E commerce 2008 section-c.


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E commerce 2008 section-c.

  1. 1. 2008- “SECTION C” DISCUSS VRIOUS BUSINESS MODELS BASED ON METHODS OF REVENUE GENERATION The ultimate goal of e-business is to generate profits, similar to traditional businesses. It is factual that the Internet has improved productivity for almost all the organizations that are using it. Nevertheless, the bottom line is that productivity must be converted to profitability. To achieve profitability as the final goal, different e-businesses or e-commerce sites position themselves in different parts of the value-chain. To generate revenue, an e-business either sells products/services or shortens the link between the sucppliers and consumers. Many business-to-business models try to eliminate the middleman by using the Web to deliver products/services directly to their customers. By doing this they may be able to offer cheaper products and better customer service to their customers. The end result would be a differentiation between them and their competitors, increased market share, and increased customer loyalty. Products sold by e-businesses could be either traditional products, such as books and clothing, or digital products, such as songs, computer software, or electronic books. E-commerce models are either an extension or revision of traditional business models, such as advertising model, or a new type of business model that is suitable for the Web implementation, such as info-mediary. Merchant, brokerage, advertising, mixed, info-mediary, subscription are the most popular e-commerce models: Merchant model: This model basically transfers the old retail model to the e-commerce world by using the Internet. There are different types of merchant models. The most common type of merchant model is similar to a traditional business model that sells goods and services over the Web. Amazon.com is a good example of this type. An e-business similar to Amazon.com utilizes the services and technologies offered by the Web to sell products and services directly to the consumers. By offering good customer service and reasonable prices, these companies establish a brand on the Web. The merchant model is also used by many traditional businesses to sell goods and services over the Internet. Dell, Cisco Systems, and Compaq are popular examples. These companies eliminate the middleman by generating a portion of their total sale over the Web and by accessing difficult-to-reach customers. An example that uses this model is Amazon.com Corporation. Brokerage model: The e-business brings the sellers and buyers together on the Web and collects a commission on the transactions by using this model. The best example of this type is an online auction site such as eBay, which can generate additional revenue by selling banner advertisement on their sites.
  2. 2. Advertising model: This model is an extension of traditional advertising media, such as television and radio. Search engines and directories such as Google and Yahoo provide contents (similar to radio and TV) and allow the users to access this content for free. By creating significant traffic, these e-businesses are able to charge advertisers for putting banner ads or leasing spots on their sites. Mixed model: This model generates revenue both from advertising and subscriptions. Internet service providers (ISPs) such as America On-line (AOL), and SuperOnline generate revenue from advertising and their customers' subscription fees for Internet access. Info-mediary model: E-businesses that use this model collect information on consumers and businesses and then sell this information to interested parties for marketing purposes. For instance, bizrate.com collect information related to the performance of other sites and sells this information to advertisers. Netzero.com provides free Internet access; in behavior of customers. This information is later sold to advertisers for direct marketing. eMachines.com offers free PCs to its customers for the same purpose. Subscription model: An e-business might sell digital products to its customers, by using this model. The Wall Street Journal and Consumer Reports are two examples. Sreeet.com, AjansPress.com is another example of this model that sells business news and analysis based on subscription. E-Commerce Models. Creating an e-commerce solution mainly involves creating and deploying an e-commerce site. The first step in the development of an e-commerce site is to identify the e-commerce model. Depending on the parties involved in the transaction, e-commerce can be classified into 4 models. These are: o Business – to – Business (B2B) model o Business – to – Consumer (B2C) model o Consumer – to- Consumer (C2C) model o Consumer – to – Business (C2B) model Let us look at each of them in detail. Business-to-Business (B2B) Model The B2B model involves electronic transactions for ordering, purchasing, as well as other
  3. 3. administrative tasks between houses. It includes trading goods, such as business subscriptions, professional services, manufacturing, and wholesale dealings. Sometimes in the B2B model, business may exist between virtual companies, neither of which may have any physical existence. In such cases, business is conducted only through the Internet. Let us look at the same example of www.amazon.com. As you know, www.amazon.com is an online bookstore that sells books form various publishers including Wrox, O’Reilly, Premier Press, and so on. In this case, the publishers have the option of either developing their own site or displaying their books on the Amazon site (www.amazon.com), or both. The publishers mainly choose to display their books on www.amazon.com at it gives them a larger audience. Now, to do this, the publishers need to transact with Amazon, involving business houses on both the ends, is the B2B model. Consider a hypothetical example. ABC company sells automobile parts and XYZ company assembles these part and then sells the automobile to customers. XYZ company comes across the Web site of ABC and finds it suitable. XYZ therefore, requests for more information about ABC and finally, decides to purchase automobile parts automobile from ABC. To do this, XYZ places an order on the Web site of ABC. After ABC receives the order details, it validates the information. As soon as the order is confirmed, the payment procedures are settled. Finally, ABC sends an acknowledgement of payment to XYZ and delivers the goods as per the shipment details decided between the two organizations. The advantages of the B2B model are: It can efficiently maintain the movement of the supply chain and the manufacturing and procuring processes. It can automate corporate processes to deliver the right products and services quickly and cost-effectively.
