Ecommerce Chap 12B

8/13/2019 Ecommerce Chap 12B

http://slidepdf.com/reader/full/ecommerce-chap-12b 1/66



Introduction to Information TechnologyTurban, Rainer and Potter

Chapter 12 Electronic Commerce

2

Learning ObjectivesDescribe electronic commerce, its dimensions,

benefits, limitations, and processDescribe the major applications of electroniccommerce, both business-to-customer and business-to-businessDiscuss the importance and activities of marketresearch and customer service

Describe the electronic commerce infrastructure andsupport servicesCompare the various payment systems and describethe role of smart cardsDiscuss legal and other implementation issues





3

Case : Intel Corporation Embracing the Web The Business Problem

Intense competition in the ICs market

The Solution

E-customer serviceE-sellingE-purchasing

E-business programs using extranet and EDI

Orders from thousands of customers,

distributors and business partners worldwide werereceived by fax and phone; errors, delays, high cost





4

The Results

Case (continued…)

Enhances competitive advantage by givingcustomers better tools for managing transactionsThe system brings substantial saving to Intel

What have we learned from this case??

Demonstrates that electronic commerce involvesnot just selling electronically, but also providingcustomer service and improving organization’s

internal business processes

Illustrates a new and effective way forconducting business





6

Definitions (continued…)

Electronic Business (E-business)a broad definition of EC, not just buying and selling, butalso servicing customers, collaborating with business

partners, and conducting electronic transactions within anorganizationall about time cycle, speed, globalization, enhanced

productivity, reaching new customers, and sharingknowledge across institutions for competitive advantagea very diverse and interdisciplinary topic, with issuesranging form technology, addressed by computer experts,to consumer behavior, addressed by behavioral scientistsand marketing research experts





7

History and ScopeHistory

Began in the early 1970sinnovations such as electronic transfer of funds (EFT)were limited to large corporations and a few daring small

businessesElectronic Data Interchange (EDI)added other kinds of transaction processing and extended the typesof participating companies

Over the last five yearsinnovative applications, from advertisement to auctions and

procurementScope

home banking, shopping in electronic stores and malls, buying stocks, finding a job, conducting an auction,

collaborating electronically with business partners aroundthe globe, and providing customer service





8

A Framework for ECElectronic Commerce Applications

• Direct Marketing • Stocks, Jobs • On -line banking• Procurement and purchasing • Malls • Procurement • Auctions • Travel • On -line publishing • Customer Services • Intrabusiness Transactions

People : Buyers, Sellers,Intermediaries,

Services, IS Peopleand Management

Public Policy :Taxes, Legal,

Privacy Issues,Regulations, and

TechnicalStandards

Marketing and Advertisement:

Market Research,Promotions, and

Web content

Supply Chain:Logistics and

Business Partners

Infrastructure

(1)Common business

services infrastructure(security, smart

cards/authenticationelectronic payments,directories/catalogs

(2)Messaging and

information distributioninfrastructure

(EDI, e-mail, Hyper TextTransfer Protocol, Chat

Rooms)

(3)Multimedia content

and networkpublishing infrastructure

(HTML, JAVA, WorldWide Web, VRML)

(4)Network infrastructure

(Telecom, cable TVwireless, Internet)(VAN, WAN, LAN,Intranet, Extranet)

Access (cell phones)

(5)Interfacing

infrastructure(The databases,

logistics,customers, and

applications)

Management





9

Benefits of EC to OrganizationsExpands a company’s marketplace to national and international markets Allows a vendor to reach a large number of customers, anywhere aroundthe globe, at a very low costEnable companies to procure material and services from other companies,rapidly and at less cost

Shortens or even eliminates marketing distribution channels; marketingproducts cheaper and vendors’ profits are higher Decrease the cost of creating, processing, distributing ,storing, andretrieving paper-based informationAllows lower inventories by facilitating “pull” -type supply chainmanagement, which starts from customer orders and uses just-in-timeproduction and delivery processingReduces the time between the outlay of capital and the receipt of productsand servicesLowers telecommunications costs because the Internet is much chapterthan value-added networks (VANs)

Helps small businesses compete against large companiesEnables ver s ecialized markets e. . www.do to s.com

http://www.dogtoys.com/

http://www.dogtoys.com/





10

Benefits of EC to ConsumersFrequently provides less expensive products and services by allowingconsumers to shop in many places and conduct online quickcomparisonsGives consumers more choices - they can select from many vendorsand many more products than they could locate otherwiseEnables customers to shop or make other transactions 24 hours aday, year round, from almost any locationDelivers relevant and detailed information in seconds, rather than indays or weeks

