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					E-Commerce




             1
                   E-commerce
•   Describe E-Commerce
•   Identify benefits and risks of E-Commerce
•   Describe E-Commerce business models
•   Describe E-Commerce Security and Encryption
•   Describe EDI (Electronic Data Interchange)
•   Describe trends and projections for E-Commerce
•   Describe issues related to E-Commerce
•   Describe order and payment processing
•   Describe E-Commerce solution options




                                                     2
           What is
      E-Commerce?
   The integration of communications,
    data management, and security
    technologies to allow individuals
    and organizations to exchange
    information related to the sale of
    goods and services.
   Major functions of E-Commerce
    include:
    • the buying of goods,
    • the selling of goods, and
    • performance of financial transactions
      on the Internet.                        3
       E-Commerce
            Issues
   Intellectual Property
   Security
   Fraud
   Taxation
   International Commerce




                             4
       e-Business solutions

ERP, CRM, Database                           Customers


                            Internet / WWW

                                               Mobile Users
                  Web EDI

Intranet


 Internal Users


                                             Suppliers, public
                                                         5
E-Commerce Advantages
        for Businesses
    Reduced Costs
    Increased Customer
     Satisfaction
    More Effective Data
     Management
    Potentially Higher Sales


                                6
E-Commerce Advantages
        for Consumers

    Convenience
    Easier Comparison Shopping
    Wider Selection of Goods




                                  7
      E-Commerce Risks
          for Businesses
   Need for a robust, reliable web
    site
   Fraudulent transactions
   Customer reluctance to
    purchase online
   Increased competition



                                      8
       E-Commerce Risks
           for Consumers
   Possible Security Issues
   Possible Privacy Issues
   Purchasing from photos &
    descriptions
   Possible difficulty with returns




                                       9
The importance




                 10
           E-Commerce
        Business Models
   B2C – Business-to-Consumer
   B2B – Business-to-Business
   C2C – Consumer-to-Consumer
   B2G – Business-to-Government




                                   11
            Electronic Data
         Interchange (EDI)
   EDI is the transfer of data between
    different companies using networks.
   This facilitates the exchange of standard
    business documents including purchase
    orders and invoices.
   EDI is not new; it has been in existence
    since the 1960s.
   Organizations that exchange EDI
    transmissions are called trading partners.
   Newer technologies such as XML and Web
    Services are replacing traditional EDI by
    allowing trading partners virtually
    unlimited opportunities to customize their
    information exchange over the Internet.
                                            12
            Questions

1.   Describe three advantages of e-
     commerce for an entrepreneur just
     starting a business.

2.   Describe three risks that
     businesses face when engaging in
     e-commerce.



                                         13
                    Order &
         Payment Processing
   E-Commerce Payment Models:
    • Cash
    • Check
    • Credit
    • Smart Card
    • Micropayments




                                 14
Credit Card Order
 Processing Flow
                        E-Commerce
                 Storefront Solutions
   Instant Online Storefront
    • Yahoo!, Bigstep, Earthstores, FreeMerchant
   Off-The-Shelf Shopping Cart Software
    • Miva Merchant, Mercantec
   Custom Built Solution
    • IBM's WebSphere Commerce Suite, Microsoft's
      Commerce Server
    • Visual Studio.NET, Macromedia Dreamweaver MX,
      IBM’s WebSphere Commerce Studio
   Semi-Custom Built Solutions on a Budget
          E-Commerce add-ons for FrontPage and Dreamweaver
          Paypal order processing                            16

          Free shopping cart scripts
                    Questions
1.    List three payment models commonly used
      on the Web. Which one is the most
      popular, why?
2.    Have you purchased online? If so, think of
      the last item that you purchased.
     1. Why did you purchase it online instead of at a
        store?
     2. Did you check to see if the transaction was
        secure? Why or why not?
     3. How will your shopping habits be different in
        the future?

