morgan Stanley Investment Management
and a new investor Singapore sovereign-wealth fund GIC.
On 6 October 2014, Flipkart sold products worth INR 650Crore in 10 hours in a
special one-day event - "The Big Billion Day", claiming they had created ecommerce history, but their hard-won reputation for good customer service
suffered because of technical problems, and angry reactions on social media from
buyers disappointed with the pricing and availability of products. It claimed to sell
a whopping 5 lakh mobile handsets, five-lakh clothes and shoes and 25,000
television sets within hours of opening its discounted sale at 8 AM. In December
2014, After it received $700 million from another funding, Flipkart had a market
cap of $11 billion or Rs.66000 crore. In May 2015 Flipkart has raised $550 million

from some of its existing investors, in a deal that raises the valuation of the
privately held Indian startup to about $15 billion or Rs. 90,000 crore
On 20 December 2014, Flipkart announced filing application with Singapore-based
companies' regulator ACRA to become a public company after raising USD 700
million for long term strategic investments in India following which its number of
investors exceeded 50. The USD 700 million fund raised by Flipkart added new
investors - Baillie Gifford, Greenoaks Capital, Steadview Capital, T. Rowe Price
Associates and Qatar Investment Authority - on company's board.Its existing
investors DST Global, GIC, ICONIQ Capital and Tiger Global also participated in
this latest financing round.
By August 2015, after raising $700 million, Flipkart had already raised a total of
$3 billion, over 12 rounds and 16 investors.

REGULATORY ACTION AND LAWSUITS

The Government Of India informed the parliament in 2012, that it had asked the
Enforcement Directorate to investigate Flipkart Online Services. In August 2014,
the Enforcement Directorate claimed that it had found Flipkart to be in violation of
the Foreign Exchange Management Act.

38
On November 30, 2012, Flipkarts offices were raided by the Enforcement
Directorate. Documents and computer hard drives were seized by the regulatory
agency.
Delhi High Court observed violation of foreign investment regulations by ECommerce firms including Flipkart.
In January 2016, a public interest litigation came up for hearing which alleges
Flipkart of contravention of foreign investment norms. The court asked the Reserve
Bank of India to provide the latest circular on foreign investment policy.

In January, 2016, the Department of Industrial Policy and Promotion (DIPP)

clarified that it does not recognize the marketplace model of online retail.
In February 2016, Health Minister, J P Nadda, informed that the Maharashtra FDA
had taken action against Flipkart, among others, for selling drugs without valid
license.

FLYTE DIGITAL MUSIC STORE

In October and November 2011, Flipkart acquired the websites Mime360.com and
Chakpak.com. Later, in February 2012, the company revealed its new Flyte Digital
Music Store.Flyte, a legal music download service in the vein
of iTunes and Amazon.com, offered DRM-free MP3 downloads. But it was shut
down on 17 June 2013 as paid song downloads did not get popular in India due to
the advent of free music streaming sites.

EXCLUSIVE PRODUCT LAUNCHES

Motorola Mobility, previously owned by Google but then sold to Lenovo, in an

exclusive tie up with Flipkart launched its budget smartphone Moto G in India on 5
February 2014; more than 20,000 units were sold within hours of launch on
Flipkart. After this Flipkart was looking for a long term tie up with Motorola
Mobility,They also launched their Android smartphone, the Moto X, on 19 March
2014. Flipkart later sold the Moto E, cheaper than Moto G, from 13 May 2014.
The sale of high-end smartphone Xiaomi Mi3 produced by Xiaomi Tech was
launched in India on an exclusive tie-up with Flipkart. The first batch was sold out
within 39 minutes on 22 July 2014, the second in 5 seconds on 29 July 2014. The
sale was proceeded on pre-registration mode where more than 150,000 buyers
booked for the 5 August 2014 sale. This got sold off in less than 2
seconds.Following this Xiaomi Tech sold 20,000 units in the next sale on 12
August 2014. On 2 September 2014 Flipkart held a flash sale of the Xiaomi Redmi
1S budget Android smartphone which was launched in India in July 2014. 40, 000

units priced at Rs 5999 each were sold within seconds.A further 40,000 units were
sold within 4.5 seconds on Sept 9, 2014.The third Redmi 1S sale on Sept 16, 2014
sold 40,000 units in 3.4 seconds; In the 4th round of sale of Redmi 1S, 60,000 units
sold in 5.2 seconds on Sept 23, 2014.On 30 September 2014 60,000 units sold in
13.9 seconds. Redmi Note in India exclusively through Flipkart; 50,000 units sold
in 6 seconds on 2 December 2014.

IN-HOUSE PRODUCTS

In July 2014 Flipkart launched its own set of tablet, mobile phones
& Phablet. The first among these series of tablet phones was Digiflip Pro XT
712 Tablet.

In July 2014 Flipkart launched its first networking router, under its own
brand name named DigiFlip WR001 300 Mbit/s Wireless N Router.

In September 2014 Flipkart launched its in-house home appliances and

personal healthcare brand Citron. The label includes a wide range of cooking
utilities and grooming products.

CRITICISM
On 13 September 2014, a Flipkart delivery boy molested a house maid in
Hyderabad.The house maid's employer has been fighting against Flipkart for
justice on this issue, and also for making offline delivery services safe.
On 6 October 2014 Flipkart launched a promotion called 'Big Billion Day' with the
intention to increase the popularity of their website by targeting a billion sales in 1
day.
40
This, even though Flipkart achieved the target, led to public outcry and
widespread criticism among consumers, competitors and partners, heavily
damaging its reputation. Many users could not place orders because of high server

load and errors which led to frustration among customers.Many users who placed
orders received emails stating that their orders were cancelled. Most of the
products were sold for less than cost price, and Flipkart was accused of killing
competition. Major competitors filed complaints against Flipkart to the commerce
ministry, claiming that selling products lesser than cost prices is against the
commerce policy of the country.The Ministry said that they would formulate new
trade rules for electronic retail after this incident.
Flipkart received mass criticism on the subject of net neutrality after their
announced partnership with Airtel to use the Airtel Zero platform which would
have made the Flipkart app free for Airtel Users. On 14 April 2015 Flipkart
retracted its decision to use Airtel Zero platform

AWARDS AND RECOGNITION

In September 2015, Sachin Bansal and Binny Bansal entered Forbes India
Rich List debuting at the 86th position with a net worth of $1.3 billion each.

Co-Founder of Flipkart, Sachin Bansal, got Entrepreneur of the Year Award

2012-2013 from Economic Times, leading Indian Economic Daily.

Flipkart.com was awarded Young Turk of the Year at CNBC TV 18's 'India
Business Leader Awards 2012' (IBLA).

Flipkart.com- got Nominated for IndiaMART Leaders of Tomorrow Awards

2011.

41
COMPARATIVE STUDY OF FLIPKART.COM WITH AMAZON.COM

The war between e-commerce companies in India is in peak, Flipkart is facing

strong competition from Amazon India, ebay, Junglee.com, Jabong.com,
Snapdeal.com and Myntra.com like companies. Among the above companies
Amazon.com is the strongest competitor of Flipkart. Recently Flipkart has won an
economical battle against Amazon.com by purchasing one of its rivals myntra.com.
Flipkart has acquired online fashion retailer Myntra.com in approx. Rs. 2,000 crore
deal, this deal is considered to be the big milestone in the success of Flipkart.
Flipkart mainly faces strong competition from Amazon.com as Amazon has
declared that it will invest $2 billion in its Indian. Following are data comparison
between Amazon.com and Flipkart.com collected during 21-Oct-2014 to 18-Nov2014. a) Stock Keeping Units: When the Stock Keeping Units (SKU) of both
Flipkart and Amazon compared for four popular electronic products mobile,
laptop, tablet, camera. Following results were obtained from the data.
Flipkart holds total 1706 SKU under the above four category while Amazon holds
only 1535 SKU for the same products. 2. Flipkart has 4172 offers for the 1706
SKU while Amazon has 2244 offers for the 1535 SKU b) Online Product
Categories and Sub-Categories: Presently Amazon.com offers 16 main categories
of products online while these 16 main categories can be further divided in to 186
sub-categories. On the other hand flipkart.com offers 86 main categories of
offerings which are expanded into a huge 422 subcategories much more than
amazon.com providing a wide range of products which are quite easy to access
through website. c) Comparison of Manpower Management and Work

Satisfaction : Considering the gender wise distribution of employees in both

Amazon.in and Flipkart.com, following information is obtained
Companies / Sex Ratio Male Female Flipkart.com 80% 20% Amazon India 87%
13% Sr. No. Description Flipkart.com Amazon India 1 Job Work/Life Balance 3.5
3.5 2 Salary Benefits 3 4 3 Job Security 3.5 3 4 Management 3.5 3 5 Job Culture 4
4 Total 17.5 17.5 * Data Showing Work satisfaction.

