Unit 2: Setting Up and Managing an E-Business

Setting Up and Managing an E-Business

Launching an E-Business

Launching an e-business means starting a business that operates primarily through online platforms. To succeed, businesses must follow a structured process.

Steps in Starting an Online Business

Step 1: Identify the Business Idea

Decide what you want to sell (products, services, digital goods).
Conduct target market analysis.
Use tools like Google Trends & Keyword Planner.

Example: Selling handmade accessories online.

Step 2: Conduct Market Research

Study customer needs
Identify competitors
Analyze market size
Use SWOT analysis

Example: Competitor analysis for Amazon, Flipkart listings.

Step 3: Select the Business Model

Choose from:

B2C (Amazon-style)
B2B (IndiaMART-style)
C2C (OLX-style)
Subscription (Netflix-style)
D2C (Boat, Mamaearth)

Step 4: Complete Legal Setup

Register the business (Sole Proprietorship/Partnership/LLP/Pvt. Ltd)
GST registration
Business bank account
Trademark (optional but recommended)

Step 5: Choose the E-Business Platform

Options include:

Marketplace (Easy, low cost) → Amazon, Flipkart, Meesho
Own Website (Full control) → Shopify, WooCommerce
Social Commerce → Instagram shop, WhatsApp Business

Step 6: Build the Online Store

Includes:

Website setup
Product listings
Payment gateway integration
Shipping partners
Inventory setup

Step 7: Set Up Logistics & Operations

Decide:

Storage/Warehouse
Packaging
Delivery partners (Bluedart, Delhivery, Shiprocket)
Return policy

Step 8: Digital Marketing Setup

Use:

SEO
Google Ads
Social media marketing
Influencer marketing
Email marketing

Step 9: Launch & Monitor Performance

Track metrics:

Traffic
Conversion rates
Customer acquisition cost (CAC)
Cart abandonment rate

Flowchart: Steps in Launching an E-Business


   Idea → Market Research → Business Model → Legal Setup → Platform Selection
       → Website Development → Logistics Setup → Marketing → Launch & Monitor

Tools & Platforms for E-Business

A. E-Commerce Website Builders

Platform	Features
Shopify	Easy, themes, plugins
WooCommerce (WordPress)	Full customization
Wix	Drag-and-drop
Magento	Enterprise-level

B. Online Marketplaces

Platform	Use
Amazon	Large customer base
Flipkart	India-focused
Meesho	Low-cost sellers
Etsy	Handmade products

C. Payment Gateways

Razorpay
Paytm for Business
Stripe
Cashfree

D. Logistics Tools

Delhivery
Shiprocket
Ekart

E. Marketing Tools

Google Analytics
Meta Business Suite
Canva
Mailchimp

Building and Operating an E-Commerce Website

A successful website requires technology, design, content, and operations.

Web Development Technologies

A. Front-End Technologies

(What users see)

Technology	Use
HTML	Structure of webpage
CSS	Styling and layout
JavaScript	Interactivity

B. Back-End Technologies

(Server, database, logic)

Technology	Use
PHP	Website backend scripting
Python (Django/Flask)	Web apps
Node.js	Scalable back-end
Java (Spring)	Large enterprise apps

C. Databases

MySQL
MongoDB
PostgreSQL

D. Cloud Hosting

AWS
Google Cloud
Microsoft Azure

Website Architecture Diagram


     +-------------------------------+
     |        Front End              |
     | (HTML, CSS, JS, React, UI)    |
     +---------------+---------------+
                     |
                     v
     +---------------+---------------+
     |     Back End (Logic)          |
     |  (PHP, Node.js, Python, etc.) |
     +---------------+---------------+
                     |
                     v
     +---------------+---------------+
     |      Database (MySQL, etc.)   |
     +---------------+---------------+

User Interface & User Experience Design (UI/UX)

UI/UX design ensures customers find the website easy, fast, and enjoyable.

