E- CommerceE- CommerceUnit – IUnit – I

By:

Akhil KaushikAsstt. Prof., CSE Deptt, T.I.T&S Bhiwani

Table of ContentsTable of Contents

• Introduction of e-Commerce

• Internet & other Novelties

• Model for e-Commerce Transactions

• Online Commerce Solutions

Introduction of e-Commerce

• E-Commerce stands for “Electronic Commerce”. It initially started during the Berlin Airlift, Germany in 1948 when big corporate started taking order for goods electronically with the help of telephones and other private networks.

IntroductionIntroduction• Definition

• What is E-Business?

• Key Drivers of E-Com

• Impact of E-Commerce

• Benefits of E-Commerce for Organizations

• Benefits of e-commerce to consumers

• Benefits of e-commerce to society

• LIMITATIONS OF E-COMMERCE

DefinitionDefinition• E-Commerce is a very vast field and can be

applied in majority of applications and areas. Hence, there is no agreed upon definition of it. Its definition may vary from context to context.

• It also pertains to “any form of business transaction in which the parties interact electronically rather than by physical exchanges or direct physical contact”.

What is E-Business?

• “E-business is the conduct of business on the Internet, not only buying and selling but also servicing customers and collaborating with business partners”.

• “E-business includes customer service (e-service) and intra-business tasks”.

• “The development of intranet and extranet is part of e-business”.

Primary processesPrimary processesare enhanced inare enhanced in

E-businessE-business

Production processes

Customer-focused

processes,

Internal management

processes

Key Drivers of E-Com• Technological factors

• Political factors

• Social factors

• Economic factorsSome others factors at organizational level:

Organizational culture

Commercial benefits

Skilled and committed workforce

Requirements of customers and suppliers

Impact of E-CommerceMajor areas that e-com has effected:

• Marketing

• Computer sciences

• Finance and accounting

• Economics

• Production and operations management

• Production and operations management (manufacturing)

Benefits of E-Commerce for Organizations• International marketplace• Operational cost savings• Mass customization• Enables reduced inventories and

overheads by facilitating ‘pull’-type supply chain management

• Lower telecommunications cost• Digitization of products and processes

Digitization of products and processes

• 24/7 access

• More choices

• Price comparisons

• Improved delivery processes

• An environment of competition

LIMITATIONS OF E-COMMERCE• Lack of sufficient system security, reliability, standards and

communication protocols.• Rapidly evolving and changing technology• Under pressure to innovate• Facing increased competition• Problems with compatibility of older and ‘newer’ technology• Computing equipment• Cost of access to the Internet• Cost of computing equipment• A lack of trust because they are interacting with faceless

computers

INTERNET & OTHER NOVELTIES• Internet is the world wide network of computers that help

one assist in sharing resources, instant messaging, emails, videoconferencing, social networking, e-commerce applications, etc. Everyone knows about the internet and I don’t think there is any need to explain the internet.

The Intranet

The Extranet

The Intranet

• An intranet is a computer network that uses Internet Protocol technology to securely share any part of an organization's information or network operating system within that organization.

• An intranet can be understood as a private analog of the Internet, or as a private extension of the Internet confined to an organization.

Benefits of Intranet

• Workforce productivity• Time• Communication• Web publishing• Business operations and management• Cost-effective• Enhance collaboration• Cross-platform capability• Built for one audience• Promote common corporate culture• Immediate updates

The Extranet

• An extranet is a computer network that allows controlled access from the outside, for specific business or educational purposes. An extranet can be viewed as an extension of a company's intranet that is extended to users outside the company, usually partners, vendors, and suppliers.

Advantages• Exchange large volumes of data using Electronic

Data Interchange (EDI)• Share product catalogs exclusively with trade

partners• Collaborate with other companies on joint

development efforts• Jointly develop and use training programs with other

companiesDisadvantages• Extranets can be expensive to implement and

maintain within an organization (e.g., hardware, software, employee training costs), if hosted internally rather than by an application service provider.

• Security of extranets can be a concern when hosting valuable or proprietary information.