43

THE E-BUSINESS MODEL:

The e-Business model, like any business model, describes how a company
functions; how it provides a product or service, how it generates revenue, and how
it will create and adapt to new markets and technologies. It has four traditional
components as shown in the figure, The e-Business Model. These are the ebusiness concept, value proposition, sources of revenue, and the required activities,
resources, and capabilities. In a successful business, all of its business model
components work together in a cooperative and supportive fashion.

44

E-BUSINESS CONCEPT:

The E-BUSINESS CONCEPT describes the rationale of the business, its goals and
vision, and products or offerings from which it will earn revenue. A successful
concept is based on a market analysis that identifies customers likely to purchase
the product and how much they are willing to pay for it

GOALS AND OBJECTIVES:

The e-Business concept should be based, in part, on goals such as "become a

major car seller, bank, or other commercial enterprise", and "to become a
competitor to some of the well-known firms in each of these industries."
Objectives are more specific and measurable, such as "capture 10% of the market",
or "have $100 million in revenues in five years." Whether these goals and
objectives are realistic or not, and whether the company is prepared to achieve
these goals is addressed in the business plan process for startup firms and in the
implementation plan for an existing firm that is considering a significant change.
In looking at the business model it is sufficient to know what the goals and
objectives are, and whether they are being pursued.

45

CORPORATE STRATEGIES

Embedded in the e-Business concept are strategies that describe how the business
concept will be implemented. These are known as CORPORATE STRATEGIES
because they establish how the business is intended to function. These strategies
can be modified to improve the performance of the business. Environmental
strategies, discussed in a following section, describe how the company will address
external environmental factors, over which it has no control.

THE E-BUSINESS CONCEPT AND MARKET RESEARCH

The selection and refinement of the business concept should be integrally tied into
knowledge of the market it serves. In performing market research care must be
taken to account for the global reach of the Internet for both customers and
competitors. It is also important to remember that markets shift, and can shift
rapidly under certain conditions. But most important is to truly understand what the
market is, who comprises it, and what do they want.

46

THE E-BUSINESS CONCEPT

PRICE
Pricing is an important part of the e-business concept and should be established on
the basis of market research. Price is often set with an eye on the competition and
can have a direct effect on market share. In traditional commerce in the U.S., the
seller sets the price. Online pricing, on the other hand, may include negotiation or
auction pricing, where the interaction of sellers and buyers can affect the price.
Knowledge of competing prices is also readily available online, and will keep
downward pressure on prices.
47

When is it OK to increase prices? It depends on the business. If a company has

high fixed to variable costs, prices should be changed cautiously. If customers are
"locked-in", and the product or service is less sensitive to price, then prices may be

changed, to a degree, with less risk. But all changes should be checked beforehand
with market research and financial analysis.
A potential problem for some products is that the market may change faster than
the seller can change the product or service. One way to survive in this
environment is to sell at the minimum price that allows a profit, avoid price
changes and continuously upgrade the product. This approach is often used in
computer hardware and software sales. At the same time the seller should invest in
finding how to shorten the development cycle, and put in place a market research
program that will quickly identify trends and changes.
The steady development of a product has other advantages. It evens out the
revenue stream rather than having the "boom or bust" cycle of a single product. It
also shows that the company is steadily developing and upgrading products for the
customers who should begin to buy into the company's vision. And customers,
analysts, and investors will develop confidence that the company is going to be
around for the long-term.
The price must also provide real value to the customer, that is the customer must be
pleased with the purchase of the product or service. In addition to price, the buyer
may also be interested in how the product can be of assistance to his company. In
this case, comparisons of price and ROI may be used to show that the offering adds
more value than a competitor's. The price can also be a basis for building long-term
customer relations, which can lead to multiple sales.
For example, as retail customers become more comfortable shopping on a site, it
should be easier to get them to migrate to higher margin products.

VALUE PROPOSITION

The VALUE PROPOSITION describes the value that the company will provide to
its customers and, sometimes, to others as well. With a value proposition the
company attempts to offer better value than competitors so that the buyer will
benefit most with this product.

Reduced price

Improved service or convenience such as the "1 click" checkout

Speed of delivery and assistance
Products that lead to increased efficiency and productivity
Access to a large and available inventory that presents options for the buyer

Providing value in an e-business uses the same approach as providing value in any
business, although it may require different capabilities. But common to both are the
customers who seek out value in a business transaction. The value proposition
helps focus the business on the well-being of the customer, where it remains in
successful companies.
49

VALUE

DELIVERY

ACTIVITIES

THROUGH

INTEGRATION

OF

INTEGRATION OF ORGANIZATION OR ENTERPRISE OPERATIONS

The integration of systems inside and outside the organization can provide value
for both customers and the organization. One of the requirements for e-business is
to link front-end with back-end systems in order automate the online operations of
the organization.
Front-end activities deal directly with the customer while back-end systems
include all of the internal support activities that do not deal directly with the
customer. Some enterprises have different geographic locations for front-end and
back-end office activities and rely on the integration of the associated computer
and network systems for successful corporate operations.
FRONT-END & BACK-END OPERATIONS:

50

Examples of activities that require integrated systems are:

Order placement through point-of-sales systems
Customization of products based on user requirements

 Production tracking
Customer order fulfillment

EXTERNAL INTEGRATION: THE SUPPLY CHAIN

Operations on the Web can also extend to cooperating firms such as partners in a
supply chain , also known as a "Value Web". The Value Web may include a wide
range of participants as well as the possible use of a digital exchange to procure
or sell products. Many firms have participated in a supply chain for years using
Electronic Data Interchange (EDI) technology to buy and sell components and
products.
Successful supply chains are vital for manufacturing operations since the
timeliness, cost and success of the final product may depend on a component part
made by a single supplier. The competence of suppliers may now be demonstrated
through the ISO 9000 qualification process, which is critical when using suppliers
from foreign countries or when the final products are exported.

51

SUPPLY CHAIN INTEGRATION

When the supply chain transactions of the partners can be automated and
integrated over the Web into the back-end systems of each other, then the resources
of all the chain partners can be planned and managed for an efficient operation. An
emerging approach to automate transactions with partners is to link systems
through the corporate portal, which greatly reduces the integration requirements.
Portal software now has potential connections, or hooks, where the systems of
different enterprises can be linked to securely transfer data.
In addition to good technology, it takes a strategy, time, resources and, most
importantly, trust between partners, for the supply chain to function successfully.