Enables consumers to get customized products, from PCs to cars, atcompetitive or bargain pricesMakes possible virtual auctions, in which consumers can find uniqueproducts and collectors’ items that might otherwise require them totravel long distances to a particular auction place at a specific time

Allows consumers to interact with other consumers in electroniccommunities and to exchan e ideas as well as com are ex eriences





11

Benefits of EC to SocietyEnables more individuals to work at home and to doless traveling, resulting in less traffic on the roads andlower air pollution

Allows some merchandise to be sold at lower prices, soless affluent people can buy more and increase theirstandard of livingEnables people in less developed countries and rural

areas to enjoy products and services that otherwise arenot available to themFacilitates delivery of public services, such asgovernment entitlements, reducing the cost ofdistribution and fraud, and increasing the quality of thesocial services, police work, health care and education





12

Technical Limitations of ECLack of universally accepted standards forquality, security, and reliabilityInsufficient telecommunications bandwidthStill-evolving software development toolsDifficulties in integrating the Internet and ECsoftware with some existing (especially legacy)

applications and databasesThere is a need for special Web servers inaddition to the network servers (added cost)Internet accessibility is still expensive and/orinconvenient for man eo le





13

Non-Technical Limitations of EC Many legal issues are yet unresolvedLack of national and international regulations and standardsfor many circumstances

Difficulty in measuring benefits of EC, such as Webadvertising. Lack of mature methodologies for justifying ECDistrust of the new: Many sellers and buyers are waiting forEC to stabilize before they take partCustomer resistance to the change from a physical to virtualstoresPerception that electronic commerce is expensive andunsecured, so many do not want even to try itInsufficient number (critical mass) of sellers and buyerswhich needed for profitable EC operations





14

Electronic Retailing and Malls Electronic Commerce enables consumers to buyfrom home 24 hours a day, 7 days a weekElectronic Commerce offers consumers a wide

variety of products and services, including the mostunique items, usually at lower pricesConsumers can easily search for what they reallywant to buy, not just what is shown on television orin paper catalogsConsumers can get very detailed information on

products, in seconds, and can easily search for andcompare competitors’ products and prices Consumers can reduce (or eliminate) the pile of

paper catalogs





15

Electronic Retailing Direct sale (business to consumers) throughelectronic storefronts or malls, usuallydesigned around an electronic catalog formatSolo storefronts

maintain their own Internet name and Web sitemay or may not be affiliated with electronic malls

may be extensions of a physical store, or it is anew businesses started by entrepreneurs who sawa niche on the Webcan be found easily on the Internet - directoriesand hyperlinks from other Web sites andintelligent agents





16

Electronic Malls (Cybermall)A collection of individual shops under oneInternet addressVendors that locate in brick-and-mortarshopping malls, or locate themselves in a virtualmall, give up a certain amount of independenceSuccess depends on the popularity of the entire

collection of stores as well as on its own effortsMalls generate streams of prospective customerswho otherwise might never have stopped at thestore

d f h l



The Process of Electronic Shopping



17

A user gains access to an online service or theinternet and goes to a merchant’s Web site. Hemay know the address, find it in another Website (refer to it by a search engine), or find it by

browsing.

At any time, the user can review the items inthe shopping cart and change quantities or deleteitems, This review continues until a final

selection is made.

The user enters the merchant’s storefront andgoes to the product displays.

If the user does not find anything of interest,or want to do more shopping he or she may

browse some additional merchant storefronts tosearch for the desired products or services.

When the user does find something ofinterest, he or she may elect to purchase itonline. To finalize the decision, the user mayneed more information that can be found on theWeb pages or obtained by e-mail.

The item is typically stored in a shoppingcart. This allows the user to continue lookingthrough this store, or even to visit other

merchants, before paying for the items.

When the user is ready to pay he is advisedabout the payment options the user makes asection and provides payment information (e.g.,the credit care number)

The payment authorization is either approvedor denied. If denied, the user is prompted foranother form of payment .If approved, thetransaction is executed.

Shipment is made, if needed, or permission todownload products from the Internet is granted.Warranty is established.

Customer service is established. Product may be returned or exchanged, for examplemaintenance information may be found on theWeb site as needed.