MODEL FOR E-COMMERCE TRANSACTIONS• E-commerce transactions can be modeled by

identifying the partners directly involved in the transaction. This is the most convenient and useful way of building models for e-com transactions. Some significant models are as follows:

• Business-to-Business e-Commerce (B2B)• Business-to-consumer (B-to-C)• Business-to-Government (B-to-G)• Consumer-to-Consumer (C-to-C)• Consumer-to-Government (C2G) model• Consumer-to-Business (C-to-B)• E-Government

Business-to-Business e-Commerce (B2B)• It is companies buying from and selling to each other

online. But there's more to it than purchasing. It's evolved to encompass supply chain management as more companies outsource parts of their supply chain to their trading partners. Business- to- business commerce includes a broad range of intercompany transactions, including wholesale trade as well as company purchases of services, resources, technology, manufactured parts and components, and capital equipment.

• Examples:Intel selling microprocessor to Dell.Heinz selling ketchup to McDonalds.

Web-based B-to-B

includes:

Direct selling and support to business

E-procurement Information sites

Business-to-consumer (B-to-C)

• It is defined as the exchange of products, information or services between business and consumers in a retailing relationship. Some of the first examples of B-to-C e-commerce were amazon.com and dell.com in the USA and lastminute.com in the UK. In this case, the ‘C’ represents either consumer or customer. The B2C model involves transactions between business organizations and consumers.

The major benefits of B2C are as follows:• B2C e-commerce reduces transactions costs.• Model the cost of the product is reduced as

we can eliminate the middle men.• Major thing in B2c model is customer care.

Pre-Cautions of B2C E-commerce:• Check for digital certificates of the site and it

hacker free.• Check for shipping price.• See the previous service going through the

reviews of the old customers• Purchasing with the appropriate cards.

Business-to-Government (B-to-G)

• It is the exchange of information, services and products between business organizations and government agencies on-line. It refers to the use of the Internet for public procurement, licensing procedures, and other government-related operations. This may include:

• E-procurement services• A virtual workplace• Rental of on-line applications and

databases

Consumer-to-Consumer (C-to-C)

• In this category consumers interact directly with other consumers. C2C is simply commerce between private individuals or consumers. They exchange information such as:

• Expert knowledge

• Opinions

Consumer-to-Government (C2G) model• In this model, an individual consumer

interacts with the government. For example, a consumer can pay his income tax or house tax online. The transactions involved in this case are C2G transactions. Examples where consumers provide services to government have yet to be implemented. It is not that popular approach and is quite rare. A possible example could be when a hacker is offering his services to the government for defence against cyber terrorism.

Consumer-to-Business (C-to-B)

• This is the exchange of products, information or services from individuals to business. A classic example of this would be individuals selling their services to businesses. Consumer-to-business (C2B) transactions involve reverse auctions, which empower the consumer to drive transactions.

E-GovernmentE-Government

E-Government (short for electronic government, also known as e-gov, digital government, online government, or connected government) is digital interactions between a government and citizens (G2C), government and businesses/Commerce (G2B), government and employees, and also between government and governments /agencies (G2G).

The e-Government delivery models can be briefly summed up as:

• G2C (Government to Citizens)

• G2B (Government to Businesses)

• G2E (Government to Employees)

• G2G (Government to Governments)

Disadvantages of e-gov

The main disadvantages concerning e-government is the lack of equality in public access to the internet, reliability of information on the web, and hidden agendas of government groups that could influence and bias public opinions, impacts on economic, social, and political factors, vulnerability to cyber attacks, and disturbances to the status quo in these areas.

• Hyper-surveillance - Once e-government begins to develop and become more sophisticated, citizens will be forced to interact electronically with the government on a

larger scale. This could potentially lead to a lack of privacy for civilians as their

government obtains more and more information on them.

•Cost - Although “a prodigious amount of money has been spent” on the development and implementation of e-government, some say it has yielded only a mediocre product.•Digital divide - An e-government site that provides web access and support often does not offer the “potential to reach many users including those who live in remote areas, are homebound, have low literacy levels, exist on poverty line incomes”. It is the division

between people having or not having communication technology.

• False sense of transparency and accountability - Opponents of e-gov online governmental transparency is dubious because it is maintained by the themselves. Information can be added or removed from the public eye.

Advantages of e-gov

• E-democracy - One goal of e-government will be greater citizen participation. Through the internet, people from all over the country can interact with politicians or public servants and make their voices heard. Blogging and interactive surveys will allow politicians or public servants to see the views of the people they represent on any given issue. Chat rooms can place citizens in real-time contact with elected officials, their offices or provide them with the means to replace them by interacting directly with public servants, allowing voters to have a direct impact and influence in their government.

• Paperless office - Proponents of e-government argue that online government services would lessen the need for hard copy forms.