52

STRUCTURAL CONCEPTS TO DELIVER VALUE

The effective delivery of value to a customer, requires that a company organize its
structure and functions according to the type of product or offering delivered. The

VALUE CHAIN, as popularized by Michael Porter 1, describes a linear set of steps,

which could be activities or business processes such as design, production and
sales, whereby a manufacturing company delivers value. This value chain delivery
model strives for overall efficiency and cost reduction by increasing the efficiency
and reducing the cost of each business process. Each step is independent and
separable, and can be OUTSOURCED, or contracted out to another company. The
value chain becomes a supply chain when a company uses the inputs and activities
of other companies in its manufacturing process.
However, the value chain doesn't appear to describe how many service-oriented
businesses operate. Stabell and Fjeldstad, Timmers, and Afuah and Tucci, have
developed additional concepts of "value shop" and "value network", following the
work of Thompson to address other types of businesses.
The VALUE SHOP describes a service operation, such as a consulting, law or
accounting firm, that focuses on customer needs rather than on the production
process of the value chain. It may also describe a department, such as customer
service, within a larger organization. For example a manufacturing company, a
value chain operation, could have within it a department that operates as a value
shop.

53
The e-business set up as a value shop works directly with the customer to provide a
necessary, often unique, solution.

The value shop is geared to solve specific client problems rather than to make a
common solution more efficient. Some value shops, such as large consulting
companies, will attempt to duplicate solutions among clients by introducing jargon
to describe steps in an approach, and by attempting to fit the client's problem to the
approach, rather than focusing on the client's problem.
The VALUE NETWORK is a type of e-business where networked users negotiate a
transaction on a web site. The value network hosts online auctions, brokering,
market making, intermediation, or other types of transactions.
The value network depends on growth in order to attract more users. When the
number of users on a value network increases, the network becomes more valuable
to each participant since it increasingly becomes the site where desirable
transactions will take place. Ultimately the strategy of network dominance results
in large companies like eBay, since in theory it drives all of the users to be on one
network. However, for various reasons described in a following section, this limit
is never reached, and competitors do emerge, even for a company like eBay.

SOURCES OF REVENUE
Depending on the business model, several revenue sources may be available to an
e-business. Many online businesses will have a three or four of these sources. A
mix of revenue sources is often referred to as a revenue model but may be
mistakenly called a business model. Some of these sources of revenue are:
54
Advertising

 Affiliation
Agent commissions
Licensing
Sales commissions
Sales profits
Sponsorship
Subscription
Syndication
Use Fees
For large public-private or government projects revenue sources might also
include:
Bonds, usually for large capital expenditures
Taxes, primarily income, property and sales taxes
Use fees and tolls
With small fast-growing companies such as e-Business startups, investors often
track expected revenues and revenue growth and may make changes to increase
revenue. However, after the Dot-Com boom ended, more traditional measures such
as cash flow and earnings have came back into favor as means of evaluation.

55

ACTIVITIES, RESOURCES AND CAPABILITIES

The activities, resources and capabilities of a business are sometimes known as its
requirements. In order to perform the activities required to carry out the mission of
the business, certain resources are needed; for example, employees with certain
skills, or capabilities, are needed to perform activities correctly and efficiently.
Also, inventions, processes and other intellectual property may add to the
individual knowledge of an employee to develop a competence in the performance
of the required activities.

ACTIVITIES
Activities are specific business processes or groups of processes such as design,
production and sales that implement the business concept. The operational business
model identifies the costs and outputs of each activity.
Activities drive the need for resources. Existing activities should be carefully
scrutinized in order to conserve resources and reduce costs. Activities left over
from previous initiatives, but not currently necessary should be curtailed. This may
sound elementary but businesses start many activities over time, especially if its
business concept changes. But one doesn't often hear of a large business curtailing
its activities in order to focus on its current mission.

56
E-BUSINESS PROCESSES:
Some fundamental e-business activities may infringe on patents. Business
processes, or the "method of doing business" may be patented, so that a business
model may unwittingly include the development or use of intellectual property
owned by another party. Patents have been freely awarded for even the most
straight forward business processes.
Amazon.com has a patent for "one click" purchasing technology and its
"Affiliates" program.
CyberGold has a patent for pay-per-view ads where the customer enjoys an
incentive for clicking on them
Netincentives has a patent for online incentives programs, possibly in
conflict with CyberGold's
Netword LLC has a patent for a Web navigation based on keywords rather
than URLs
Open Market has a patent on electronic shopping carts, on paying with credit
cards using the secure socket layer encryption and on secure credit card
transactions. However, there are now several types of shopping carts.

57
Priceline.com was issued a patent for its reverse auction method, that is,
"name your price" auction.
Sightsound.com has a patent for selling digital content (e.g. downloading
films) on the Web.
CI Software has a patent for EDI on the Internet
One of the most widely renowned patent infringement cases was
Amazon.com's patent for "one click" technology for purchasing items, which
was at the center of its dispute with Barnes and Noble. One-click shopping
allows the prospective buyer to bypass the use of a "shopping cart", which is
cumbersome for many users.
Amazon.com also has a patent for its "Affiliates" program, which allows the
company to market the products of other companies in return for a
commission. This business process has been used freely by traditional
businesses since the beginning of recorded history and the fact that this
process has been patented is very controversial. Also controversial is
Priceline.com's patent for a reverse auction method, which it uses to sell
airline tickets.
In effect, a few companies have patented Internet business models, which
are being used by many other companies. If these patents can be easily
licensed at reasonable rates then there won't be a problem in the future

development of e-business. But if not, the resulting chaos will inhibit the
growth of the online business world.
58

E-BUSINESS ENVIRONMENT AND STRATEGIES

The rate of change in e-business presents an enormous challenge to managers.
Business on the Internet is just beginning, and is evolving through a process of trial
and error. Management flexibility is a key for survival and success in e-business.
The environment of any organization consists of all of the factors that are beyond
its control, but influence it in one way or another. Examples of these factors are
shown in the figure, E-Business Environment and Strategies. To counter the
potential adverse affects of these factors, the e-business can respond with
strategies.
An external strategy is an approach to deal with factors in the external business
environment such as competitors, markets, and technological developments, that
are beyond the company's direct control. This is different from a corporate strategy,
which addresses factors under the company's control such as the approach to
marketing, sales, and pricing. Other components of the business model such as the
value proposition and sources of revenue may also include strategies.
The steady development of a product has other advantages. It evens out the
revenue stream rather than having the "boom or bust" cycle of a single product. It
also shows that the company is steadily developing and upgrading products for the
customers who should begin to buy into the company's vision. And customers,
analysts, and investors will develop confidence that the company is going to be
around for the long-term.

59
The price must also provide real value to the customer, that is the customer must be
pleased with the purchase of the product or service. In addition to price, the buyer
may also be interested in how the product can be of assistance to his company. In
this case, comparisons of price and ROI may be used to show that the offering adds
more value than a competitor's. The price can also be a basis for building long-term
customer relations, which can lead to multiple sales. For example, as retail
customers become more comfortable shopping on a site, it should be easier to get
them to migrate to higher margin products.

THE E-BUSINESS ENVIRONMENT AND STRATEGIES

60

External strategies may be driven by components of the business model, such as

finding workers with certain capabilities to staff activities. If the required work
force is not available locally, the business concept may have to change, and
workers brought in, or the work outsourced. Even though strategies may be
implicit in the business model, such as hire workers at the industry wage, it is
important to recognize them explicitly because they may have to change as the
business environment changes.

THE COMPETITIVE ENVIRONMENT AND STRATEGIES

The competitive environment, sometimes known as the industry environment,

results from relationships with other firms. These relationships are with suppliers,
customers, producers of substitute products, potential new entrants, competitors,
"complementary", and strategic partners, which are described by Porter.
When suppliers are limited, they may keep prices high and reduce the profit of a
firm that buys from them. A strategy for the buyer is to find new suppliers, or
producers of substitute products. On the other hand, if there are only a few buyers,
they can keep prices low, but a strategy for the seller is to find more customers to
compete for products in order to raise prices, or to find a more profitable of their
industrial capacity.
61

Therefore the Internet serves to increase the knowledge of prices, find producers of
substitute inputs, and subsequently cause downward pressure on prices.
Potential new entrants to a market may also disrupt prices. Either they enter the
market with low prices to gain market share, or they cause the existing firm to
lower its prices in order to create a entry barrier to the new firm. Competitors may
also cause prices to drop through price wars, but can also contribute to stability in
the marketplace. Finally, complementary, firms that make products that need the
firm's product to add value (e.g. software developers for particular PC operating
systems), as well as strategic partners can create demand for the firm's products. In
each case the Internet may be used to the advantage or disadvantage of the ebusiness. The point is that an e-business must have an Internet strategy to be
successful.