I d i I f i T h l





18

Advertisementan attempt to disseminate information in order toattract buyers

Internet Advertisementcan be updated any time at a minimal cost andtherefore can always be timelycan reach very large numbers of potential buyers, all

over the worldcan be cheapercan efficiently use the convergence of text, audio,graphics, and animation

can be interactive and targeted to specific interestgroups and/or individuals

Advertising Online

I d i I f i T h l





19

Banners - Electronic Billboardsthe most commonly used form of advertising onthe Internet, links to advertiser's sitecontains a short text or graphical message to

promote a product or a vendorKeyword banners

appear when a predetermined word is queried from thesearch engine

effective for companies who want to narrow their targetto consumers interested in particular topicsRandom banners

appear randomlymight be used to introduce new products to the widest

possible audience, or to keep a well-known brand in the public memory

Advertising Methods

I d i I f i T h l





20

E-mail - emerging as an Internet advertising and marketingchannel that permits cost-effective implementation and a betterand quicker response rate than other advertising channels

marketers develop or purchase a list of e-mail addressesmarketers employing e-mail must take a long-term view andwork towards the goal of motivating consumers to continueto open and read messages they receivemarketers must decide what portion of their target market

can be reached by e-mail and must supplement existingdatabase information with data relevant to e-mail campaignsmarketers should integrate inbound customer service e-mailwith their outbound marketing efforts

marketers must develop e-mail-specific editing skill and theability to deliver multimedia-rich e-mail

Advertising Methods (continued …)

I t d ti t I f ti T h l





21

Customizing Ads - Filtering the IrrelevantInformation

BroadVision : One-to-One system/adsallows the rapid creation of secure Web sites that are visitor-friendly, using a customer database, with registration dataand information gleaned from site visits

Webcast : push technologydelivers only the information users want or needusers get the information they want; at the same time theyalso get the banner ads related to that informationmarketers will get a more customized audience if they place

banners on a system that delivers via push technology

Advertising Issues

I t d ti t I f ti T h l g





22

Attracting Visitors to a SiteMaking the top list of a search engine

the search engine’s spider crawls through the submitted site,following and indexing all related content and linksa company can get to the top of a search engine’s list byadding, removing, or changing a few sentences

Online events, promotions, and attractions people generally like the idea of something funny orsomething free (or both)contests, quizzes, coupons, and free samples are an integral

part of Internet commerce as much, or even more than, theyare of offline commerce

designed to attract visitors and to keep their attention

Advertising Issues (continued …)

Introduction to Information Technology23





23

Attracting Visitors to a Site (CONT’)


ATTRACTION HOW IT WAS USEDGive away games anddiscount contests. Also,games sponsored bymultiple companies

Yoyodyne Inc. sponsors games and contests to get users to read product information of advertisers, ranging form Major LeagueBaseball to Sprint Communication. In one contest, tax-preparerH&R Block paid $20,000 towards the winner’s federal taxes.

Free Internet access Netzero and other offer this in exchange for viewing adsPersonal, nonautomatedselling

www.egghead.com uses real people to help you online.www.lucent.com connects a sales rep with a customer over the phoneand then “pushes” material and ads to your computer

Monetary payment Cybergold (www.cybergold.com), Goldmine (www.goldmine.com),and others connect users with advertisers who pay them real money toread ads and explore the Web

Sweepstakes Netstakes runs sqeepstakes that requires no skills. Users registeronly once and can randomly win prizes in different categories(see http://webstakes.com). The site is divided into channels, andeach channel has several sponsors. The sponsors pay Netstakes tosend traffic. Netstakes runs online ads, both on the Web and inmany email lists that people request to be on.






24

Profiling Customers Using Intelligent AgentsProduct brokering

some companies collect information about consumers for the purpose of creating a customer’s profile

with this profile, the company can tailor ads to the specificcustomers, or offer them product informationExample - Fujitsu’s agents profile consumers :

is using a new agent-based technology called InteractiveMarketing Interface (iMi) that allows advertisers to interactdirectly with targeted customers personal profiles submitted to iMi by consumers

product announcements, advertisements, and marketingsurveys are sent to customers via e-mail based on their profiles

by answering marketing surveys or acknowledging receipt of

advertisements, consumers earn iMi points, redeemable forgift certificates and phone cards






