Design of E-Commerce in Online Store: A Case Study of Amazon IndividualFinal Examination Odd Year 2012As the requisite of Management Information System Subject that lectured by Prof. EkoGanisSukoharsono, SE, MCOM-HONS, PH.D By: Fatiah Putri R ( 105020307121016) International Accounting Major Economic and Business Faculty University of Brawijaya Malang 2012
1. DefinitionE-commerce refers to the process of buying or selling products or services over theInternet. Online shopping is becoming increasingly popular because of speed and easeof use for customers. E-business activities such as selling online can be directed atconsumers or other businesses. Business to Consumer (B2C) involves the online salesof goods, services and provision of information directly to consumers. Business toBusiness (B2B) refers to the online exchange of products, services, or informationbetween businesses.2. The advantagesSelling online can help the business reach new markets and increase sales and revenuegains. If we are interested in selling to other businesses, we can use the Internet tofind sales leads, announce calls for tender, and to offer products for sale. Searchingfor products and services online can save you time and money by allowing you to findthe best prices without having to walk. You can use the Internet to find new suppliers,post buying requests or search for products and services. The benefits of effectiveB2B e-commerce include lower costs associated with selecting suppliers, establishingprices, ordering, and finalizing transactions. Online trading networks can also be usedto support efficient information exchange between buyers and sellers.3. E-commerce designIn order to process an online sales transaction three things are needed: Shopping Carts Shopping cart software keeps track of what the user selects to buy from the website before proceeding to the “checkout”. An online shopping cart consists of three parts: Product catalogue is made up of all the information needed to present any product to the customer and to complete a sales transaction online. Information to be included in the product database generally includes the price, identification number (SKU), image or other multi- media
information, product options or choices. Shopping list (i.e. list of selected products) allows users to track the items they want to purchase. A shop- ping cart image is generally used to show what items the shopper has selected for purchase. In order for the shop- ping cart to function properly the user’s computer must be set to allow “cookies”. The checkout system allows customers to select prod- ucts by clicking an “add items to cart” button and then enables them to pay for these products. Secure ServerThe secure server helps provide protection against the loss or modification ofpersonal information. Secure Socket Layer (SSL) is the most commonly usedtech- nology for secure online transactions. SSL encrypts(or codes) all data between the shop’s server and the customer’s computer. Thismakes it very difficult for third parties to decode any information exchanged suchas credit card numbers. The following diagram shows how a secure server canprotect information passed between the consumer and the merchant:and we need a Digital Certificate for SSL technology to work. A DigitalCertificate is an electronic ID that helps to show the credibility of a website.
Payment Processing OptionsThere are three payment processing options: Third Party Payment Processing Software: These services offer an alternative to obtaining an Internet Merchant Account. The advantage of this alternative is that it is possible to start selling online more quickly and easily. There are registration, transaction, and month- ly fees attached. There may also be a longer holdback period before the balance of a sale is turned over to the merchant.PayPal (www.paypal.com) is the most popular third-party online service provider. Both PayPal and merchant accounts charge transaction fees, including a percentage of the sale plus a flat fee per transaction. Charges based on the number of transactions may be appropriate for micro businesses or where the number of transactions is limited. Internet Merchant Account:An Internet Merchant Account is an account issued by a financial institution that enables a business to accept credit card payments online. Businesses must obtain a separate Internet Merchant Account for each type of credit card they wish to accept (e.g.VISA, Mastercard, American Express). Manual (Offline) Payment Processing: You can set up an e-commerce website where users can order online, but you process credit cards manually rather than rely on online payment processing options. With this option, credit card information can be obtained through a secure server and the transaction can be processed manually. This option is feasible when you have a limited number of online orders. Hardware and Software Hardware: Monitor, Keyboard, Mouse, CPU (tower), Modem, Network card Software: An operating system (windows), Web design tools, Accounting software (Quickbooks), word-processing software, spreadsheet stuff
Ensure you have SSL technology that encrypts all confidential information during transmission andauthorization of transactions. Ensure you have appropriate security features for storing information. For example a PCI (peripheralcomponent interconnect: hardware) card is often added for protection. Another approach is SET (SecureElectronic Transaction) that has been developed by Visa and MasterCard. With this approach, sensitiveinformation is not seen by the business and is not stored on the company’s website. Firewalls should beused to protect the network and computers from viruses and computer hackers. You should also restrictaccess to information, particularly sensitive information to authorized employees. Review other fraud prevention tools and assess if they are right for you. For example, Address VerificationService (AVS) compares the information in the customers’ addresses with records stored by card-issuingbanks. Major credit card companies also have verification systems. Three-digit codes printed on the backof major credit cards can help you assess if customers have legitimate cards. Always verify customer addresses. Be suspicious of large orders or requests for multiple copies of the same product, especially if thecustomer asks for rush delivery. If you are selling valuable products that are easily resold consider whether you need advanced fraud protectionservices provided through gateway providers (e.g. fraud filters to screen for suspicious activity).4. Company ProfileAmazon.com has always sold goods out of its own warehouses. It started as abookseller, pure and simple, and over the last decade has branched out into additionalproduct areas and the third-party sales that now represent a good chunk of its revenue(some estimates put it at 25 percent). Both retailers and individual sellers utilize theAmazon.com platform to sell goods. Large retailers like Nordstrom, Lands End andTarget use Amazon.com to sell their products in addition to selling them through theirown Web sites. The sales go through Amazon.com and end up at Nordstrom.com,Lands End.com or Target.com for processing and order fulfillment. Amazonessentially leases space to these retailers, who use Amazon.com as a supplementaloutlet for their online sales. Small sellers of used and new goods go to AmazonMarketplace, Amazon zShops or Amazon Auctions. At Marketplace, sellers offer
goods at a fixed price, and at Auctions they sell their stuff to the highest bidder.Amazon zShops features only used goods at fixed prices. If an item listed on zShops,Marketplace or Auctions is also sold on the main Amazon.com, it appears in a boxbeside the Amazon.com item so buyers can see if someone else is selling the productfor less in one of the other sales channels.The level of integration that occurs on Amazon is a programming feat that few (ifany) online sales sites can match.Another sales channel called Amazon Advantage isa place where people can sell new books, music and movies directly from the Amazonwarehouse instead of from their home or store. Sellers ship a number of units toAmazon, and Amazon handles the entire sales transaction from start to finish. In all ofthese programs, Amazon gets a cut of each sale (usually about 10 percent to 15percent) and sometimes charges additional listing or subscription fees; in the case ofAmazon Advantage, the company takes a 55 percent commission on each sale. TheAdvantage channel is something like a consignment setup, a sales avenue for peoplewho create their own music CDs or have self-published a book and are simplylooking for a way to get it out there.