MAINTAIN AND IMPROVE COMPETENCIES

One obvious strategy is to develop the capabilities, and to build and maintain
competencies in order to keep an advantage over other firms. To do this, one must
understand market conditions and the firm's strengths and weaknesses.
Other strategies to maintain competencies include:
Block: The "block" strategy makes it difficult for other companies to copy
business processes and intellectual property. Blocks can be achieved by
limiting knowledge transfer about critical features or by reducing or
indicating a reduction in prices.
62

 Run: The "run" strategy means the business innovates faster than potential
competitors. To pull it off the company needs competencies in critical areas.

Strategic Alliance: The e-business works with other firms that are not
usually direct competitors. For small e-businesses, alliances may be essential
since every facet of growth can be facilitated through association with a
well-known and capable partner. Strategic alliances can solve immediate
problems of developing capabilities in distribution, shipping, and billing,
and will allow the company to be "up and running" very quickly. However,
the small company should be concerned about losing its autonomy and
intellectual property to its larger partner.

THE TECHNOLOGY ENVIRONMENT AND STRATEGIES

Technology plays an important role in e-business and must be
tracked closely. It can shift very quickly and greatly disrupt an
unprepared company.

DISRUPTIVE TECHNOLOGIES
When a new technology creates a different approach to performing a task that is
less costly, more efficient, or otherwise relatively advantageous and displaces
existing technology, it is known as a DISRUPTIVE TECHNOLOGY. These

technical disruptions can cause businesses to fail, particularly in those

organizations unprepared to change their business model.
63
Examples of disruptive technologies are:
Alternative Energy Generation at low cost.
Artificial Intelligence including Autonomous Systems.
Emergent Computing: Biocomputing, DNA Computing, Optical Computing,
Molecular or Chemical Computing, and Quantum Computing.
Global e-Commerce with the Electronic Product Code (EPC) and RFID.
Grid

Computing,

including

Bioinformatics

Grids

and

Economic

Development Grids.
Human-Machine Interaction: Intelligent Collaboration, Intelligent Design,
and Intelligent Training Systems.
Nanotechnology.
Open Courseware.
Open Design & Problem Solving.
Parallel Computing.
Knowledge Representation and the Semantic Web.
Superconductivity.

 Voice, Sight and Haptic (i.e. touch) Response Systems.

Wireless Internet.

64

TECHNOLOGY STRATEGIES
Every e-business concept based on a technology break-through runs the risk of
being replaced by a company with a newer technology. Therefore, a strategy to
maintain technological leadership, or to have access to the leading applicable
technologies, is essential for the long-term survival of a technology-based ebusiness.

A technical innovation strategy can be as simple as outsourcing the technical side

of an e-business rather than trying to maintain the competency in-house. If it is
large enough, a firm can develop new technologies. But for most firms, an R&D
program is too expensive. One option is to partner with an organization known for
developing new technologies, so that they become available as they are developed.
Co-developing and licensing technologies are also options. The use of a strategic
alliance can serve as a technology strategy, as well as a competitive strategy.

To avoid falling victim to a new technology, a firm must try to keep abreast of
technological developments that may affect its industry. Any company that is
technology-dependent must have someone in-house who is knowledgeable about
the latest technical developments. But more importantly, the company must be
willing to take action when it appears that a major advance in technology poses a
threat.
65

THE GENERAL ENVIRONMENT AND STRATEGIES

The general environment contains those factors that face most businesses: laws and
regulations, the economic climate, and worker availability.

LAWS AND REGULATIONS

New laws and regulations may have unexpected effects on e-business, especially in
the areas of privacy, patents and other intellectual property. E-Business leaders
should understand regulations and the rational for local taxes, including how tax
revenues are spent. Unfair tax breaks should not be expected by an e-business;
neither should businesses expect to compete unfairly with other businesses.

ECONOMIC CLIMATE
Sound financial strategies will help maintain cash flow and solvency during an
economic downturn. Many small businesses simply run out of money before
products begin to generate revenues. E-business should use the conservative
accounting practices preferred by most investors.

WORKER AVAILABILITY

The availability of qualified employees is one of the biggest problems for an ebusiness attempting to grow from a startup into a small or medium sized enterprise.
Although technical workers became available in the economic downturn after the
Dot-Com crash, the availability of foreign workers decreased significantly after the
terrorist attack of September 11, 2001. Larger technical companies, who had
augmented their work force through hires of foreign workers prior to "9/11" now
feel that must outsource large numbers of jobs abroad in order to find the talent
needed to stay competitive. Whether outsourcing will be proven as a successful
strategy over time remains to be seen.
66
Certainly it will work in some situations, but it is unlikely to work in all situations.
Strategies for the local work force include obtaining and keeping qualified
employees with programs such as training, child care, and employee services.
Training programs are also necessary for all employees to develop skills in new
technologies.

E-BUSINESS: AN EMBATTLED BUSINESS CULTURE

67
its simplest form, e-business involves incorporating the Internet or its technologies
to support a basic business process. For example, your order entry system,
connected directly to the inventory database, is typically accessed from the field by
sales reps calling their product availability inquiries in to an order entry
administrator.
The sales reps call in through a static GUI program or by e-mail to an order entry
clerk, who processes each inquiry by order of receipt.

The process works but may bog down during peak periods of the day or when the
staff is short-handed. Besides, the main function of the order entry staff is to
process actual orders.
Providing product availability information to the field is a related responsibility
that is often super ceded by higher priorities.
Processing last minute requests in preparation for a meeting is too often out of the
question.
To complicate matters, you also have independent dealers and affiliates requiring
product availability status reports as well as inquiries on an ongoing basis.
After deciding that the product availability inquiry activity is suitable for an ebusiness application, the next step is identifying the information asset(s) the
process generates.
68
The mapping of information assets with the processes that support them is a critical
requirement in e-business application development.

PRODUCT INQUIRY FULFILLMENT PROCESS

Instead of field personnel interacting with a character-based, static GUI or other

generic front end to generate the inquiry request, they would access a front end that
is capable of running in their browser, a personal digital assistant (PDA), or
wireless hand device. The front endWeb servermust be able to perform the
function provided by the order entry staff.
69
That is, it must be able to access the inventory database, gather the information
required by the inquiry, format the response, and feed it back via the Internet to the
appropriate place (field) in the users browser, which is running the application on
a laptop, home office computer, PDA, and so on. The application also does some
housekeeping chores by clearing the inquiries from the front end and the remote
database calls from the back end, or inventory database.

CROSSING THE DIGITAL CHASM WITH MIDDLEWARE

70
Most likely, the front-end Web application, or what the users see and interact with
in the browser, is developed with Internet-enabled technologies, such as Java or
HTML application tools. The back end could be, for instance, a legacy UNIX
database that has been a mission-critical application for some time.
To accomplish the interconnectivity between the front-end browser application and
the back-end UNIX database, yet another application system, typically referred to
as middleware, must be used to provide the interconnections, or compatibility,

between the dissimilar front- and back-end applications. Examples of middleware

are systems developed with J2EE (Java 2 Platform Enterprise Edition).
Developed by Sun Microsystems, J2EE is more popular in Web application
development than CORBA (common object request broker architecture),
introduced by the Object Management Group in 1991, or DCOM (distributed
component object model), which is Microsofts bet for an object standard.
However, the other standards are growing in use for Web application development.
With middleware in place, the e-business application provides the same
functionality of the previous system. However, the virtual process replaces the
traditional product inquiry and physical clearinghouse process and provides greater
operating advantages and overall benefits to the enterprise.