3.    Describe three types of e-commerce
      solutions available. Which provides the
                                                   17
      easiest entry to e-commerce? Explain.
    Application Service Provider

   What is ASP?
    • Application Service Provider
    • (not the ASP from microsoft)
    • A company offers individuals or enterprises to
      host their applications or services on this ASP
      company. (low budgets for small companies,
      outsourcing for large companies)




                                                        18
             Hosting Solutions
   Mid-High Volume: Amazon


   Other:
    • Servelink.com, CyberSharks.net,
      Hostek.com, LiquidWeb.com,
      Tikios.com(windows-based)



                                        19
               Terminology
   Dedicated line – A point-to-point, hard
    wire connection between two service
    locations.
   Leased line – A telecommunications line
    dedicated to a particular customer along
    predetermined routers.
   Outsourcing – The transfer of components
    or large segments of an internal IT
    infrastructure, staff, processes or
    applications to an external resource such
    as Application service provider (ASP).
                                            20
         Example e-Business
   Storefront model
   Auction model
   Portal Model
   Dynamic Pricing Models
   B2B Exchanges
   B2B Service Providers
   e-Learning

                              21
                  Storefront Model
   The storefront model combines transaction
    processing, security, online payment
    which allows merchants to sell their
    products to the customers on the Web.
   Many famous storefront model companies
    are Business-to-Consumer (B2C)
    companies.
    • www.amazon.com

    • www.ticketmaster.com
          Sell tickets
                                            22
             Storefront Model
   Allow companies to conduct business 24-
    by-7 (all-day, everyday).
   One of the most commonly used model is
    “shopping cart”
    • An order-processing technology that allows
      user to accumulate the shopping list and
      continue shopping.
    • Supported by product catalog, merchant
      server and database technology.
    • www.gap.com
    • www.icare.com.hk (international)

                                                   23
              Shopping Example


                                 Shopping cart


Go shopping




                                         24
                   Shopping Carts
   Templates for shopping carts in dreamweaver at
    ecommercetemplates.com (you host solution)
          Many other providers (http://www.fortune3.com)




   Managed Solutions
   Make your own                                           25
          Shopping Cart SW
   Sometimes will also include Product
    pages –that are created from
    statically entered in product
    information (not stored in databases)




                                        26
    Comparisons of Shopping Cart SW
   Search online to see what is popular
   Check out wiki page
    (http://en.wikipedia.org/wiki/Comparison_of_shopping_cart_software)




                                                                          27
        Free Shopping Cart SW
   Do a search
   Check out www.free-carts.com

   PHP: http://www.opencart.com/
    • This does cart + product pages
    • Install on a Web Server
    • As part of install of SW must specify a MySQL database
      and give the admin name and a password to it.
    • Finish install of OpenCart SW – will include creation the
      database tables to support OpenCart
    • Using Interface of opencart: Setup categories of
      products, product info with images, etc.


    Java: http://www.jadasite.com/
                                                                  28

        Shopping Cart Payment
         Processing Services
   Google Checkout
   PayPall
   Amazonpayments
   Others: (search yourself)- 2checkout.com,
    authorize.net, itransact, cyberbit, and more
   Direct Credit Card




                                                   29
           Storefront Model
   Another model is “online shopping
    mall” which provides a wide selection
    of products and services.
   Customers can purchase items from
    many stores in a single transaction.
    • Offer speed and add convenience
    • www.mall.com
    • www.shopnow.com
    • www.e-buy.com.hk
                                        30
Shopping Mall Example



                        Different
                        shops




                               31
                 Auction Model
   Internet User can login to the online
    auction sites, either bidder or seller.
   Sellers post their items and wait for the
    buyers to bid.
   Auction sites get commission on every
    successful auction.
    • E.g. most profitable: www.ebay.com
    • International: auction.timway.com
    • http://auctions.yahoo.com/
   Reverse Auction model
    • Allow buyer to set the price, www.epurchasingagent.com
                                                          32
           http://ebay.com/
Auction Model Example




                              33
                    Portal Model
   Allow visitors to find everything
    within the website.
    • Horizontal Portal
         Wide-ranged of topics
         E.g. www.yahoo.com




    • Vertical Portal
         Offer specific information on a single area of
          interest.
         E.g. www.webmd.com (medical information)         34
      Dynamic Pricing Model

   Name-your-price Business Model
    • Customers choose their price for the
      products or services (www.priceline.com).
   Comparison Pricing Model
    • Customers poll some merchants and find
      the lowest prices (www.bottomdollar.com)
   Demand-Sensitive Pricing Model
    • Enables customers to get better services
      and prices. (www.mobshop.com)
   Bartering Model
    • Exchange items (www.ubarter.com)
                                                  35
Pricing model example




                        36
       Group Pricing Model

   Customers get group pricing if
    enough purchase the offer
    (www.groupon.com).