26

Interactive Advertising and Marketingadvertisers present customized, one-on-oneadvertising, which is followed by sales

interactive : the ability to address an individual, togather and remember that person’s response, and toserve that customer based on his or her previous,unique responses

Coupons Onlineconsumers can gather any discount coupons they want

by accessing sites like www.hotcoupons.com orwww.supermarkets.com , selecting the store wherethey plan to redeem the coupons

Advertising Online


http://www.hotcoupons.com/

http://www.supermarkets.com/

http://www.supermarkets.com/

http://www.hotcoupons.com/





27

Services Online

Cyberbankingnames : electronic banking, virtual banking,home banking, and banking onlinecapabilities ranging form paying bills tosecuring a loan

for customers : saving time and conveniencefor banks : offering an inexpensive alternativeto branch banking and a chance to enlistremote customers






28

Cyberbanking (CONT’)

SFNB puts security firstwww.sfnb.com the first virtual bankoffering secure banking transactions on the Web

Hong Kong Bank grows without brancheswww.hongkongbank.comusing HEXAGON, the bank has leveraged its reputation andinfrastructure in the developing economies of Asia to becomea major international bank rapidly

Mark Twain supports foreign currency tradingwww. marktwain.com

using electronic cash to support trading in 20 foreigncurrencies

Services Online (continued…)


http://www.sfnb.com/

http://www.hongkongbank.com/

http://www.marktwain.com/

http://www.marktwain.com/



http://www.sfnb.com/





29


Online Stock Tradingan online trade typically costs between $5 and $30,compared to an average fee of $100 from a full-service

broker and $25-50 from a discount brokerno waiting on busy telephone linessmall chance of making mistakes which are made inoral communicationorders can be placed from anywhere, any timecan find considerable amount of information regarding

investing in a specific company or in a mutual fund






30

Services Online (continued…) The Online Job Market

Job seekerscan reply to employment ads onlinecan take the initiative and place resumes on their own home

pages or on others’ Web sites, send messages to members ofnewsgroups asking for referrals, and use recruiting firmsJob offerers

advertise openings on their Web siteuse sites ranging form Yahoo!, to online services, bulletin boards,

and recruiting firmsRecruiting firmsuse their own Web pages to post available job descriptions andadvertise their services in electronic malls and in other Web sites

Newsgroups

jobs in a certain category or location are posted, discussions areconducted, and resumes can be sent






31

Services Online (continued…) Travel

Internet is an ideal place to plan, explore, and arrange almostany trippotential savings are available through special sales, auctions,and the elimination of travel agentsallows to purchase airline tickets, reserve hotel rooms, andrent carssupports an itinerary-based interface ,including a fare-tracker

featurelinks to weather sites, currency converters, adventuremagazines, and chat forums, where users can share travel tipsallows to set a price that people are willing to pay for anairline ticket or hotel accommodations, and the company thenattempts to find a vendor for that price ( www.priceline.com )


http://www.priceline.com/

http://www.priceline.com/





32

Services Online (continued…) Real Estate

consumers can view many properties on the screen,saving time for themselves and the brokers

consumers can sort and organize properties accordingto their criteria and preview the exterior and interiordesigns of the properties, shortening the search processconsumers can find detailed information about the

properties and frequently get even more details than brokers usually providehomebuilders now use virtual reality technology ontheir Web sites to demonstrate three-dimensional floor

plans to potential home buyers






33


AuctionsSpecialized auction sites ( www.onsale.com )Auctioning cars to dealers ( www.manheim.com )Art auctions ( www.onlineart.com & www.auctions-on-line.com ); collectors’ items ( www.ebay.com )Airlines ( www.americanair.com &www.cathey.usa.com )

Barteringthe exchange of goods and/or services without amonetary transaction ( www.barterbrokers.com )


http://www.onsale.com/

http://www.manheim.com/

http://www.onlineart.com/

http://www.auctions-on-line.com/


http://www.ebay.com/

http://www.americanair.com/

http://www.cathey.usa.com/

http://www.barterbrokers.com/

http://www.barterbrokers.com/

http://www.cathey.usa.com/

http://www.americanair.com/

http://www.ebay.com/






http://www.onlineart.com/

http://www.manheim.com/

http://www.onsale.com/





34

Business-to-Business ApplicationsProduct - specifications, prices, sales history Customer - sales history and forecasts Supplier - product line and lead times, sales terms and conditions