  4. 4. The B2B model is predicted to become the largest value sector of the industry within a few years. This is said to be the fastest growing sector of e-commerce. e-Commerce Models Business-to-Consumer (B2C) Model The B2C model involves transactions between business organizations and consumers. It applies to any business organization that sells its products or services to consumers over the Internet. These sites display product information in an online catalog and store it in a database. The B2C model also includes services online banking, travel services, and health information. Consider a hypothetical example in which a transaction is conducted between a business organization and a consumer. A business house, LMN Department Store, displays and sells a range of products on their Web site, www.lmn.com. The details information of all their products is contained in the huge catalogs maintained by LMN Department Stores. Now, a consumer, William Ward, wants to buy a gift for his wife. He therefore, logs on to the site of LMN Department Stores and selects a gift from the catalog. He also gets the detailed information about the gift such as, the price, availability, discounts, and so on from their catalog. Finally, when he decides to buy the gift, he places an order for the gift on their Web site. To place an order, he needs to specify his personal and credit card information on www.lmn.com. This information is then validated by LMN Department Store and stored in their database. On verification of the information the order is processed. Therefore, as you can see, the B2C model involves transactions between a consumer an done or more business organizations. e-Commerce Models The example of the www.amazon.com site also involves the B2C model in which the consumer searches for a book on their site and places an order, if required. This implies that a complete business solution might be an integration solution of more than one business model. For example, www.amazon.com includes the B2B model in which the publishers transact with Amazon and the
  5. 5. B2C model in which an individual consumer transact with the business organization. The B2C model of e-commerce is more prone to the security threats because individual consumers provide their credit card and personal information n the site of a business organization. In addition, the consumer might doubt that his information is secured and used effectively by the business organization. This is the main reason why the B2C model is not very widely accepted. Therefore, it becomes very essential for the business organizations to provide robust security mechanisms that can guarantee a consumer for securing his information. Consumer-to-Consumer (C2C) Model The C2C model involves transaction between consumers. Here, a consumer sells directly to another consumer. eBay and www.bazee.com are common examples of online auction Web sites that provide a consumer to advertise and sell their products online to another consumer. However, it is essential that both the seller and the buyer must register with the auction site. While the seller needs to pay a fixed fee to the online auction house to sell their products, the buyer can bid without paying any fee. The site brings the buyer and seller together to conduct deals. Let us now look at the previous figure with respect to eBay. When a customer plans to sell his products to other customers on the Web site of eBay, he first needs to interact with an eBay site, which in this case acts as a facilitator of the overall transaction. Then, the seller can host his product on www.ebay.com, which in turn charges him for this. Any buyer can now browse the site of eBay to search for the product he interested in. If the buyer comes across such a product, he places an order for the same on the Web site of eBay. eBay now purchase the product from the seller and then, sells it to the buyer. In this way, though the transaction is between two customers, an organization acts as an interface between the two organizations. e-Commerce Models
  6. 6. Consumer-to-Business (C2B) Model The C2B model involves a transaction that is conducted between a consumer and a business organization. It is similar to the B2C model, however, the difference is that in this case the consumer is the seller and the business organization is the buyer. In this kind of a transaction, the consumers decide the price of a particular product rather than the supplier. This category includes individuals who sell products and services to organizations. For example, www.monster.com is a Web site on which a consumer can post his bio-data for the services he can offer. Any business organization that is interested in deploying the services of the consumer can contact him and then employ him, if suitable. Let us look at another example of the C2B model. William Ward needs to buy an airline ticket for his journey form New York to New Jersey. William needs to travel immediately. Therefore, he searches a Web site for a ticket. The Web site offers bidding facility to people who want to buy tickets immediately. On the Web site, William quotes the highest price and gets the ticket. In addition to the models discussed so far, five new models are being worked on that involves transactions between the government and other entities, such as consumer, business organizations, and other governments. All these transactions that involve government as one entity are called e-governance. The various models in the e-governance scenario are: • 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. • 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. • Consumer-to-Government (C2G) model: In this model, an individual consumer interacts