                                     37
                B2B Exchanges
   Define as buying, selling, partnering, bartering or
    trading conducted between two or more business
    (B2B).
   Allow Business to buy, sell, auction, barter and
    distribute products and services.
   Examples:
    •   www.ework.com (Exchange employee)
    •   www.itoi.com (Industry to Industry)
    •   www.biz2biz.com (Business to Business)
    •   www.icgcommerce.com, www.tradeaccess.com




                                                      38
B2B examples




               39
        B2B Service Providers
   B2B service providers make the B2B
    transactions easier.
   These e-Businesses help other businesses
    improve their policies, procedures,
    services and general operations.
   Solutions include supply chain
    management, logistics, procurement.
   www.ariba.com
   www.freemarkets.com
   www.liveperson.com
                                               40
          Chat online?

   Why? To solve your E-business
    problem via the Internet.




                                    41
               Loan Online
   A growing segment of E-commerce.
   Loan online at a lower rate than
    other traditional channels.
   E-loan – www.eloan.com
   E-credit – www.ecredit.com
    • Clients – HP, Intel, other businesses
   Loan direct – www.loansdirect.com

                                              42
       Recruitment on the Web
   Effectively job searching on the Web.
   Improve the recruitment for both
    employer and seeker.
   Search International Jobs
    (www.monster.com)
   Focus on computer industry
    (www.dice.com)
   www.guru.com
   www.jobdb.com

                                            43
         Online News Services
   Web is playing an important role in the
    publishing and news industries.
   The Wall Street Journal (www.wsj.com)
   Articles by leading investment analysts
    (www.barrons.com)
   Latest sports news (www.espn.com)
   Comprehensive news site
    (www.drudgereport.com)


                                              44
Recruitment / News




                     45
        Online Travel Services
   Customers can bypass the travel
    agents.
   Allow discount and low fare rate
    online.
   air-tickets, hostel, and car-rentals.
   “Last minutes” tickets offer low price.
   www.cheaptickets.com,
    www.kayak.com, orbitz.com,
    expedia.com, ….www.travelocity.com
                                          46
         Online Entertainment
   Multimedia rich websites provide
    Audio and Video, popular music and
    videos are available online for free.

   Internet Movie Database
    • www.imdb.com
   www.icast.com, netflix.com,
    blockbuster.com,…
                                            47
             e-Learning
   e-Learning is growing rapidly as the
    number of Internet users increases.
   Universities and other training
    companies offer HQ distance education
    over the Web.
   www.click2learn.com
   www.saba.com
   www.online.uillinois.edu
   wwwtools.cityu.edu.hk
   www.polyu.edu.hk/elearning
   E-books – www.xlibris.com
                                            48
             M-Commerce
   What is Mobile Commerce?
   Mobile commerce is the term applied
    to online financial transactions -
    shopping or the electronic transfer of
    funds - using a mobile device.
   Mobile commerce transactions are
    being enhanced by developments in
    the world of mobile communication.
                                         49
MasterCard & M-Commerce




                      50
      Build an e-Commerce site
   Register a Domain name
    • Search for domain names (InterNIC)
    • What is the criteria of selecting a good name?
   Find a Web Host
    • Select the suitable ISP
   Web Developers
    • Hire a web designer
    • Cut cost and work with the designer
    • If your site is easy to use, the customers will
      stay longer and come more frequent.

                                                        51
              Web Hosting
   It is a very important step in e-
    Commerce.
    • Good uptime?
    • Good technical support?
    • Fast connection to the Net?
    • Staffs are knowledgeable about e-
      Commerce?
    • Compatibility with other e-Commerce
      providers?

                                            52
          Attract and keep customers
   e-Business Advertising
    • Banner Advertising
         Recently, losing their effectiveness
    • Buying and Selling advertising
         You can become a host, or an advertiser
         www.valueclick.com
    • Webcasting and Interactive Advertising
         Use streaming media to broadcast
          information on the web.

                                                    53
    Enterprise Resources Planning
                (ERP)
   An industrial term defines as the activities
    supported by application software that
    helps company to manage the important
    parts of the business.
     • Product planning, parts purchasing,
       maintaining inventories, contacting suppliers,
       customer servicing.
   Integrated with database (such as Oracle)
    to provide other features, business
    process analysis, employee training, …
                                                        54
       ERP example

I have questions about billing,
product availability, shipping    Finance:
and customer service.             How can I help you


                                  Fulfillment:
                                  Yes, Sir?


                                  Inventory:
                                  Which item?