71

E-BUSINESS: THE SHAPING AND DYNAMICS OF A NEW

ECONOMY
E-business is a revolution: a business existence based on new models and digital
processes, fueled by hyper growth and new ideals.
It is also pursuit of new revenue streams, cost efficiencies, and strategic and
competitive advantages spawned by virtual business channels. Cutting-edge
Internet technologies and new vistas of emerging technologies enable e-business.

E-business is a forging of a new economy of just-in-time business models,

whereby physical processes are being supplanted by virtual operating dynamics.
Yes, e-business is all this.

THE E-BUSINESS SUPPLY CHAIN

Typically, e-business is described and discussed with more emotion than other
business areas, and rightfully so. After all, we are witnesses to an exciting
revolution.
To gain true insight and a conceptual understanding of e-business, it needs to be
defined from both the B2C and the B2B perspectives.
This section also introduces Internet, or digital, supply chains and reveals their
underlying significance to both the B2C and B2B e-business channels.
72

THE B2C SUPPLY CHAIN STREAMLINES PROCESSES OF

THE PHYSICAL WORLD

THE BUSINESS-TO-CONSUMER PHENOMENON

When consumers purchase goods and certain classes of services directly from the
Internet, online retailers are servicing them. In other words, online retailers, or etailers, have initiated a consumer-oriented supply, or value, chain for the benefit of
Internet consumers. This form of Internet-based activity is known as business-toconsumer (B2C).
73
Supply chain is used interchangeably with value chain. However, supply chain, in
the traditional sense, refers to the supply and distribution of raw materials, capital
goods, and so on, that are purchased by a given enterprise to use in manufacturing
or developing the products and services for customers or in regular business
operations.

In B2C distribution modes, supply, or value, chain refers to the system, or

infrastructure, that delivers goods or services directly to consumers through
Internet-based channels.
B2C e-business is a rich, complex supply chain that bears no direct analogy to the
physical world. In fact, no supply chain in the physical world compares to B2C
value chains such that an apples-to-apples comparison can be made. Thus, B2C echannels are unique because they are providing supply chains that streamline and
enhance processes of the physical world.
Internet-driven supply chains depend heavily on the coordination of information
flows, automated financial flows, and integrated information processes rather than
on the physical processes that traditionally move goods and services from producer
to consumer.

74

THREE CLASSES OF B2C VALUE CHAINS MAKE POSSIBLE

THE FOLLOWING E-BUSINESS REALITIES:
1)

Delivery of the universe, or an unlimited numberpotentially

millionsof goods and services within established markets, by
operating under a single brand identity or as a
intermediary.

superefficient

2). Creation of new market channels by leveraging the Internet.

3). Elimination of middlemen while streamlining traditional business
processes

E-BUSINESS: THE SHAPING AND DYNAMICS OF A NEW

ECONOMY
Amazon.com and CD Now are excellent examples of the B2C class indicated in
class 1. Amazon has succeeded by producing an efficient consumer product
delivery system.
The value in this e-business channel is the uniting of many backstreet dealers under
the banner of one popular brand name. CD Now is also attempting to implement a
similar strategy. Furthermore, no one bookstore or music store in the physical
world offers 10 million titles like Amazon.com does or 325,000 CDs like CD Now
does.
75
Traditional book or CD retailers in established markets could never offer this vast
array of merchandise, because of shelf space and inventory constraints. For
example, the typical super bookstore or music
CD store stocks only 150,000 or 60,000 titles, respectively.
An example of B2C class 2 is eBay, which created a new market channel in
establishing an online auction facility. Through this e-business channel, buyers and

sellerseveryday consumerscan interact to sell personal items in a venue that

did not exist previously.
Dell.com is an example of the third B2C e-business class. Dell.com is successful
because it incorporates the principle of disintermediation, or the ability to
eliminate intermediaries from the value chain. In other words, disintermediation
involves disengaging middlemen, who usually command a share of the value
chain. Research has shown that intermediaries add a large percentage to the final
price of products.
Percentages range from 8 percent for travel agents to more than 70 percent for a
typical apparel retailer. Dell is a business case example of effective deployment of
disintermediation because its direct consumer model delivers custom-built
computer systems at reasonable prices by leveraging Internet channels.
In the future, other online supply chains will successfully remove middlemen,
resulting in even lower prices for other classes of goods and services.
76
In summary, the Internet supply chains created to support B2C e-business
initiatives have no direct analogy in the traditional, or physical, world of
commerce.
True, the two channels have similarities. The goods and services offered in
physical bricks-and-mortar retailers become sexy multimedia presentations and
transaction data. E-tailers and consumers connect via Web portals instead of
driving to malls or to various business concerns. Inventory becomes online

transaction data that flows from the consumers shopping cart of the online store
Web siteto fulfillment houses or directly to the producers themselves.

B2C Value Chains Create The Following Three Types Of E-Business

Realities:

1. In established markets, creation of digital supply chains that eliminate

middlemen and enable

the availability

of a unique service, such as Dells direct delivery of custom-built PCs.

2. Creation of a new market channel that did not exist in the physical universe,
such as eBays creation of the online auction facility for the convenience of
everyday consumers.
3. Uniting of back-end, used or rare-product dealers under the banner of a popular
name brand. In effect, this creates a consortium of businesses under a single
branded identity, or under a new, superefficient intermediary, that did not exist in
the physical world.

77

THE BUSINESS-TO-BUSINESS PHENOMENON

B2B commerce growing from $150 billion in 1999 to $7.4 trillion by 2004!
Presently, the median transaction for B2B sites is three to four times the size of the
median transaction for B2C sites, or $800 versus $244.
Important drivers of this projected growth include, but are not limited to,
competitive advantage, reduction

of costs, increased profits, and customer

satisfaction.
78
If you are able to build an effective B2B channel, the payoff could be significant,
resulting in improved economies of scale and productivity, reduction in overhead,
improved information flows and processing, and increased operating efficiencies,
to name a few.

REDUCE

COSTS

OF

GOODS

AND

SERVICES

AND

POTENTIALLY LOWER CUSTOMER PRICES.

By connecting information systems directly with suppliers and distributors,
organizations can realize more efficient processes, resulting in reduced unit costs
of products or services and, perhaps, lower prices to customers while effectively
achieving economies of scale.
REDUCE OVERHEAD. B2B channels can eliminate extraneous or redundant

business functions

and related infrastructures, resulting in the reduction of

overhead costs.
INCREASE PRODUCTIVITY.

By eliminating operational waste and the

automation of inefficient business practices, organizations can realize productivity

gains.
ENHANCE PRODUCT AND SERVICE OFFERINGS . With economies of

scale, reduction of overhead, operating efficiencies, and lower operating costs,

such gains may be passed on to the customer through lower prices or as enhanced
or additional features of products or services.
79
CUSTOMER SATISFACTION. A strategic benefit of the successful

implementation of dynamic B2B

business models is improved customer

perception of the transaction.

This metamorphosis will not occur unless companies undergo radical changes.
Enterprises will begin with critical self-examination and comprehensive process

analysis to determine what internal operating functions, underlying infrastructures,

and critical practices are necessary to transform into a B2B channel that is capable
of leveraging the Internet.
This in turn will lead to the reengineering of processes, elimination of operational
inefficiencies, and, ultimately, increased productivity. If companies are successful,
they will reinvigorate their value chains, incorporate technology-driven processes
that become the foundation for B2B, and increase transactions with customers.

END-TO-END SOLUTION
company cannot merely incorporate e-business technologies into an existing
system (that is, write something in Java). Rather, it must become an e-business
through-and-through.
To reap full value, e-business methodologies should be universal throughout the
organization, from interaction with suppliers to transactions with customers.

80
More importantly, an e-business focused organization integrates these e-functions
with core business applications to maximize efficiencies at all operational levels.
Business intelligence is also key to the e-business model since, without the benefit
of buying pattern analyses, companies tend to simply open a Web catalog and
compete on price often with disastrous results. Without a value add, an ebusiness is dead on arrival.