Product process - capacities, commitments, product plansTransportation - carriers, lead times, costs Inventory - inventory levels, carrying costs, locations Supply chain alliance - key contracts, partners’ roles andresponsibilities, schedules Competitor - benchmarking, competitive product offerings,market share Sales and marketing - point-of-sale (POS), promotions Supply chain process and performance - process descriptions,performance measures, quality, delivery time, customer satisfactio




gyTurban, Rainer and Potter


35

Seller-Oriented MarketspaceOrganizations attempt to sell their products (services) toother organizations electronically (e-selling)The buyer is expected to visit the seller’s site or a mall,

view catalogs, and place ordersThe buyer is an organization that may be a regularcustomer of the sellersKey Mechanisms : electronic catalog that can be

customized for each large buyer, the ordering system, the payment system, and the integration of the incomingorders with the vendor’s logistics system EC is used to increase sales, reduce selling expenditures,increase delivery speed, and reduce administrative costs






36

Buyer-Oriented MarketspaceEC technology is used to reduce both the cost of items

purchased and the administrative cost of procurementRequest For Quotation (RFQ) on Buyer’s Web Site

businesses submit bids electronically, and the bids arerouted via the buyer’s intranet to the engineering andfinance departments for an evaluationclarifications are made via e-mail

the winner is notified electronicallysaves 10-15 percent on the cost of the items placed for bidsaves up to 85 percent on the administrative costsaves about 50 percent on cycle timeknown as e-purchasing or e-procurement






37

Intermediary-Managed Marketspace

Electronic IntermediariesA link between buyers and sellers

Main function : market makingPART - about 300 parts suppliers and dozens ofairlines participate (by Boeing Aircraft Corp.)

ProcureNet - more than 150,000 products, knownas MROs (maintenance, repairs, and operations)Some of the online services make money, some ofthem only improve service for customers






38

Customers and Their BehaviorExamples of the importance of learningabout customers

Peapod providing supermarket products onlinethe company was still incurring losses in 2000problems :

» small customer base» customers like to see and feel items before

they buy them

Amazon selling books published by othersassesses the potential customers’ reaction, andcorrectly predicts books to be a desirable itemsfor online sale






39

Market Research :

Behavioral Model

DecisionMakingProcess

Personal CharacteristicsAge, Gender, Ethnicity, Education,Lifestyle, Psychological, Knowledge,Values, Personality

Environmental CharacteristicsSocial, Family, Communities

Vendors’ Controlled Systems LogisticSupportPayments,Delivery

TechnicalSupportWeb Design,

IntelligentAgents

CustomerServiceFAQs, E-mail,

Call Centers,One-to-One

Buyers’ Decisions Buy or NotWhat to BuyWhere (Vendor)WhenHow Much to Spend

Repeat Purchases

StimuliMarketingPricePromotionProductQuality

OthersEconomicalTechnologyPoliticalCultural




Turban, Rainer and PotterChapter 12 Electronic Commerce

40

Market Research (continued …)

To find out what motivates consumers to buyTo developed models that explain consumer

behavior regarding purchasing decisionsTo identify new marketsTo investigate competitors and their products

To test consumer interest in new productsTo help one-to-one marketing (allows one-to-one

personal contact with customers, and provides marketingorganizations with greater ability to understandconsumers, the market, and the competition)





41


Asking Customers What They Wantinteracting directly with consumersfilling in electronic questionnaires

vendors need to use inducements to motivateconsumers to participate and be honest

learning what consumer want from thedirectly obtained answerstrying to infer from consumers’ preferenceson other preferences





42


Tracking Customer Activities on the Webobserving consumers’ behavior on the internet

site-tracking services, based on cookies or otherapproachesone of the most interesting tools for tracking

customers on the Internet as well as helpingthem to shop with intelligent agents possible invasion of privacy

Introduction to Information Technologyb i d43




43

Electronic Commerce AgentsIntelligent agents

computer programs that conduct routing tasks,search and retrieve information ,support decisionmaking, and act as domain expertssense the environment and act autonomouslywithout human intervention

Software agentswith no intelligence

Learning agents

exhibit some intelligent behavior

Introduction to Information TechnologyT b R i d P44




44

EC Agents (continued …)