                                  Customer Service:
                                  We’re ready to hel
                                                 55
        Customer Relationship
         Management (CRM)
   All the customer services provided by the
    company form the CRM.
   CRM includes
    • Call handling (in/out calls from customers and
      service representatives)…Nuance
    • Sales tracking (tracing and recording the sales
      made)
    • Transaction support (the technology used for
      transactions)
    • Improve customer satisfaction and maximize
      the profits

                                                    56
     Electronic Data Interchange
                (EDI)
   Standard format to exchange
    business data.
   EDI message is a string of data that
    represents “price”, “product number”,
    “product name”, etc.
   EDI message can be encrypted.
   EDI is one form of E-commerce, also
    include email, fax.

                                        57
                    http://www.disa.or
Electronic Data Interchange
                     g/

           (EDI)




                                    58
                   Get Paid
   How to you pay on the website?
    • Credit card transactions
    • Cybercash: www.cybercash.com
    • PayPal: www.paypal.com
    • Google Checkout
    • E-Wallets allows you to keep track your
      transactions,
      www.visa.com/pd/ewallet/main.html
    • Digital Cash: store your money
      electrically
         www.ecash.com                         59


    • More complex: B2B Transactions.
       Manage the E-commerce
             business
   Have a good communication between the
    business production line (including the
    customer services team), and the IT
    development line.
   “Online transaction history log” and
    “Historical investment performance
    reports” also helps to decide and plan for
    the product and service trend.
   Migration of the traditional trading client
    to the new e-business.

                                                  60
              Secure the site
   Customers fear for their online privacy.
   Make sure all transactions on your e-
    commerce site are protected.
   Security is provided by different kind of
    cryptography (encryption, digital
    signatures, digital certificates)
   Sometimes, you may provide your
    personal information for: member-only
    discounts, giveaway, sweepstakes,
    coupons. Beware!
                                                61
         Online shopping risks
   A list of safeguards to keep in mind.
    • Shop with trusted merchants.
    • Read the site’s delivery, return, and privacy
      policies.
    • Only enter your details with the URL that
      begins with https:// and either a locked
      padlock or an unbroken key icon.
    • Be careful not to hit the ORDER NOW button
      more than once.
    • Never send credit card information via e-mail.
    • Keep a record of your transactions until
      shipped.
                                                       62
    Application Service Provider
   What is an Application Service
    Provider?
    • Deliver and manage applications or
      computer services via the Internet.
    • Provide a cost-effective solution from an
      outside supplier. (maintenance,
      upgrades and customization)
    • It can be a commercial entity, a not-for-
      profit organization or government
      related.
                                              63
               ASP other names
   On-demand software or software
    as a service (SaaS).
   TYPES:
   A specialist or functional ASP delivers a single
    application, such as credit card payment processing or
    timesheet services;
   A vertical market ASP makes software for a particular
    (vertical) market –i.e. medical transcriptions/records;
   An enterprise ASP delivers wide set of solutions;
   A local ASP delivers small business services within a
    limited area.

                                                              64
             Using ASP Benefits
   Speed to market
    • ASP has the latest equipment, applications, ready to
      provide market access.
   Operational freedom
    • The customer can focus on their core business.
   Improved performance
    • ASP provides vast experience on different issues.
   Financial flexibility
    • Reduced fixed cost and overall expenditures.
   Reduced risk
    • Customers can test a new technology with minimal
      impact to their existing system.

                                                             65
ASP Advantages




                 66
What kind of application can be
          delivered?
   Citrix, GraphOn and SCO
    • The applications run on a central server
      managed by the ASP, but not the
      applications on the end-user desktop or
      company’s server.
    • Portal means a gateway (starting point),
      for a WWW site, it is the starting site for
      user to browse.


                                                67
Portal Software
                 Choosing ASP
                Shared   Shared Server with      Server Farm (Each
                Server   Application Isolation    company with its
                               Systems              own server)
Customer Cost    Low             Low                   High

    Initial      Low             Low                   High
  Customer
 Investment
Maintainance     Low          Moderate               Moderate
    cost
    Server      Compl         Moderate                Simple
 Architecture    ex
Security Risk    High            Low                 Moderate

                                                                     69
               Summary
   e-Commerce is defined as a
    company has an online presence.
   We have discussed different types of
    e-Commerce models.
   Discuss the important issues on
    developing e-Business.
   ASP provides very good supports to
    the e-Commerce development.
                                           70
            References
   www.ecommercetimes.com
   www.ecommerce-guide.com




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