With this understanding, iSeries provides an ideal end-to-end solution platform.

From customer relationship management (CRM) to supply chain management
(SCM), it applies analytical business intelligence to better target e-business
efficiencies. Emphasizing both B2C and B2B practices e-business on iSeries is
so much more than simply an electronic shopping cart application.

81

E-BUSINESS FRAMEWORK

By anyones measure, embarking on a mission to establish a cohesive e-business

project is challenging. Couple that with the need to interoperate with tried-and-true

back-office systems, and you can end up with a task so large that a beginning point
is hard to locate. To meet this need, IBM developed the e-business Application
Framework.
The Internet makes it possible to extend these mission-critical applications even
further.
iSeries allows customers to easily integrate e-business solutions with line-ofbusiness and front-office applications that are being re-engineered as Web-based
applications. iSeries is unique in that it offers integrated (not add-on) e-business
capabilities that optimize this server for end-to-end e-business solutions and
emerging workloads.
82

TOOLS OF E-BUSINESS
TOOLS AND MIDDLEWARE
A wide range of tools are available to allow an iSeries or AS/400e system to play a
key role in the development and deployment of e-business applications. Within the
e-business/e-commerce modernization strategy, a number of specific categories of
tools can be brought to bear:
Application Servers are development and execution environments, many of which
come complete with developer tool sets for creating applications that may

interoperate with other like or unlike systems. These are typically based on Java
and open standards-based models.
Application Service Provider (ASP) Solutions include tools that allow
Application Service Providers to create and/or deploy applications via the Internet
to multiple customers from the ASP's site(s).

B2B Connectors & Enablers are tools specifically targeted to B2B applications
and the Internet deployment of the supply chain. Many of these tools focus on
connecting buyers and sellers via e-marketplaces, as well as other many-to-one and
one-to-many scenarios, thus consolidating the catalog and buying process.
83
Browser Front End to Existing Application Solutions are created with tools
that can be used to connect core business application code to a browser-based
presentation of that code via Java or HTML with little or no actual coding required
on the part of the programmer.
New

Browser-based Applications can be built from scratch using tools that

create the GUI client presentation code and the back-end processing code.
Browser Utilities can be used to create and maintain components of a WebBased application and can also be used to build applets to access data. Other
miscellaneous tools are included here as well.
CRM Solutions are tools that are designed to assist customer service

functions. These tools include business rules that can be implemented to

enhance the support for customers.
EAI (Enterprise Application Integration) tools facilitate the connection of ERP
solutions to other back end applications, including the extraction of data from
ERP, reformatting and transport of the data across heterogeneous servers and
loading of the data into the databases used by the receiving application such
as Business Intelligence.
e-Commerce Solutions are largely already finished applications that can be
customized with minor effort to perform a specific purpose generally a
"shopping cart" type of application, although some solutions may be dedicated
to CRM or other mission-critical application areas.
84
Electronic Data Interchange/eXtensible Markup Language (EDI/XML)
refers to tools that allow for the movement, via the Internet, of data between
vendors and systems with the supply chain.
Payment Servers are tools that validate charge card purchases by contacting the
holding card company to confirm the availability of credit for the purchaser. These
tools also provide trusted security and confidentiality routines, as is demanded
more and more by consumers when providing personal and private information.
Portals & Personalization tools allow the creation of web portals and creation of
personalized user interfaces. Users are given the capability to save their
configurations for future web site visits.

Web Access to DB2 UDB for AS/400 is delivered via tools and utilities that
provide access from the browser to DB2 UDB for AS/400 tables. These tools may
simply provide database connection drivers via JDBC, or they may be higher level
tools with their own GUI for building queries against DB2 UDB for AS/400.
Web Report Viewers are tools that allow the end user to view iSeries or AS/400
print spool files via a browser. These tools hold promise for workers whose jobs
involve many hours of browsing through archived AS/400 print output. These tools
can also extract AS/400 print and distribute the print files in PDF or other Web
formats to Internet users via e-mail tools.
85
Wireless Access Solutions can be achieved by using tools for writing/extending
applications to handheld devices. As an interesting side point, the personal
information management (PIM) industry (which includes Palm Pilots and Hand
Spring Visors that link to e-mail via wireless modems) is expecting recordbreaking sales in the last quarter of 2000.
Wireless access is becoming as mainstream as the cellular phone, both of which
will accelerate demand for wireless access solutions. These tools allow the
programmer to deploy a 5250 application to a tier0 device with no change to the
underlying RPG application in most cases.

BUSINESS MODELS:

A method of doing business by which a company can generate revenue to sustain

itself
Spells out where the company is positioned in the value chain
Business models are a component of a business plan or a business case

86

THE CONTENT OF A BUSINESS PLAN

Mission statement and company description.
The management team.
The market and the customers.
The industry and competition.
The specifics of the products and/or services
Marketing and sales plan.

 Operations plan.
Financial projections and plans.
Risk analysis.
Technology analysis.

87

STOREFRONT MODEL:
Storefront model enables merchants to sell products on the Web.
Transaction processing, security, online payment, information storage.
E-commerce allows companies to conduct business 24-by-7, all day every day,
worldwide.
An e-commerce storefront should include:
Online catalog of products
Order processing

 Secure payment
Timely order fulfillment

SHOPPING CART TECHNOLOGY

SHOPPING CART
An order-processing technology allowing customers to accumulate lists of items
they wish to buy as they continue to shop.
Product catalog
88
Merchant server
Database technology
Combine a number of purchasing methods to give customers a wide array of
options

ONLINE SHOPPING MALLS

Wide selection of products and services.
Offers greater convenience than shopping at multiple online shops.
Consumers can make multiple purchases in one Transaction.

AUCTION MODEL
ONLINE AUCTION SITES
Act as forums through which Internet users can log-on and assume the role of

either bidder or seller.

Collect a commission on every successful auction.
Sellers post items they wish to sell and wait for buyers to bid.
RESERVE PRICE:
The minimum price a seller will accept in a given Auction.

89
REVERSE AUCTIONS
Allow the buyer to set a price as sellers compete to match or even beat it.

PORTAL MODEL

PORTAL SITES
Give visitors the chance to find almost everything they are looking for in one
place
HORIZONTAL PORTALS
Portals that aggregate information on a broad range of topics.
Yahoo!, AltaVista, Google.
VERTICAL PORTALS
Portals that offer more specific information within a single area of interest.
WebMD.
90

HORIZONTAL PORTALS

DYNAMIC PRICING MODELS

 The Web has changed the way products are priced and purchased.

COMPARISON PRICING MODEL

Web sites using shopping both technology to find the lowest price for a given
Item.
DEMAND-SENSITIVE PRICING MODEL
Group buying reduces price as volume of sales increase.
91
NAME-YOUR-PRICE MODEL
Name-your-price for products and services.
BARTERING MODEL
Individuals and business trade unneeded items for items they desire.
REBATE MODEL
Sites offer rebates on product at leading online retailers in return for commission
or advertising revenues.
FREE OFFERING MODEL
Free products and services generate high traffic.

E-BUSINESS ADVERTISING
Traditional
Television, movies, newspapers and magazines
Establish and continually strengthen branding
Brand is a symbol or name that distinguishes a company and its products or
services from its competitors and should be unique, recognizable and easy to
remember.
92
Publicize URL on direct mailings and business cards
Online advertising
Place links on other sites, register with search engines

BANNER ADVERTISING
BANNER ADS
Located on Web pages, act like small billboards, usually contain graphics and an
advertising message.
Increased brand recognition, exposure and possible revenue.
SIDE PANEL ADS OR SKYSCRAPER BANNERS

 Advertisements that lie vertically on Web sites

Place logo on banners, enhancing brand Recognition

93
BANNER ADVERTISING

Inventive color schemes and movement.