A. UI (User Interface) Principles

Simple and clean layout
Consistent fonts and colors
High-quality product images
Clear call-to-action (Buy Now, Add to Cart)
Mobile responsive design

Example: Myntra’s product page with filters, zoom images, size chart.

B. UX (User Experience) Principles

Fast loading pages
Easy navigation
Quick checkout process
Search bar with suggestions
User reviews and ratings
Secure payment process

Example: Amazon’s 1-click checkout improves user experience.

Website Operation & Maintenance

A. Content Management

Update product info
Add blogs for SEO

B. Order Management

Track orders
Manage returns (RTO)
Inventory update

C. Customer Service

Chatbots
Email support
Order status updates

D. Website Security

SSL certificate
Secure payment
Data protection

E-Commerce Website Lifecycle


Planning → Designing → Development → Testing → Launch → Maintenance → Upgrades

Real Business Example

Example: Nykaa (D2C + Marketplace)

Started with WordPress + Magento platform
Strong UI focusing on beauty categories
Uses high-quality images, tutorials, filters
Mobile app built for fast UX
Influencer-led marketing
Warehouse automation

Customer Acquisition & Retention in E-Business

Customer success in e-business depends on getting customers (acquisition) and keeping them loyal (retention).

Customer Acquisition in E-Business

Customer acquisition refers to bringing new customers to your online business through digital strategies.

Digital Marketing Strategies for Customer Acquisition

1. Search Engine Optimization (SEO)

Improves ranking on Google
Increases organic traffic
Uses keywords, backlinks, quality content

Example: Flipkart ranks for keywords like “best smartphone under 15,000”.

2. Search Engine Marketing (SEM)

Paid ads (Google Ads)
Target specific keywords
Immediate visibility

Example: Amazon runs Google product listing ads for electronics, fashion, etc.

3. Social Media Marketing

Instagram, Facebook, Twitter
Boosts engagement and brand awareness
Influencer collaborations

Example: Mamaearth uses Instagram influencers to target young women.

4. Content Marketing

Blogs, YouTube videos, guides
Educates customers and builds trust

Example: Nykaa publishes beauty blogs and tutorials.

5. Email Marketing

Newsletters
Promotional offers
Cart abandonment reminders

Example: Myntra sends discounts for wishlisted items.

6. Affiliate Marketing

External bloggers promote products
Business pays commission on sales

7. Display Advertising

Banner ads on websites
Retargeting for bounced visitors

Example: After viewing shoes on Amazon, ads appear on YouTube/Google.

8. Mobile Marketing

App notifications
SMS promotions
Mobile coupons

Flowchart – Customer Acquisition Process


Identify Target Audience → Select Digital Channels → Create Campaigns 
→ Drive Traffic → Convert Visitors → Measure Performance

Customer Retention in E-Business

Retention means keeping existing customers loyal and increasing repeat purchases.

Key Retention Strategies

1. CRM (Customer Relationship Management)

CRM helps companies track customer:

Preferences
Purchase history
Feedback
Complaints
Communication

Popular CRM Tools:

Salesforce
Zoho CRM
HubSpot CRM

2. Personalization

Using customer data to offer personalized:

Recommendations
Emails
Offers
Homepage layout
Cart suggestions

Example: Netflix recommends shows based on viewing history. Amazon: “Customers who bought this also bought…”

3. Loyalty Programs

Reward points
Membership programs
Exclusive discounts

Example: Amazon Prime (free delivery + video + music).

4. Customer Service Excellence

24/7 support
Chatbots
Easy returns

Example: Zappos gained loyalty by offering great customer support.

5. Retargeting

Showing ads to customers who visited but did not purchase.

6. Customer Feedback & Improvement

Surveys
Reviews
Net Promoter Score (NPS)

Diagram – Customer Retention Cycle


Customer Data → CRM Storage → Personalization → Loyalty Programs 
→ Repeat Purchase → Feedback → Improvement → Retention

Payment Systems in E-Commerce

A payment system allows users to pay online securely.

