e-Commerce Reality and myth
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Transcript of e-Commerce Reality and myth
e-Commerce e-Commerce Reality and mythReality and myth
T.N.C.Venkata RanganT.N.C.Venkata RanganCMD, Vishwak Solutions Pvt. Ltd.CMD, Vishwak Solutions Pvt. Ltd.
www.venkatarangan.com/blog www.venkatarangan.com/blog
AgendaAgenda Competitive advantage of going Competitive advantage of going
onlineonline e-Commerce mythse-Commerce myths Security & Payments aspectsSecurity & Payments aspects
Darwinism on the webDarwinism on the webEvery invention of man has gone through phases Every invention of man has gone through phases
of:of: FearFear ExperimentationExperimentation Confidence and TrustConfidence and Trust InnovationInnovation
TrustTrust Trust is the current step as ecommerce Trust is the current step as ecommerce
is booming. is booming. Innovations will decide the future of the Innovations will decide the future of the
web. web.
InnovationInnovation In the old corporate scenario, In the old corporate scenario,
innovations were coming from all innovations were coming from all corners, but only those with good corners, but only those with good financial backup survived. financial backup survived.
In this digital era, good innovations are In this digital era, good innovations are capable of surviving on their own with capable of surviving on their own with little or no corporate back uplittle or no corporate back up
Advantages of going OnlineAdvantages of going Online Lowers Entry CostsLowers Entry Costs Reduces Transaction CostsReduces Transaction Costs Provides Access to Global MarketProvides Access to Global Market Provides for Online DistributionProvides for Online Distribution Secures Market ShareSecures Market Share
Challenges of going OnlineChallenges of going Online Unmatched Scale IssuesUnmatched Scale Issues
A large enterprise application has A large enterprise application has thousands of concurrent usersthousands of concurrent users
A Large commerce site might have 10s of A Large commerce site might have 10s of thousands of global, concurrent usersthousands of global, concurrent users
Rapidly Evolving TechnologiesRapidly Evolving Technologies New Applications of TechnologyNew Applications of Technology
Major Security and Privacy IssuesMajor Security and Privacy Issues
Internet Myths - 1Internet Myths - 1 Users are sold when they see a video on Users are sold when they see a video on
your siteyour site
Reality: Online Travel Shoppers Don't Reality: Online Travel Shoppers Don't Want to See Your VideoWant to See Your Video
No Video please!No Video please!
Internet Myths - 2Internet Myths - 2 Modem is dyingModem is dying
Reality : majority of Internet usage is Reality : majority of Internet usage is through dial-up modemsthrough dial-up modems
Internet Myths - 3Internet Myths - 3 Established e-commerce players are Established e-commerce players are
invincibleinvincible
Reality: Ubid is under tremendous Reality: Ubid is under tremendous pressure to improve their support and pressure to improve their support and fulfillment processes. Egghead has fulfillment processes. Egghead has been sold to Amazonbeen sold to Amazon
E-Commerce Myth – 1E-Commerce Myth – 1 Its cheap, Easy and LucrativeIts cheap, Easy and Lucrative
Reality:Reality: It will become lucrative, but it isn’t nowIt will become lucrative, but it isn’t now Many organizations simply “Webify” their Many organizations simply “Webify” their
bad manual business processbad manual business process Very difficult to integrate front end website Very difficult to integrate front end website
with back end processeswith back end processes
E-Commerce Myth – 2E-Commerce Myth – 2 Everyone’s Doing itEveryone’s Doing it
Reality:Reality: Giga Groups’ Bartel says that 90 percent of Giga Groups’ Bartel says that 90 percent of
large companies websites are just more large companies websites are just more than “Brochure Ware”.than “Brochure Ware”.
Only 5% are using it to automate their Only 5% are using it to automate their supply chains.supply chains.
E-Commerce Myth – 3E-Commerce Myth – 3 Middlemen Are EliminatedMiddlemen Are Eliminated
Reality:Reality: Infomediaries who provide information Infomediaries who provide information
about products and who locate the best about products and who locate the best choice or price replace intermediarieschoice or price replace intermediaries
E-Commerce Myth – 4E-Commerce Myth – 4 All Products Become Commodities and All Products Become Commodities and
the playing field is leveledthe playing field is leveled
Reality:Reality: This is true to a pointThis is true to a point But don’t expect “If you build it, they will But don’t expect “If you build it, they will
come”come” Consumers are still quaeasy enough about Consumers are still quaeasy enough about
giving information over the web giving information over the web
E-Commerce Myth – 5E-Commerce Myth – 5 Brand Building Is Easy on the webBrand Building Is Easy on the web
Reality:Reality: Organisations that have brand strength Organisations that have brand strength
and are well known are unlikely to go awayand are well known are unlikely to go away Products that can be delivered and Products that can be delivered and
described completely digitally can succeed described completely digitally can succeed faster over the Internetfaster over the Internet
Payment AspectsPayment Aspects
Globalization and GrowthGlobalization and Growth Projections from the Boston Consulting Group Projections from the Boston Consulting Group
predicted that U.S. shoppers have spent $61 billion predicted that U.S. shoppers have spent $61 billion on online shopping last year.(June 2003) on online shopping last year.(June 2003)
Banking and financial services are forecast to grow Banking and financial services are forecast to grow from $3.6 billion in 1999 to $12.3 billion in 2004.from $3.6 billion in 1999 to $12.3 billion in 2004.