Intelligent agents for information search andfiltering

help to determine what to buy to satisfy a specific needPersonalogic uses filtering process - consumers specifyrequirements and constraints, and the system returns alist of products that best meet the desired productFirefly used (until recently) a collaborative filtering

process that can be described as “word of mouth” to build the profile (not available any more)

its Passport generates a customer’s personal profile

Introduction to Information TechnologyT b R i d P45





Intelligent agents for Product and Vendor Findinghelp consumers decide where to buy by comparingmerchants’ offers

Bargainfinder from Andersen Consulting queried the priceof a specific CD from a number of online vendors andreturned the list of vendors and prices (Not in use anylonger)

Jango form NetBot/Excite originates the requests form theuser’s site instead of Jango’s, so vendors can not block it Kasbah from MIT Laboratories allows users who want tosell or buy a product, assign the task to an agent that is sentout to actively seek buyers or sellers

Introduction to Information TechnologyT b R i d P tt46





Negotiation Agentshelp to take away some of the frustration somecustomers experience in the negotiating process and

the technical limitations of being in different locationsAuctionBot allows users create auction agents byspecifying a number of parameters that vary dependingon the type of auction selected

Kasbah allows users create agents for the purpose ofselling or buying processTele-@-tete uses a number of different parameters:

price, warranty, delivery time, service contracts, return policy, loan option, and other value-added services

Introduction to Information TechnologyT b R i d P tt47




Organizational Buyers

Make purchase decisions in business-to- business situationsMore formalized purchasing decisionThe purchasing process may be moreimportant than advertising activities inswaying purchase decisionsDecisions may be made by a group

Introduction to Information TechnologyTurban Rainer and Potter48




Customer Service

Phases in the Customer Service Life CyclePhase 1 : Requirements

assisting the customer to determine needsPhase 2 : Acquisition

helping the customer to acquire a product or service

Phase 3 : Ownershipsupporting the customer on an ongoing basis

Phase 4 : Retirementhelping the client to dispose of a service or product





Customer Service (continued …) Facilitating Customer Service

Personalized Web pages - customers build individualized pages at the vendor’s site

Chat rooms - customers can interact with each other and withvendor’s personnel who monitor the chat room E-mail - send confirmations, product information, andinstructions to customers

FAQs - provide online answers to questions customers ask most Tracking capabilities - enable customers to track the status oftheir orders, services, or applications Web-based call centers - a comprehensive communicationcenter takes customers’ inquiries in any form they come andanswers them quickly




Electronic Payment Systems Electronic credit cards

Payments using unencrypted credit cardthe buyer e-mails her or his credit card number to theseller on the Internetrisk here is that hackers will be able to read the creditcard number

Encrypted paymentsusing public/private key encryption, credit card detailscan be encrypted for better securitythis can be done by simply using the SSL protocol inthe buyer’s computer





Electronic Payment Systems

(continued …)

Electronic checkssecured by public-key cryptography and may besuitable for some micropaymentsStep 1 : the customer establishes a checkingaccount with a bankStep 2 : the customer contacts a seller, buys a

product or a service, and e-mails an encryptedelectronic check signed with a digital signatureStep 3 : the merchant deposits the check in his orher account: money is debited in the buyer’saccount and credited to the seller’s account






(continued …)

Electronic cash in your PCStep 1 : the customer opens an account with a bank andreceives special software for his or her PCStep 2 : the customer buys “electronic money” from the

bank by using the softwareStep 3 : the bank sends an electronic money note to thiscustomer, endorsing it with a digital signatureStep 4 : the money is stored on the buyer’s PC and can bespent in any electronic store that accepts e-cashStep 5 : the software is also used to transfer the e-cashfrom the buyer’s computer to the seller’s computer Step 6 : the seller can deposit the e-cash in a bank,

crediting his or her regular or electronic account, or usethe e-cash to make a urchases elsewhere






(continued …) Electronic payment cash (Smart Cards) with e-cashcredit cards using magnetic strips contain only limitedinformation , such as the card’s ID number

cards to pay photocopies in the library, or to paytelephone calls storing a fixed amount of prepaid moneycard used by New York Metropolitan TransportationAuthority (MTA) in buses, trains, interstate toll bridges,and tunnelscards containing microprocessor storing a considerableamount of information (more than 100 times more than aregular credit card) and allowing money to be stored inquantities that can be decreased as well as increased





SecuritySecurity Requirements

Authentication - the buyer, the seller, and the paying institutionsmust be assured of the identity of the party with whom they aredealing

Integrity - it is necessary to assure that data and informationtransmitted in EC, such as orders, reply to queries, and paymentauthorization, are not accidentally or maliciously altered ordestroyed during transmission