• Speed, efficiency & convenience - E-government allows citizens to interact with computers to achieve objectives at any time and any location, and eliminates the necessity for physical travel to government agents sitting behind desks and windows.

• e-participation - Recent trials of e-government have been met with acceptance and with increasing frequency, and young people, who traditionally display minimal interest in government affairs, are drawn to e-voting procedures.

Government-to-Government (G2G) model

This model involves transactions between 2 governments. For example, if the American government wants to by oil from the Arabian government, the transaction involved are categorized in the G2G model. It may also be defined as the electronic transactions between two governments within a nation like centre & state govt. or state & state information sharing, not commerce in most of the occasions.

• Vertical Govt. Integration – e-commerce among govt. agencies up and down and local levels. Example: County Councils – dealing with the Dept. of the Environment.

• Horizontal Govt. Integration – e-commerce among agencies within one level. Example: National Roads Authority dealing with the Heritage council.

Government-to-Consumer (G2C) model

In this model, the government transacts with an individual consumer. For example, a government can enforce laws pertaining to tax payments on individual consumers over the Internet by using the G2C model.

• Does not fit well at all within the traditional supply-and-demand e-commerce notion.

• Paying taxes, registering vehicles, grant applications, CAO applications, etc.

• Big drive to get all local government services on web.

Government-to-Business (G2B) model

This model involves transactions between a government and business organizations. For example, the government plans to build a fly over. For this, the government requests for tenders from various contractors. Government can do this over the Internet by using the G2B model.

• Not a large e-commerce market.

• Example – Govt selling research services through Universities and Institutes of Technology to SMEs (Small and Medium sized Enterprises).

• Holding auctions and selling off used / confiscated items (most times, you must be a

“business” to participate in these auctions).

• Ordinance Survey selling detailed survey data to businesses.

Business-to-Government (B2G) model

In this model, the business houses transact with the government over the Internet. For example, similar to an individual consumer, business houses can also pay their taxes on the Internet.

• Lockheed Martin providing aviation products, satellites, naval systems, and services to US Dept of Defence (80% of its revenue).

• Fairly large e-commerce model in terms of revenue.

• Most U.S. government entities (for sure at the federal level) won’t do business with your business if you can’t do it electronically.

• In Europe – governments use e-tenders to get companies to supply goods and services.

M-commerceMobile commerce is the buying and selling of goods and services through wireless technology-i.e. handheld devices such as cellular telephones and personal digital assistants (PDAs). Mobile Commerce is any transaction, involving the transfer of ownership or rights to use goods and services, which is initiated and/or completed by using mobile access to computer-mediated networks with the help of an electronic device.

Mobile Ticketing – Tickets can be sent to mobile phones using a variety of technologies. Users are then able to use their tickets immediately, by presenting their phones at the venue. Tickets can be booked and cancelled on the mobile device with the help of simple application downloads, or by accessing the WAP portals of various travel agents or direct service providers. Example: People getting movie tickets or getting boarding pass on mobiles.

Mobile vouchers, coupons and loyalty cards - Mobile ticketing technology can also be used for the distribution of vouchers, coupons, and loyalty cards. These items are represented by a virtual token that is sent to the mobile phone. A customer presenting a mobile phone with one of these tokens at the point of sale receives the same benefits as if they had the traditional token. Stores may send coupons to customers using location-based services to determine when the customer is nearby.

Information Services – Example: Commuters getting PNR inquiry on mobiles by doing sms on 139. Another example is getting tram arrival time on their mobile through sms.

Examples of it are News, Stock quotes, sport scores, financial records, traffic reporting, etc.

Mobile Banking – Banks and other financial institutions use mobile commerce to allow their customers to access account information and make transactions, such as purchasing stocks, remitting money. This service is often referred to as Mobile Banking, or M-Banking. Example: Account holders getting sms after every transaction from their banks on their mobile.

Content purchase and delivery - Currently, mobile content purchase and delivery mainly consists of the sale of ring-tones, wallpapers, and games for mobile phones. The convergence of mobile phones, portable audio players, and video players into a single device is increasing the purchase and delivery of full-length music tracks and video. The download speeds available with 4G networks make it possible to buy a movie on a mobile device in a couple of seconds.

Mobile marketing and advertising - mobile marketing refers to marketing sent to mobile devices. Companies have reported that they see better response from mobile marketing campaigns than from traditional campaigns. Mobile campaigns must be based on the

global Content Generation or what is called Generation C and four other 'C's: Creativity, Casual Collapse, Control, and Celebrity.

