e Commerce Class

8/8/2019 e Commerce Class

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e-Commerce


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Meaning

E-Commerce or Electronic Commerce refers tocarrying out commercial transactionselectronically.

It involves buying and selling of products andservices and exchange of information overcommunication networks.

It includes paperless exchange of businessinformation, electronic mail, electronic bulletinboards, electronic fund transfer etc


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e-Commerce Models

Basically there are three models of e-Commerce, namely, Business to

Business, Business to Customer, andInternal procurement


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B2B

It is concerned with carrying outtransactions between two or morebusiness firms.

Majority of e-Commerce transactions areB2B transactions.

Transactions between producer and

distributors, Wholesaler and retailers,manufacturer and component suppliersare examples of B2B model


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B2C

It is concerned carrying transactionsbetween business and customers and vice

versa. The individual customers browse forproducts, identify the products and theirsuppliers, give online orders, receive the

products through courier and makepayment electronically or otherwise.


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C2B

consumer requests a specific service from thebusiness.

Example: Harry is planning a holiday in Darwin.

He requires a flight in the first week of Decemberand is only willing to pay $250. Harry places asubmission with in a web based C2B facility.Dodgy Brothers Airways accesses the facilityand sees Harry's submission. Due to it being aslow period, the airline offers Harry a return farefor $250


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C2C

These sites are usually some form of anauction site. The consumer lists items forsale with a commercial auction site. Other

consumers access the site and place bidson the items. The site then provides aconnection between the seller and buyerto complete the transaction. The siteprovider usually charges a transactioncost. In reality this site should be callC2B2C


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Method of Conducting e-

Commerce The core of any e-Commerce transaction is

Electronic Data Interchange (EDI).

It is the exchange of structured business

information between applications among tradingpartners by agreed message standards throughelectronic means.

It is the transmission of business information andor documents such as purchase orders, invoicesand remittance advices in standard formats


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The Roots of E-Commerce

E-Commerce History EDI

Uses private communications networks

(VANs) to transmit standardized transactiondata

Automating transactions using EDI

Drastically reduced the amount of paperworkand the need for human intervention

Internet

Provided the ideal platform for conducting EDI

transactions


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Transaction Processing

Transaction

An exchange involving goods or services s

Transaction processing system (TPS)

Information system used to support andrecord transactions

Batch processing

Transactions are collected over time andprocessed together in batches

Online transaction processing

Takes place at the point of sale


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The Transaction Processing

Cycle Data collection The process of capturing transaction related

data

Data editing Checking the validity of data entered

Data correction

Implemented if an error is found in theentered data

Data manipulation

Processing transaction data


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Different Transaction

Processing for Different Needs Order processing system

Supports the sales of goods or services to

customers Arranges for shipment of products

Purchasing system

Supports the purchase of goods and rawmaterials from suppliers


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Major E-Commerce Mechanisms

Auction is a competitive process in whicheither a seller solicits bids from buyers or abuyer solicits bids from sellers.

Forward auctions are auctions thatsellers use as a channel to many potentialbuyers.

Reverse auctions one buyer, usually anorganization, wants to buy a product orservice.


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Major E-Commerce Mechanisms(Continued)

Electronic storefront is a Web site on theinternet representing a single store.

Electronic mall (cybermall, e-mall) is a

collection of individual shops under one Internetaddress.

Electronic marketplace (e-marketplace) is acentral, virtual market space on the Web where

many buyers and many sellers can conductelectronic commerce and electronic businessactivities.


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EDI through VAN

Under this method the EDI is executedthrough a third party service provider thatreceives, stores and transmits data, calledValue Added Network.


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EDI based on FTP

Under this method the trading partners willbe allowed access to EDI messagescontained in an FTP server through a loginwith password


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EDI over the Internet

In this case Internet mail is used as ameans for transmitting EDI message. TheEDI messages arrive via the Internet in aparticular mailbox under the domainnames of each individual trading partner.Appropriate filtering softwares process the

EDI messages and issue auto responses.


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Web Commerce

In this case A Web site acts as the electronicmarket place. It is basically a B2C model.

The sellers advertise on the website and the

customers can search and place orders.

The websites in turn are connected tomanufacturers/ warehouses who receive theorders in EDI mode.

The goods are delivered through courier andpayment is received electronically.


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Mobile Commerce

Mobile Commerce (m-commerce)refers to e-commerce that is

conducted in a wireless environment.i.e. using cell phone to shop over theInternet


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Software Systems Required

The basic softwares required for e-Commerce are,

Wallet

merchant system payment gateway

and certificate authority.


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Software Systems Required

The basic softwares required for e-Commerce are:-,

Wallet merchant system

payment gateway

certificate authority


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Wallet

It is basically a client site application. Ithelps the customer to make payments.Wallet provides payment instruments suchas credit cards, digital cash, electroniccheques etc for securely storing andretrieving private payment information.


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Merchant System

It is a collection of software products thatdefines the processes to be followed by amerchant who is interested in doing retailbusiness on the Internet. The softwareoffers services such as displaying theproducts, answering queries related to the

products, dealing customers orders etc


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Payment Gateway

A gateway is a mechanism for providingaccess to another system. A paymentGateway acts as an interface betweentraditional banking network and electroniccash transactions


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Certificate Authority

A Certificate Authority is a third party trustmaintainer. Its purpose is to issue digitalcertificates for usage in e-Commercetransactions. It forms a bridge between theparties to an e-Commerce transaction.The digital certificates are issued with

digital signatures


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6.4 Electronic Payments

Electronic payment systems enable youto pay for goods and serviceselectronically.

