Electronic commerce popularly known as e-commerce or e-com is the current day phenomenon. It is a tool to modernise business, make it global and make it more profitable.

E-commerce means doing commerce i.e. business electronically. It consists of buying and selling of products or services over electronic system such as internet and other computer networks. However today e-commerce is not only doing just business, it has revolutionised the way we used to do our business. The amount of trade conducted electronically has grown extraordinarily with a wide spread internet usage. E-commerce can be defined as, " a shift in business paradigm to seamlessly integrate the various business process through dissemination of real time information." It can also be taken as a tool for re-engineering business process by reducing the time for a cycle, as well as reducing cost, increasing productivity by using a faster, reliable and easy way of doing business.

E-commerce was developed exclusively for the business community in the early 1970's to facilitate processing high volume and high value transactions electronically. Today, it also includes sharing and collaboration with other organization the much valued information, the resource which is invaluable. It generates revenue from these activities which support revenue generation like marketing, providing customer services, facilitating communications etc. All the traditional aspects of any business can be done efficiently by using e-commerce.

E-commerce is the result of digitalisation of everything in business. Right from business transactions, documentation to payments, everything is digitalised. This digitization enables the e-commerce to become world wide acceptable phenomenon. A large percentage of e-commerce is conducted entirely electronically for  virtual items such as access to premium content on a website. But most e-commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail. Almost all big retailers have electronic commerce presence on world wide web. contemporary e-commerce involves everything from ordering digital content for immediate online consumption, to ordering conventional goods and services to facilitate other types of e-commerce.

For different groups, e-commerce have different meaning:

1) A consumer's response to these questions will focus primarily on convenience, access to the global market, savings and bargains.

2) A merchant's or small business's response will focus on competition in industry, global reach and customer relations.

3) The response of a large business will take into consideration a no. of factors, including crating real values through the transformation of core business process, lean and efficient operations, integration of supply chain for cost management and operational efficiency.

E- commerce transactions are essentially quite simple. Any one can execute such transaction with minimal knowledge of the system and its working. The following are the benefits of e-commerce to an organization:

1) It decreases the cost of creating, processing, distribution, storing and relieving information.

2) E-commerce allows reduced inventories and overheads.

3) It reduces the time between the payments and receipts of goods and services.

4) It enables an organization to operate in the areas.

Types of e-commerce and their application:

E-commerce can be broadly classified into the following categories, depending upon the extent, scope and functionality of these applications.

1) Business-to-consumer (B2C):

a) This category of e-commerce makes business comes closer to consumers and vice versa.

b) This is done to offer an attractive electronic market place, where products and sold and purchased.

c) This business is done by providing a well designed websites, which are like normal shops in the market, with the products and services to be sold, displayed with description and price.

d) These applications are not only source of trade, but also act as supporting activities, which may help to generate revenue.

e) Today's rapid growth of B-2-C segment of e-commerce owes its existence to low cost access, easy access to information, increased household penetration of computers and internet, customer redressal system, proliferation of secured payment mechanisms, discounted offerings and personalised as well as instantaneous services.

Example: A virtual storefront is an example of B-2-c e-commerce. Virtual storefront is an e-business where physical goods and services are sold online instead of an actual retail outlet. A customer can select an item from their website and place an electronic order. The payment can be done through credit card and then the company delivers goods using traditional means.

Other examples of this segment includes home banking, entertainment services like video on demand, movies and games, web based training, virtual classroom, market research etc.

2) Business-to-Business(B-2-B):

a) This category of e-commerce involves electronic transactions for trade and business activity between business concerns..

b) These segment is now becoming more and more vital, as they now re-engineer the business processes.

c) Using B-2-B applications, almost every business transactions with clients, business partners and the channels of supply and distribution are made automated.

d) Electronic data interchange(EDI) is an application of B-2-B e-commerce. It involves business organizations which do the data interchange using the electronic media.

e) EDI can be defined as, " the inter-process communication of the business information between computer to computer, in a standardised electronic form."

f) EDI removes the need to communicate with other business partners or organisations through regular postage and couriers. Most of the business-business transactions like placing orders, sending acknowledgement etc are done through EDI, where the computers having special software, interchange the required information electronically and achieve the acknowledgement.

g) the most important benefit of EDI is that it reduces the transaction cost by improving the speed and efficiency of filling orders.

3) Business -to-Government(B-2-G):

It is a business transaction which involves government agencies like Forex Clearances, customs, central excise etc. The B-2-G applications connect governmental agencies to business. One can automate these transactions and save a lot of time. This enhances productivity and therefore B-2-G applications are becoming very popular.

4) Consumer-to Administration(C-2-A):

When a consumer requires certain information from administration agencies, instead of visiting them, spending a lot of time to retrieve information, one can now directly get information through e-commerce sites and also get their grievances handled.

5) Consumer-to-Consumer(C-2-C):

a) This type of application facilitate the consumers to interact with fellow consumers.

b) It enables consumers for resale and repurchase of goods they have or information exchanges.

c) these applications are like auctions where consumer brings in what he has to sell and others purchase it and vice versa.

d) This concept is provided as an add-on service by many portals, facilitating to do the activity. ex: www.bazee.com

Types of transactions done through e-commerce:

1) Credit card transactions:

a) Credit`card transactions over the net is similar to a mail order or telephone order.

b) five entities are associated with the credit card transaction, namely the cardholder, the merchant, card issuing company, the merchant's bank and the acquiring financial institution.

c) As soon as we confirm our intent to purchase a commodity, the browser automatically switches to secure hypertext transfer protocol to ensure information for this session is secured. We now enter the information requested by the merchant's server.

d) Request is conveyed to the merchant acquiring bank and on approval, the account is updated. Merchent receives credit card authorization and we receive confirmation of our order.

2) Secure electronic transaction(SET):

a) Master card and Visa international have developed SET protocol exclusively for enabling secure credit card transactions over the net.

b) SET protocol includes that the merchant has no access to the credit card confirmation and SET also requires authentication of all parties involved in transaction.

c) Implementation of SET requires Wallet software installed on user's computer, commerce server on merchant's website, and a payment server on the web site of the institution issuing credit card.

3) Cybercash:

a) it is an alternative to SET.

b) In cybercash credit card information is secured during authorization process and after completion of transaction process.

c) It also provides protection to the customer for damaged or defective products or non delivery.

d) The merchant and the consumer requires Cybercash software to be installed on their computer.

4) Smart cards:

a) These cards uniquely identify their owners through encoded certificates or digitalised fingerprints

b) Smart cards have a little chip embedded in the card that can store much more information than credit cards.

c) these cards stores private key of the owner and uses to encrypt messages.

d) this makes transaction using smart cards absolutely secured and appropriate for e-commerce.

Future of e-commerce:

The areas of e-commerce which are expected to be revamped extensively in the near future are:

1) Customer interface: This will make the customers' experience as close to real life as possible. It will bridge the gap between the electronic world and the real world.

2) Personalized interactivity: This will allow personalization of customer interface and customization of services to match specific needs. This trend will further accentuate with business outbidding each other in providing personalized and customized services through their website.

3) New products: The future belongs to products which will combine the best of both worlds. Integrated products broken up to possess independent existence will result in much wider choice for the customer and much better value of money.

4) Marketing: For most business, current sales through conventional means are significantly higher then sales through e-commerce. in the near future, the balance is bound to become more even and conventional marketing and marketing on net will have to be integrated to generate synergy.