Mobile Purchase - Catalog merchants can accept orders from customers electronically, via the customer's mobile device. In some cases, the merchant may even deliver the catalog electronically, rather than mailing a paper catalog to the customer. Some merchants provide mobile websites that are customized for the smaller screen and limited user interface of a mobile device.

ONLINE COMMERCE SOLUTIONS ONLINE COMMERCE SOLUTIONS

Domain Name - All online stores must have a unique web address, which makes registering a domain name an important ecommerce solution. When you buy a domain name, you become the sole owner of that web address and your online business has a place to call home. Your personal information will also be provided to the WHOIS database, where it will be available to the public. You can keep this information private by electing Private Registration when you register your domain name.

Ecommerce Shopping Cart Software - Ecommerce shopping cart software encompasses many aspects of online stores, including setting up inventory, managing orders from customers, delivery of products, and customer service. Choosing an ecommerce solution is a difficult process - many different options exist, including open source, licensed, and hosted solutions. Determine which ecommerce solution is right for your business, instead of allowing the solution to determine your business model.

Ecommerce Web Hosting- Professional Web hosting for online stores is an ecommerce solution that offers several benefits. When you work with a web hosting company, you can choose an ecommerce Web hosting package that satisfies your individual needs for space, bandwidth, merchandising and even design. Another benefit a Web hosting company should provide online stores: peace of mind that comes from knowing customer support is available to assist you 24/7, should problems or questions arise regarding your online store.

Professional Web Design - Looks may not be everything, but they are definitely something to consider when starting online stores. Ecommerce websites can be created with easy-to-use web design templates or with the help of a professional web designer .

Merchant Account - No matter how impressive your site is in terms of design and usability, you may lose customers if you cannot accept credit card payments. Online stores that cannot process credit card transactions are fighting an uphill battle, as the vast majority of online shoppers favor credit card payments. In order to accept credit card payments online, ecommerce websites need a merchant account to take money from the bank, and an online gateway to take the money from the merchant account.

Online Payment Gateway IntegrationOnline Payment Gateway Integration

A payment gateway is an e-commerce application service provider service that authorizes payments for e-businesses, online retailers, bricks and clicks, or traditional brick and mortar. It is the equivalent of a physical point of sale terminal located in most retail outlets. Payment gateways protect credit card details by encrypting sensitive information, such as credit card numbers, to ensure that information is passed securely between the customer and the merchant and also between merchant and the payment processor. Payment Gateway is a part of an e-commerce service that empowers the payment mode for electronic-business. Payment Gateway encrypts confidential information that transfers in a safe path between a customer and therespective merchant. A payment gateway holds a soul of any e-commerce application. Some famous payment gateways are: PayPal, Google Checkout, Pay-Me-Now, iBill, etc.

Example of online payment gateway: WorldPay (formerly RBS WorldPay) is a payment processing company. It provides payment services for mail order and internet retailers, as well as point of sale transactions. Customers are a mix of multinational, multichannel retailers, with the majority being small business merchants. WorldPay started as an electronic payment provider called Streamline in 1989 in the UK but has extended into Mail Order/Telephone Order, "unattended" payments and handling secure payments over the internet through merger and acquisition of several other companies.

Shipping Gateway Integration Shipping Gateway Integration

Shipping gateway integration includes organizations that are responsible for shipping.

Example: FedEx Corporation originally known as FDX Corporation, is a logistics services company, based in the United States with headquarters in Memphis, Tennessee. The name "FedEx" is a syllabic abbreviation of the name of the company's original air division, Federal Express, which was used from 1973 until 2000.

Inventory Management Inventory Management Inventory means a list compiled for some formal purpose, such as the details of an estate going to probate, or the contents of a house let furnished.

Inventory management is primarily about specifying the shape and percentage of stocked goods. It is required at different locations within a facility or within many locations of a supply network to proceed the regular and planned course of production and stock of materials.

Scope of inventory management concerns the fine lines between replenishment lead time, carrying costs of inventory, asset management, inventory forecasting, inventory valuation, inventory visibility, future inventory price forecasting, physical inventory, available physical space for inventory, quality management, replenishment, returns and defective goods and

demand forecasting.