Types of Online Payment Systems

1. Credit/Debit Card Payments

Visa, MasterCard, RuPay
Most common method
Requires OTP authentication

2. Net Banking

Direct payment through bank portals
Safe and widely used in India

3. UPI (Unified Payments Interface)

India’s fastest-growing payment system
Works through Google Pay, PhonePe, Paytm
Instant 24/7 transfers

Advantages:

Zero cost
High speed
Secure

4. Wallets

Paytm Wallet
Amazon Pay
PhonePe Wallet

Useful for small payments and cashback.

5. Cash on Delivery (COD)

Still popular in India
Builds trust for first-time buyers

6. EMI & Buy Now Pay Later (BNPL)

Amazon Pay Later
Flipkart Pay Later
Simpl, LazyPay

7. Payment Gateways

Payment gateways help process digital payments securely.

Popular Gateways:

Razorpay
PayU
Cashfree
Stripe

Payment Process Flowchart


Customer → Payment Gateway → Bank/UPI Network → Merchant Bank → Order Confirmed

Security in E-Commerce

Security ensures safe transactions and protects customer data.

Major E-Commerce Security Threats

Phishing
Malware
Identity theft
Credit card fraud
Data breaches

Security Measures

1. SSL Certificate

Encrypts data between browser & server
Website starts with https://

2. Encryption Technologies

Protects stored and transmitted data
Uses algorithms like AES, RSA

3. Two-Factor Authentication (2FA)

OTP, fingerprint, face ID

4. Tokenization

Converts card details into encrypted tokens

5. PCI-DSS Compliance

Mandatory security standard for businesses handling card payments.

6. Firewalls & Antivirus Systems

Protect servers from unauthorized access.

7. Secured Payment Gateway

Gateways follow:

Encryption
Risk scoring
Fraud detection
Transaction monitoring

Diagram – E-Commerce Security Framework


        +----------------------------+
        |    E-Commerce Website      |
        +-------------+--------------+
                      |
           ---------------------
           |  Security Layers |
           ---------------------
   SSL → Encryption → 2FA → Tokenization → Firewalls → PCI Compliance

Online Payment Options and Platforms

Online payments enable customers to purchase products/services through digital methods.

Major Online Payment Options

1. Credit and Debit Cards

Visa, MasterCard, RuPay
Widely used for online transactions
OTP-based authentication (3D Secure)

Example: Payments on Amazon, Flipkart, Nykaa.

2. UPI (Unified Payments Interface)

Instant bank-to-bank payment system
Used through GPay, PhonePe, Paytm UPI
24/7 real-time transfers

Advantages:

Fast
Free
Convenient

3. Net Banking

Direct bank portal payment
Secure with OTP + password
Used for EMI, large payments

4. Mobile Wallets

Paytm Wallet
Amazon Pay Wallet
PhonePe Wallet

Used for small and quick payments, cashback offers.

5. COD (Cash on Delivery)

Payment made at the time of delivery
Builds trust for first-time online buyers
High in India (rural + non-tech population)

6. EMI & Buy Now Pay Later (BNPL)

Amazon Pay Later
Flipkart Pay Later
Simpl, LazyPay

Allows customers to buy items on credit.

7. Payment Gateways

Platforms that process online transactions securely.

Examples:

Razorpay
PayU
Cashfree
Stripe
CCAvenue

Payment Processing Flowchart


Customer → Merchant Website → Payment Gateway → Bank/UPI Network 
→ Transaction Verified → Payment Successful → Order Confirmed

Cybersecurity Issues in E-Commerce

Cybersecurity protects digital systems, customer data, and financial transactions.

Major Cybersecurity Threats

1. Phishing

Fake emails/websites used to steal customer information.

2. Malware & Ransomware

Malicious software:

Steals data
Blocks access to systems
Demands ransom

3. Identity Theft

Hackers steal personal details (name, address, card details) to commit fraud.