Electronic checks (e-checks) are similarto paper checks and are used mostly inB2B.

Electronic credit cards allow customersto charge online payments to their creditcard account.


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Electronic Payments (Continued)

Purchasing cards are the B2B equivalent ofelectronic credit cards and are typically used forunplanned B2B purchases.

Electronic cash Stored-value money cards allow you to store a fixed

amount of prepaid money and then spend it asnecessary.

Smart cards contain a chip called a microprocessor

that can store a considerable amount of informationand are multipurpose can be used as a debit card,credit card or a stored-value money card.


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Electronic Payments (Continued)

Person-to-person payments are a formof e-cash that enables two individuals oran individual and a business to transferfunds without using a credit card.


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E-Commerce Implementation

Implementing e-commerce

Requires large investment and expertise

E-Commerce host Business that takes responsibility for setting

up and maintaining an e-commerce system


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Infrastructure

E-Commerce requires significantinfrastructure changes

B2C e-commerce

Often connects manufacturers directly withconsumers, cutting out the middleman

Requires shipping individual products directly

to consumers


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Hardware and Networking

Underestimating the amount of Web traffic

Leads to network stalls and long wait times

Typical e-commerce Web site Employs one or more server computers and a

high-speed Internet connection

Outsourcing to a Web hosting company

Can operate 24 hours a day, 7 days a week


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Software

Web Server Software

Responds to requests for Web pages

Web Server Utility Programs

Provide statistical information about serverusage and Web site traffic patterns

E-Commerce Software

Supports e-commerce activities Includes catalog management, electronic

shopping cart, and payment software


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Software (continued)

Web Site Design Tools

What see what you-get (WYSIWYG)applications or wizards

Graphics Applications Design and create graphic elements of Web

sites

Web Site Development Tools Application programming interfaces (APIs)

Allow software engineers to develop Web-drivenprograms


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Software (continued)

Web services

Programs that automate tasks bycommunicating with each other over the Web

Systems developers can provide tools forautomating trivial or repetitive tasks

Important in transaction processing


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Building Traffic

The 3Cs Approach

Content, community, and commerce

Keywords and Search Engines

Choose name and product names that bestdescribe business purpose and features

Select descriptive domain names

Business-related keywords can be listed inthe HTML meta tag


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Building Traffic (continued)

Marketing

Online advertising methods include banner

ads, pop-up ads, and e-mail Offline advertising methods include

magazines, newspapers, radio, and television


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Issues Relating to e-Commerce

In spite of the numerous advantages,there are certain issues.These issues areclassified in to four categories on the basisof the parties affected such as:

Consumers

Businesses

Industries, and

Nations or governments


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Issues perceived by consumers

The consumers are concerned about lackof privacy and confidentiality, lack ofsecurity, wrong transactions, andexpensive infrastructure


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Issues perceived by businesses

The major issues that concern businessesare, difficulty in the integration of existingsystems with the new system, nonavailability of human resources andsecurity of networks (Hacking, Computerviruses etc)


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Issues perceived by industries

The two major issues of concern to theindustries are the management of changeand multi cultural implications

I i d b ti


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Issues perceived by nations,governments and international

community

legal issues

insurance issues

multiple currencies

taxation trademark issues

Copyright cyber crimes (mainly related to credit

card misuses)


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Legal Issues Specific to E-commerce

Fraud on the Internet i.e. stocks,investments, business opportunities,auctions.

Domain Names problems withcompetition.

Cybersquatting refers to the practice of

registering domain names solely for thepurpose of selling them later at a higherprice.


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Legal Issues Specific to E-commerce (Continued)

Taxes and other Fees when and where(and in some cases whether) electronicsellers should pay business license taxes,franchise fees, gross-receipts taxes,excise taxes, etc.

Copyright protecting intellectual property

in e-commerce and enforcing copyrightlaws is extremely difficult.


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Benefits and Risks involved

in e-Commerce


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Benefit forBusiness

Inexpensive way of increasing sales

New market opportunities by expanding

customer base More service to customers

Better advertisement

Direct relationship with customers Reduction in operating cost


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Benefit to Customers

Convenience in terms of always openstores

Expanded market pace Lower prices

Browse, compare price and purchase ontheir own terms


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Risks Involved

Payment system risks like, risk of default,malfunctions of the operation, misappropriationof electronically transferred funds

Theft of intellectual property, trade secrets, and

other confidential information Computer frauds and Hacking Transmission of computer virus Infringement of copyrights, trade marks and

patents Computer piracy Misleading advertisements Lack of effective regulatory mechanism


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Security and Privacy

Trust based security Nothing special for protection

Security ThroughObscurity

Hiding of files and data

Password Schemes Restricting Access

Biometric Systems Finger print, Palm print, RetinalPatterns, Signature verification

Firewalls Placing a device a computer,or a router

D t E ti M t ti f i f ti i

e Commerce Class

Documents

Transcript of e Commerce Class