Non-repudiation - merchants need protection against thecustomer’s unjustifiable denial of placing an order; buyer needs

protection against the vendor denial of shipment, or sending wrongorder Privacy - many customers want their identity to be undisclosed

Safety - customers want to be sure that it is safe to provide acredit card number on the Internet





Security (continued …)

Security ProtectionEncryption - a process of making messages indecipherableexcept by those who have an authorized decryption key

Single-key encryption» the sender of the electronic message (or payment)

encrypted the information with a key» the receiver used an identical key to decrypt the

information to a readable form» the same code had to be in the possession of both the

sender and the receiver» problems : if a key were transmitted and intercepted

illegally, it could be used to read all encrypted messagesor to steal money

Introduction to Information TechnologyTurban, Rainer and Potter57




Security (continued …)

Security Protection : Encryption (continued …)

Public/private key encryptionuses two different keys - public key and private keyseveral authorized people may know the public key, butonly its owner knows the private keyevery person has one private key and one public key

encryption and decryption can be done with either keyif encryption is done with the public key, thedecryption can be done only with the private key andvice versa





Security (continued …) Security Protection :Encryption (continued …)

Public/private key encryption

MessageText

MessageText

Sender Receiver

Encryption Decryption

Public Key ofRecipient

Private Key ofRecipient

Signature Signature

Private Key

of Sender

Public Key

of Sender

Ciphered

Text



,Chapter 12 Electronic Commerce

Market Practices

Fraud on the Internetinternet fraud and its sophistication have grown asmuch and even faster than the Internet itselfstocks manipulations, selling bogus investmentsand phantom business opportunitiesexamples:

stock promoters falsely spread positive rumors aboutthe prospects of the companies they toutedthe information provided might have been true, but the

promoters did not disclose that they were paid to promote the companies





Buyer ProtectionTips for safe electronic shopping include:

look for reliable brand names at sites like Wal-Mart Online, DisneyOnline, and Amazon.comsearch any unfamiliar selling site for company’s address and phoneand fax numbercheck out the seller with the local Chamber of Commerce and/or BetterBusiness Bureauinvestigate how secure the seller’s site is by reading the posted privacynotice, and evaluate how well the site is organizedexamine the money-back guarantees, warranties, and serviceagreementscompare prices to those in regular (suspect the too cheap sites)ask friends what they know about the vendorfind out what your rights are in case of a disputeconsult the National Fraud Information Centercheck www.consumerworld.org for a listing of useful resources


http://www.consumerworld.org/

http://www.consumerworld.org/




Seller Protection

Be protected against consumers who refuseto pay or pay with bad checks and buyers’

claims that the merchandise did not arriveBe protected against the use of their name byothers as well as use of their unique words

and phrases, slogans and Web addressHave legal recourse against customer whodownload copyrighted software and/orknowledge and sell it to others





Ethical IssuesPrivacy

most electronic payment systems know who the buyersare; therefore, it may be necessary to protect the buyers’identity

The Human Elementthe technology is new to many IS directors andemployees and so many require new sets of skills

Web Tracking by using sophisticated software it is possible to trackindividual movements on the internet

Disintermediationthe use of EC may result in the elimination of some of acompany’s employees as well as brokers and agents





Legal Issues

Domain Namesseveral companies that have similar or same names(in different countries) compete over a domain namethat is not a registered trademark

Taxes and Other Fees particularly complex for interstate and internationalcommerce (A tax moratorium until October 2001)

Copyrightintellectual property is protected by copyright laws

and cannot be used freely





For AccountingThe implications of replacing paper documents by electronicmay impact many of the accountants’ tasks, especially theauditing of EC activities and systems

For FinanceThe world of banking ,stocks, and commodities markets, andother financial services are being reengineered due to EC

For MarketingThe revolution is affecting many marketing theories, rangingform consumer behavior to advertisement strategies

What’s in it for Me?





What’s in IT for Me? (continued …)

For Production/Operations ManagementEC is changing the manufacturing system forma product-push mass production to an order-

pull mass customizationFor Human Resource Management

Modern HRM has tremendous opportunities to

exploit Internet capabilities to improve the productivity of HRM personnel, recruit andmaintain top employees , and increase jobsatisfaction to very high levels

Ecommerce Chap 12B

Documents

Transcript of Ecommerce Chap 12B