4. Data Breaches

Unauthorized access to company databases.

Example: 2020: BigBasket data breach leaked user info.

5. Payment Frauds

Fake transactions
Stolen card details
Chargeback fraud

6. DDoS Attacks (Distributed Denial of Service)

Hackers overload website servers, making them crash.

Cybersecurity Solutions

1. SSL Certificates

Encrypts communication between browser & server.
Shows https:// and a lock icon.

2. Encryption (AES, RSA)

Protects data while storing or transferring.

3. Two-Factor Authentication (2FA)

OTP, biometric, or email verification.

4. Firewalls & Antivirus

Blocks unauthorized entry.

5. Tokenization

Converts card details into unreadable tokens.

6. Secure Payment Gateways

Advanced fraud detection:

Risk scoring
IP tracking
Velocity checks

7. Regular Database Backups

Helps restore data after a cyberattack.

8. Cybersecurity Training

Helps employees identify phishing or fraud emails.

Cybersecurity Framework Diagram


User → Authentication → Encryption → Firewall → Secure Server → Monitoring Tools → Backup

Legal and Ethical Concerns in E-Commerce

E-commerce businesses must follow legal regulations and ethical guidelines.

4.1 E-Commerce Regulations (India)

1. Information Technology (IT) Act, 2000

Legal recognition of electronic transactions
Punishment for cybercrimes
Data protection guidelines

2. Consumer Protection Act, 2019 (E-Commerce Rules 2020)

Protects online shoppers
Mandatory product transparency
No misleading ads
Easy return and refund policies

3. RBI Regulations

Guidelines for digital payments
KYC norms for wallets & UPI
Secure authentication (OTP)

4. FDI Rules for E-Commerce

Marketplace model only (Amazon, Flipkart)
No inventory-based model allowed for foreign firms

5. Data Protection Bill (DPDP Bill 2023)

Protects personal data
Requires user consent for data collection
Legal penalties for data misuse

Privacy and Data Protection

Privacy ensures that customer information is collected and used responsibly.

Key Principles:

Transparency (inform users why data is collected)
Consent-driven data usage
Data minimization (collect only what is necessary)
Secure storage
Right to access, modify, or delete data

Example: Websites must display a Privacy Policy and Cookie Consent Notice.

Ethical Marketing in E-Business

Ethical marketing means promoting products in a truthful and socially responsible way.

Unethical Practices:

Misleading ads
Fake reviews
Hidden charges
Selling customer data

Ethical Practices:

Transparent pricing
Honest product descriptions
No manipulation
Respect for customer privacy

Example: Apple emphasizes user privacy → ethical marketing communication.

Consumer Rights in E-Commerce

Based on Consumer Protection Act, customers have:

Right to Information - Clear product details must be provided.
Right to Safety - Products must be safe and tested.
Right to Choice - Multiple alternatives must be offered.
Right to Redressal - Easy refunds, returns, and compensation.
Right to Privacy - Personal data must remain confidential.

Intellectual Property (IP) Rights in E-Commerce

Protects digital content and online assets.

Types of IP Rights

Copyright – protects website content, images, videos
Trademarks – protects brand name, logo
Patents – protects inventions or unique technologies
Trade Secrets – algorithms, formulas (e.g., Google’s ranking algorithm)

Example: Amazon’s "One-Click Checkout" was once a patented technology.

Summary Table

Topic	Key Points
Payment Options	Cards, UPI, Wallets, Net banking, COD, EMI, Gateways
Cybersecurity Issues	Phishing, data breaches, identity theft, malware
Security Solutions	SSL, Encryption, 2FA, Firewalls, Tokenization
Regulations	IT Act 2000, CPA 2019, RBI guidelines, DPDP 2023
Ethical Concerns	Privacy, no fake reviews, honest marketing
Consumer Rights	Information, safety, choice, redressal, privacy
Intellectual Property	Copyright, trademarks, patents