The computer hardware/software, consumer The computer hardware/software, consumer electronics segment will lead the market with electronics segment will lead the market with revenue projected to grow from $7.5 billion in 1999 to revenue projected to grow from $7.5 billion in 1999 to $59.7 billion in 2004.$59.7 billion in 2004.
EE-commerce grew to $600 billion in 2001, a 68 percent increase -commerce grew to $600 billion in 2001, a 68 percent increase
over 2000. over 2000.
Globalization and Growth Globalization and Growth cont’dcont’d By 2005 75+% of internet users will be By 2005 75+% of internet users will be
outside the U.S. and Canada.outside the U.S. and Canada. Today 43% of internet users are non-Today 43% of internet users are non-
English speakers: Japanese, Spanish, English speakers: Japanese, Spanish, German.German.
By 2005, China should be the 2By 2005, China should be the 2ndnd largest largest internet user.internet user.
Note: Currently only 7% of adults in Note: Currently only 7% of adults in Germany own a credit card.Germany own a credit card.
Indian ExamplesIndian Examples IRCTC.CO.INIRCTC.CO.IN
Sold nearly 7.3 lakh tickets in Sold nearly 7.3 lakh tickets in 2003-04 2003-04
Logged a sales volume of Logged a sales volume of Rs.102 crore Rs.102 crore
Rs.30 Lakhs everyday, nearly Rs.30 Lakhs everyday, nearly 1 Lakh tickets everyday1 Lakh tickets everyday
Indian Buying patternsIndian Buying patterns Baazee.com records following Baazee.com records following
pattern:pattern: Products priced up to Rs 3,000 - Products priced up to Rs 3,000 -
Credit CardsCredit Cards Between Rs 3,000 and Rs 6,000 – Between Rs 3,000 and Rs 6,000 –
DD/Cheque/CCDD/Cheque/CC Above Rs 10,000 – DD/ChequeAbove Rs 10,000 – DD/Cheque Less than Rs 1,000 attract cash-on-Less than Rs 1,000 attract cash-on-
delivery paymentsdelivery payments
Internet Payment methods - 1Internet Payment methods - 1 Three different types of payment Three different types of payment
systems can be established on the systems can be established on the InternetInternet
1.1. Post-Paid Payment solutionsPost-Paid Payment solutions Credit card solutionsCredit card solutions InvoiceInvoice Internet ChequesInternet Cheques Cash on DeliveryCash on Delivery
Internet Payment methods - 2Internet Payment methods - 2
2. Instant-paid payment systems2. Instant-paid payment systems Direct DebitDirect Debit
Uses Bank account numbers and the bank code.Uses Bank account numbers and the bank code. Requires proof either by physical signature or Requires proof either by physical signature or
digital signature (which has to be approved by digital signature (which has to be approved by approved laws)approved laws)
Internet Payment methods - 3Internet Payment methods - 3
3. Pre-paid payment systems3. Pre-paid payment systems Electronic cashElectronic cash Smart cardsSmart cards
Threats on the InternetThreats on the Internet Loss of Data IntegrityLoss of Data Integrity
Information is created, modified or deleted by an Information is created, modified or deleted by an intruderintruder
Loss of Data PrivacyLoss of Data Privacy Information is made available to unauthorized Information is made available to unauthorized
personspersons
Loss of ServiceLoss of Service A service breaks down due to the action of a A service breaks down due to the action of a
hackerhacker
Loss of ControlLoss of Control Services are used by Authorized persons in an Services are used by Authorized persons in an
uncontrolled wayuncontrolled way
SecuritySecurity CryptographyCryptography
Secret key cryptographySecret key cryptography Public key cryptographyPublic key cryptography
Digital signaturesDigital signatures Based on Public Key Based on Public Key
SSL (Secure Socket Layer)SSL (Secure Socket Layer)
PrivacyPrivacy Footprints on the NetFootprints on the Net
IP NumberIP Number Browser informationBrowser information CookiesCookies ProfileProfile
TRUSTeTRUSTe An independent, non-profit organization, to build An independent, non-profit organization, to build
customers’ trust and confidence on the Internetcustomers’ trust and confidence on the Internet Website owners agree for third-party checksWebsite owners agree for third-party checks
AnonymizerAnonymizer
Digital Payment Requirements –1Digital Payment Requirements –1 AcceptabilityAcceptability
In order to be successful, the payment infrastructure needs In order to be successful, the payment infrastructure needs to be widely accepted to be widely accepted
AnonymityAnonymity If desired by customers, their identity should be protectedIf desired by customers, their identity should be protected
ConvertibilityConvertibility The digital money should be able to be converted into other The digital money should be able to be converted into other
types of fundstypes of funds
EfficiencyEfficiency The cost per transaction should be near zeroThe cost per transaction should be near zero
FlexibilityFlexibility Several methods of payment should be supportedSeveral methods of payment should be supported
Digital Payment Requirements-2Digital Payment Requirements-2 IntegrationIntegration
Support with existing applications via interfacesSupport with existing applications via interfaces
ReliabilityReliability Needs to be highly available and should avoid single point Needs to be highly available and should avoid single point
of failureof failure
ScalabilityScalability Allowing lot of news customers and merchants shouldn’t Allowing lot of news customers and merchants shouldn’t
break the systembreak the system
SecuritySecurity Should support financial transactions over open networksShould support financial transactions over open networks
UsabilityUsability Payment should be as easy as in the real worldPayment should be as easy as in the real world
SummarySummary Competitive advantagesCompetitive advantages E-commerce - Reality E-commerce - Reality ThreatsThreats PrivacyPrivacy Payment categoriesPayment categories Payment modelsPayment models