One of the latest additions to Amazons repertoire is a subsidiary company calledAmazon Services. Through Amazon Services, Amazon sells its sales platform,providing complete Amazon e-commerce packages to companies looking to establishor revamp their e-commerce business. Amazon sets up complete Web sites andtechnology backbones for other e-commerce companies using Amazon software andtechnology. Target, for instance, in addition to having a store on Amazon.com, alsouses Amazon Services to build and manage its own e-commerce site, Target.com.But selling goods isnt the only way to make money with Amazon.com. The Websites affiliate program is one of the most famous on the Web. Through Amazons
Associate Program, anyone with a Web site can post a link to Amazon.com and earnsome money. The link can display a single product chosen by the associate, or it canlist several "best seller" products in a particular genre, in which case Amazon updatesthe list automatically at preset intervals. The associate gets a cut of any sale madedirectly through that link. The cut ranges from 4 percent to 7.5 percent depending onwhich fee structure the associate signs up for (see Amazon Associates for completeprogram details). The associate can also take advantage of Amazon Web Services,which is the program that lets people use Amazons utilities for their own purposes.The Amazon Web Services API (application programming interface) lets developersaccess the Amazon technology infrastructure to build their own applications for theirown Web sites. All product sales generated by those Web sites have to go throughAmazon.com, and the associate gets a small commission on each sale.Software Development CentersWhile much of Amazons software development occurs in Seattle, the companyemploys software developers in centers across the globe. Some of these sites are runby an Amazon subsidiary called A2Z Development.• North America USA: Cambridge, MA; Charleston, SC; Cupertino, CA; Orange County, CA; San Francisco, CA; San Luis Obispo, CA;, Seattle, WA; and Tempe, AZ Canada: Vancouver, British Columbia and Mississauga, Ontario• Europe UK: Slough (England), London (England) and Edinburgh (Scotland) Ireland: Dublin Romania: Iaşi• Asia India: Hyderabad, Bangalore and Chennai Japan: Shibuya (Tokyo) China: Beijing• AfricaSouth Africa: Cape Town
5. E-Commerce Design of AmazonE-Commerce web design is made easy with Amazon Webstore. Using online toolsthat can control the website’s look and feel and quickly make changes with notechnical or HTML expertise. This powerful set of layout and merchandising toolsallow us to design and publish our website without technical resources. The onlinestore builder makes it easy to update and manage the website according to ourbusiness needs. With a little effort we can develop a branded site that will show offour business to the world. Template Designs Amazon Webstore has built-in website templates and website themes that make launching our store quick and easy. These templates are completely customisable and give your store a professional look and feel with very little effort. Custom Navigation and Product Categories Webstore lets you build online store categories and product categories to suit the needs of your business and brand. For example you can categorise clothing items by season as opposed to gender or categorise electronics by manufacturer. Additionally, you can manage multiple releases of your site navigation and category structure making changes easy to implement and release. Merchandising Widgets Leverage the eCommerce expertise of Amazon with built-in Merchandising widgets that help you promote products to customers based on your business rules and your customer’s actions on your website. Amazon personalization widgets allow to efficiently merchandise a large catalogue helping you increase average order value Customer Reviews Allow your customers to leave reviews of products specific to your business. Customer reviews can be automatically filtered for known offensive language. Additionally, Webstore gives you full control the reviews so you can delete
offensive or inaccurate posts. Page Masters Page Masters give you full control of your website’s look-and-feel. Bycreating page masters you can quickly modify your website and apply thechanges across your entire site. With page masters you can define customlayouts to match your brand and desired look-and-feel. Built-in Hosting for Images and Assets You can upload your product images and web page assets directly through theWebstore interface. This makes it easy to use these images throughout yourwebsite and leverages the powerful Amazon hosting and caching architecturebuilt in to Webstore. This image and asset caching makes your site load fasterregardless of the customer’s location and ensures both a positive customerexperience on your website as well as increased reliability and responsivenessfor search engine robots – helping with your sites search engine optimization. Publish website updates without IT supportOnce you’ve completed designing your eCommerce website you can previewupdates to the website design and merchandising that you have made. TheWebstore preview feature allows you to access and share a completely activeversion of your eCommerce website so you can test the experience end-to-endbefore releasing it to your customers. Your site can be published to productionwith no IT resources making frequent or emergency changes a breeze.