 Flashing, scrolling text, pop-up boxes and color changes.

Pop-up box is a window containing an advertisement that appears separate from
the screen the user is viewing, pops up randomly or as a result of user actions
(can have a negative effect due to their intrusive nature)
Determine the best position on sites for a banner
94
Web sites cluttered with ads annoy visitors
Space can be more expensive during high traffic
Exchanging banners with another site

BUYING AND SELLING BANNER ADVERTISING

Buy advertising space on sites that receive a large number of hits and target a

similar market.
Selling ad space provides additional income.
Monthly charges for online advertising rarely used.
CPM (COST PER THOUSAND)
A designated fee for every one thousand people who view the site on which your
advertisement is located.
ADVERTISING PAYMENT OPTIONS
Pay-per-click: you pay the host according to the number of click-through to your

site
Pay-per-lead: you pay the host for every lead generated from the advertisement.
Pay-per-sale: you pay the host for every sale resulting from a click-through.
Selling advertising space.
Provide appropriate contact information on your Web site.
Register with organizations that will sell your space for you.
These companies typically charge a percentage of the revenue you receive from
the Advertisements placed on your site.
95

ORGANIZATIONAL STRATEGIES FOR E-BUSINESS

To be successful in e-business, an organization must master the art of electronic
relationships.Traditional means of customer acquisition such as advertising,
promotions, and public relations are just as important with a Web site. Primary
business areas taking advantage of e-business include:

MARKETING SALES
FINANCIAL SERVICES
PROCUREMENT
CUSTOMER SERVICE
INTERMEDIARIES

MARKETING/SALES

Direct selling was the earliest type of e-business and has proven to be a
steppingstone to more complex commerce operations. Successes such as eBay,
Barnes and Noble, Dell Inc., and Travelocity have sparked the growth of this
segment, proving customer acceptance of e-business direct selling. Marketing and
sales departments are initiating some of the most exciting e-business innovations.
Cincinnatis WCPO-TV was a ratings blip in 2002 and is now the number three
ABC affiliate in the nation. WCPO-TV credits its success largely to digital
billboards that promote different programming depending on the time of day. The
billboards are updated directly from a Web site.
96

The station quickly noticed that when current events for the early-evening news
were plugged during the afternoon, ratings spiked.The digital billboards let several
companies share one space and can change messages directly from the companys
computer. In the morning, a department store can advertise a sale, and in the
afternoon, a restaurant can advertise its specials.
Eventually customers will be able to buy billboard sign time in hour or minute
increments.Current costs to share a digital billboard are $40,000 a month,
compared with $10,000 for one standard billboard.

FINANCIAL SERVICES
Financial services Web sites are enjoying rapid growth as they help consumers,
businesses, and financial institutions distribute information with greater
convenience and richness than is available in other channels. Consumers in e-

business markets pay for products and services using a credit card or one of the
methods outlined.
Online business payments differ from online consumer payments because
businesses tend to make large purchases (from thousands to millions of dollars)
and typically do not pay with a credit card. Businesses make online payments
using electronic data interchange (EDI) Transactions between businesses are
complex and typically require a level of system integration between the businesses.
Many organizations are now turning to providers of electronic trading networks for
enhanced Internet-based network and messaging services. Electronic trading
networks are service providers that manage network services.
97
They support business to- business integration information exchanges, improved
security, guaranteed service levels, and command center support.
As electronic trading networks expand their reach and the number of Internet
businesses continues to grow, so will the need for managed trading services. Using
these services allows.Organization to reduce time to market and the overall
development, deployment, and maintenance costs associated with their integration
infrastructures.

PROCUREMENT
Web-based procurement of maintenance, repair, and operations (MRO) supplies is
expected to reach more than $200 billion worldwide by the year 2009.
Maintenance, repair, and operations (MRO) materials (also called indirect
materials ) are materials necessary for running an organization but do not relate to
the companys primary business activities. Typical MRO goods include office

supplies (such as pens and paper), equipment, furniture, computers, and

replacement parts.
In the traditional approach to MRO purchasing, a purchasing manager would
receive a paper-based request for materials. The purchasing manager would need to
search a variety of paper catalogs to find the right product at the right price.
Not surprisingly, the administrative cost for purchasing indirect supplies often
exceeded the unit value of the product itself. According to the Organization for
Economic Cooperation and Development (OECD), companies with more than
$500 million in revenue spend an estimated $75 to $150 to process a single
purchase order for MRO supplies.
98

E-PROCUREMENT
E-procurement is the B2B purchase and sale of supplies and services over the
Internet. The goal of many e-procurement applications is to link organizations
directly to preapproved suppliers catalogs and to process the entire purchasing
transaction online. Linking to electronic catalogs significantly reduces the need to
check the timeliness and accuracy of supplier information.
An electronic catalog presents customers with information about goods and
services offered for sale, bid, or auction on the Internet. Some electronic catalogs
manage large numbers of individual items, and search capabilities help buyers
navigate quickly to the items they want to purchase. Other electronic catalogs
emphasize merchandise presentation and special offers, much as a retail store is
laid out to encourage impulse or add-on buying. As with other aspects of ebusiness, it is important to match electronic catalog design and functionality to a
companys business goals.

CUSTOMER SERVICE

E-business

enables

customers

to

help

themselves

by

combining

the

communications capability of a traditional customer response system with the

content richness only the Web can provideall available and operating 24x7. As a
result, conducting business via the Web offers customers the convenience they
want while freeing key support staff to tackle more complex problems. The Web
also allows an organization to provide better customer service through e-mail,
special messages, and private password-Web access to special areas for top
customers.
Customer service is the business process where the most human contact occurs
between a buyer and a seller. Not surprisingly, e-business strategists are finding
that customer service via the Web is one of the most challenging and potentially
lucrative areas of e-business.
99
The primary issue facing customer service departments using e-business is
consumer protection.

CONSUMER PROTECTION
An organization that wants to dominate by using superior customer service as a
competitive advantage must not only consider how to service its customers, but
also how to protect its customers. Organizations must recognize that many
consumers are unfamiliar with their digital choices, and some e-businesses are well
aware of these vulnerabilities.
For example, 17-year-old Miami high school senior Francis Cornworth offered his
Young Mans Virginity for sale on eBay. The offer attracted a $10 million phony
bid. Diana Duyser of Hollywood, Florida, sold half of a grilled cheese sandwich

that resembles the Virgin Mary to the owners of an online casino for $28,000 on
eBay.Highlights the different protection areas for consumers. Regardless of
whether the customers are other businesses or end consumers, one of their greatest
concerns is the security level of their financial transactions.
This includes all aspects of electronic information, but focuses mainly on the
information associated with payments (e.g., a credit card number) and the
payments themselves,that is, the electronic money. An organization must
consider such issues as encryption, secure socket layers (SSL), and secure
electronic transactions (SET)

100

NEW TRENDS IN E-BUSINESS: E-GOVERNMENT

AND M-COMMERCE

Recent business models that have arisen to enable organizations to take advantage
of the Internet and create value are within e-government. E-government involves
the use of strategies and technologies to transform government(s) by improving the
delivery of services and enhancing the quality of interaction between the citizen
consumer within all branches of government. customer-focused links connect users
to millions of Web pages, from the federal government, to local and tribal
governments, to foreign nations around the world.