Online Shopping carts Online Shopping carts Shopping cart software is software used in e-commerce to assist people making purchases online, analogous to the American English term 'shopping cart'. In British English it is generally known as a shopping basket, almost exclusively shortened on websites to 'basket'. The software allows online shopping customers to accumulate a list of items for purchase, described metaphorically as "placing items in the shopping cart". Upon checkout, the software typically calculates a total for the order, including shipping and handling (i.e. postage and packing) charges and the associated taxes, as applicable.

Online shopping carts refer to the facility provided by the e-com websites to purchase and add multiple items at the same time.

Shopping cart software can be generally categorized into two main categories:

Licensed software: The software is downloaded and then installed on a Web server. This is most often associated with a one-time fee, although there are many free products available as well. The main advantages of this option are that the merchant owns a license

and therefore can host it on any Web server that meets the server requirements, and that the source code can often be accessed and edited to customize the application.

• Hosted service: The software is never downloaded, but rather is provided by a hosted service provider and is generally paid for on a monthly/annual basis; also known as the application service provider (ASP) software model. Some of these services also charge a percentage of sales in addition to the monthly fee. This model often has predefined templates that a user can choose from to customize their look and feel. Predefined templates limit how much users can modify or customize the software with the advantage of having the vendor continuously keep the software up to date for security patches as well as adding new features.

Customer Order Tracking systems Customer Order Tracking systems

Order Tracking Software is build to improve customer service levels making management of inquiries / orders more easy and reliable. With Order Tracking Software you can track your inquiries / orders online. You can easily search old orders and get the latest updated status on it.

Features of Order Tracking Software are:

• Easy management of daily inquiries /orders

• Up-to-date information on each and every inquiry

• User friendly Graphical User Interface

• Search any inquiry anytime and from anywhere

• Find old inquiries in milliseconds

• Reminder scheduler helps remember follow ups

• No paperwork involved

• Restricted number of intended users like User, Management and Administrator

• Secured login and password for every user

• Different features for different users

Tailor Made Payment Gateway Tailor Made Payment Gateway

Payment gateways protect credit card details by encrypting sensitive information, such as credit card numbers, to ensure that information is passed securely between the customer and the merchant and also between merchant and the payment processor.

Payment gateways can be customized according to the user’s needs. Hence providing more benefits & flexibility to the user.

Tailor Made Payment Gateway Tailor Made Payment Gateway

Security features of payment gateways:

• Since the customer is usually required to enter personal details, the entire communication of 'Submit Order' page (i.e. customer - payment gateway) is often carried out through HTTPS protocol. • To validate the request of the payment page result, signed request is often used - which is the result of the hash function in which the parameters of an application confirmed by a «secret word», known only to the merchant and payment gateway. • To validate the request of the payment page result, sometimes IP of the requesting server •has to be verified.

Secure Transactions Secure Transactions

Secure Electronic Transaction (SET) was a standard protocol for securing credit card transactions over insecure networks, specifically, the Internet. Secure Electronic Transactions (SET) is an open protocol which has the potential to emerge as a dominant force in the securing of electronic transactions.

SET is jointly developed by Visa and MasterCard, in conjunction with leading computer vendors such as IBM, SET is an open standard for protecting the privacy, and

ensuring the authenticity, of electronic transactions.

Key features to meet the business requirements, SET incorporates the following feature-

• Confidentiality of information

• Integrity of data

• Cardholder account authentication

• Merchant authentication

Auctioning and Online Shop portals

Overstock - Why it’s good: Big traffic numbers and a Verified Registered User policy that has prevented fraud from Day 1 (are you listening eBay?). Fees are value for money and the site fosters a tight community. We also liked the fact that payment options are more varied.

eBid - eBid has consistently kept its place as one of the top alternatives to eBay since its launch in 1999. Available in 14 countries, traffic does vary between sites, but in general, traffic is high.

BlueJay - BlueJay is extremely popular with sellers and buyers for very good reason. It’s 100% free and submits all listings to Google shopping, from which the majority of buyers come.

eCrater - We had difficulty deciding who was better out of BlueJay and eCrater. BlueJay won because of its superior design, however we strongly encourage you to try both.

Online Auction - Online Auction has one low monthly fee with no listing or final value fees. However, as part of the latest site upgrade, sellers can page $10 to get their auctions “featured” on Google shopping.

CQOut - CQOut is very big in the UK and saw it’s listings grow by 100% in 2007. CQOut’s fees are significantly lower than eBay and if you don’t make a sale, you don’t need to pay anything.