M-COMMERCE:

In a few years, Internet-enabled mobile devices will outnumber PCs. Mobile

commerce , or m-commerce , is the ability to purchase goods and services through
a wireless Internet-enabled device. The emerging technology behind m-commerce
is a mobile device equipped with a Web-ready micro-browser. To take advantage of
the m-commerce market potential, handset manufacturers Nokia, Ericsson,
Motorola, and Qualcomm are working with telecommunication carriers AT&T
Wireless and Sprint to develop smartphones. Using new forms of technology, smart
phones offer fax, e-mail, and phone capabilities all in one, paving the way for mcommerce to be accepted by an increasingly mobile workforce. Figure 3.33 gives a
visual overview of m-commerce.
101
Amazon.com has collaborated with Nokia to pioneer a new territory. With the
launch of its Amazon.com Anywhere service, it has become one of the first major
online retailers to recognize and do something about the potential of Internet
enabled wireless devices. As content delivery over wireless devices becomes faster,
more secure, and scalable, m-commerce will surpass landline e-business
(traditional telephony) as the method of choice for digital commerce transactions.
According to the research firm Strategy Analytics, the global m-commerce market
was expected to be worth more than $200 billion by 2005, with some 350 million
customers generating almost 14 billion transactions annually.
Additionally, information activities like e-mail, news, and stock quotes will
progress to personalized transactions, one-click travel reservations, online
auctions, and videoconferencing.

M-COMMERCE TECHNOLOGY OVERVIEW

102

1900s. Technology is a primary force driving these changes. Organizations that

want to survive must recognize the immense power of technology, carry out
required organizational changes in the face of it, and learn to operate in an entirely
different way.

OFFICIAL SITES OF E-BUSINESS

1. Flipkart
Website: (www.flipkart.com)

Flipkart is an Indian e-commerce company headquartered in Bangalore, Karnataka.

It was founded by Sachin Bansal and Binny Bansal in 2007. In its initial years,
Flipkart concentrated on online sales of books, but it later on expanded to
electronic goods and a diversity of other products. Flipkart offers multiple payment
methods like credit card, debit card, net banking, e-gift voucher, and the major of
all Cash on Delivery. The cash-on-delivery model adopted by Flipkart has proven
to be of great significance since credit card and net banking penetration is very low
in India.

103
2.

Snapdeal:

Website: (www.snapdeal.com)

Snapdeal is a leading online marketplace, headquartered in New Delhi, India.

Snapdeal features products across categories like mobiles, electronics, fashion
accessories, apparel, footwear, kids, home and kitchen, sports, books; and services
like restaurants, spas & entertainment amongst others. The company was started by
Kunal Bahl, a Wharton graduate and Rohit Bansal, alumnus of IIT Delhi, in
February 2010. Snapdeal also provides discounted deals connecting with local
merchants.

3.Fashionandyou:
Website: (www.fashionandyou.com)

Fashion and You is a private invitation only shopping club, based in Gurgaon,
India. It was founded by Harish Bahl in November, 2009. The fashion site features
collections by top designers for men, women and children for up to 80% off retail
prices.
104
Fashion and You obtain authentic designer merchandise straight from the brand
and provides it exclusively to its members through limited-time events.

4. Myntra:
Website: (www.myntra.com)

Myntra was established by Mukesh Bansal, Ashutosh Lawania, and Vineet Saxena
in February 2007. All three are IIT graduates, and have worked for several startups. Myntra is headquartered in Bangalore and has been funded by Venture Capital
funds like IndoUS, IDG & Accel Partners. Myntra.com works as an online
shopping retailer of fashion and casual lifestyle products. The company started off

in the business of personalization of products, and soon expanded to set up

regional offices in New Delhi, Mumbai and Chennai.

5. Homeshop18:Website: (www.homeshop18.com)

105
HomeShop18 is the online and on-air retail and distribution venture of Network 18
Group, headquartered in NOIDA, India. HomeShop18 was launched on 9 April,
2008 as India's first 24-hour Home Shopping TV channel, where anchors
performed live demonstration of products on sale. The television channel
established HomeShop18's foothold in Indian retail because of high television
penetration. Later, as the internet reach grew all over the country, HomeShop18
expanded to the internet.

8. Yebhi.com:
Website: (www.yebhi.com)

Yebhi.com is an Indian Online shopping E-commerce portal for Home, Lifestyle &
Fashion e-retailer, launched in the year 2009. Yebhi, which began as
BigShoeBazaar.com, has a registered user base of about 1.5 million people, of who
about half a million have transacted on the site. Nexus Venture Partners and N. R.
Narayana Murthys Catamaran Ventures invested 40 crore in Agarwals company
in mid-2011. On July' 10th 2012, Big Shoe Bazaar India Pvt Ltd. owner of Brand
Yebhi.com announced that it has raised 100 Cr in Series C round of funding led
by Fidelity Growth Partners India and Qualcomm.

106

9) Caratlane:
Website: (www.caratlane.com)

Caratlane is India's first online jewellery store with an assorted range of diamond
jewellery designs to offer every customer. They offer more than 1,40,000 loose
diamonds, and over 1000 ready to choose diamond jewellery online like diamond
rings, pendants, earrings, bracelets, bangles and gold coins for all budgets. The
quality & authenticity of diamond jewellery is validated with BIS Hallmarking and
Certification from International labs like GIA, IGI, HRD and AGS. The website
offers discount up to 25 percent of prices. This advantage is achieved with no
inventory cost, minimal overhead cost, no intermediaries and in-house
manufacturing facility.

Buying jewellery online in India is more challenging with the lack of touch and
feel factor. To counter this, Cartlane.com also offers try at home facility before
buying a jewellery online, to ensure complete satisfaction of look and size. The
clients also receive personalized service from the qualified jewellery consultants
every time they buy jewellery online. With easy payment options including
convenient 6 or 12-month EMIs, customers can enjoy free, insured delivery
anywhere in India.

107

Research Limitation
One of the limitations in research includes lack of adequate information on a
particular subject.
Research equipments are very hard or expensive to acquire leading to formulation
mere assumptions. Another hindrance is poor or inaccessibility to the region of
study.
Some of the limitations of doing a research include access of information,
availability of enough resources and time management. The availability of experts
in editing and guidance may also be minimal where support from friends or
organisation may not be enough.

108

DATA ANALYSIS AND INTERPRETATION AND FINDINGS

1) What is the price control between flipkart and amazon?

109

2) What is the annual profit between Amazon and Flipkart?

110

3) What is the Brand count in Flipkart and Amazon?

111
4) What is the pageviews per visit of the customer in online shopping websites?

112

5) How many negative response in the following online shopping websites?

113

6) What is the E-commerce companies seeing growing mobile app access?

114

7) What were the highest number of shopping queries in E-comerce industry in

India before four years?

115

8) How many ways customer is accessing Flipcart and Amazon websites?

116

9) What number of books for which a store is cheapest for top 5000 books
without shipping charges?

117
10) What is the Stock Keeping Units in Flipkart and Amazon?

117

CONCLUSIONS: The e-commerce has been in the peak in India during past 2 years, the fast
growing technological changes has opened an option of online selling and
purchase for a common man in India.
While comparison between both Flipkart and Amazon, it is observed that
Flipkart maintains more number of stock keeping units (SKU) as compared
to amazon considering the four popular electronic products
On the other hand the product sub categories offered by Flipkart is 422 with
86 main categories on the website as compared to 186 sub categories and 16
main categories of Amazon.
It has been seen that there is a tie between both amazon India and Flipkart
when compared the work satisfaction level of employees.
Both Flipkart and Amazon have established a strong base in India and a
strong competition can be seen between them in coming years

 community consensus on essential details to improve quality of products and

services based on real requirements of end-users.

successful implementation among early adopters which then results in a

faster and broader adoption process.

greater flexibility for innovation and increased revenues.

118

RECOMMENDATIONS

119

Webliography

http://en.wikipedia.org/wiki/myntra on 6/4/16
http://en.wikipedia.org/wiki/flipkart on 6/4/16
http://www.google.com on 6/4/16
http://www.yebhi.com on 6/4/16

http://en.wikipedia.org/wiki/homeshop18 Retrieved on 6/4/16

http://www.myntragroup.co.in/about-us.html Retrieved on 6/4/16

http://www.flipkart.com/ Retrieved on 6/4/16

http://www.cartlane.com on 6/4/16

http://www.snapdeal.com on 6/4/16

120

THANK YOU