  7. 7. 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. e-Commerce Models • 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. • 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. EXPLAIN THE DIFFERENT SECURITY MEASURES AVAILABLE IN E-COMMERCE Ecommerce websites and online businesses regardless of the products and services they are promoting need to provide customers and users with a safe and secure online shopping portal. To create a thriving ecommerce business, e-retailers need to inspire trust and confidence in their customers by minimising the various risks that they are faced with online. With fraudulent ecommerce scams and hackers becoming evermore sophisticated and commonplace, it's vital that all e-retailers and budding e-retailers learn about the basics of ecommerce security The 4 Fundamentals of Ecommerce Security Before any ecommerce website or online business can consider itself secure, it first needs to fulfil these four fundamentals of ecommerce security: Customer Privacy - All customer information (especially sensitive information such as payment details and delivery details) needs to be stored in a safe and secure way which is inaccessible to unauthorized parties Integrity of Information - Any communication and transactions between the ecommerce website and the customer must be tamper proof and maintain the integrity of the original communication Authentication of Identify - During the communication process both the ecommerce website and the customer need to prove that they are who they say they are
  8. 8. Non-Repudiation - Any transactions or communication carried out between the ecommerce website and the customer need to be proven genuine to prevent the rejection (repudiation) of a transaction Fulfilling the Fundamentals of Ecommerce Security Even though ecommerce security is by nature a complex subject, e-retailers don't need to find complex solutions to fulfill the four fundamentals. The basic requirements of ecommerce security can be easily met by e-retailers using the following solutions: Encryption - The privacy requirements of ecommerce security can usually be met with encryption of communications and transactions between the ecommerce website and the customer. During encryption a message "key" such as a PKI (Public Key Infrastructure) is used to scramble the information sent in a transaction into an unreadable and unintelligable format. The information is only capable of being unscrambled by the intended recipient of the transaction who holds a matching "private key". Encryption is the first step towards meeting the fundamentals of ecommerce security Digital Signatures - Digital signatures fulfill the integrity requirements of ecommerce security by preventing third parties from tampering with the information that is sent through a transaction. Simply put, digital signatures are the electronic equivalent of an individual's written signature and are attached to information sent during transactions to prove not only the authenticity of the sender, but that the information sent has not been tampered with. SSL Digital Certificates - SSL (Secure Socket Layer) digital certificates act as digital ID and can be used to fulfill the authentication requirements of ecommerce security. Digital certificates are used by e-retailers to prove their authenticity and identify them as genuine online merchants. Digital certificates are issued by certification authorities such as Verisign, and provide e-retailers with a completely unique digital identity
  9. 9. WHAT IS HTML? USING HTML TAGS DESIGN WEBSITE FOR GROCERY STORE? WHAT IS EDI? DISCUSS THE ROLE OF EDI IN INTERNATIONAL TRADE? o EDI involves the electronic exchange of business transactions documents over the internet and other network between supply chain trading partners (organization and their customers and suppliers). o Data representing a variety of business transactions documents(such as purchase orders, invoice, requites for quotation, and shipping notices) are automatically exchanged between customers using standard document message formats. o EDI software is used to convert a company’s own document formats into standardized EDI formats as specified by various industry and international protocols. Electronic Data Interchange (EDI) - interposes communication of business information instandardized electronic form
  10. 10. Two characteristics set EDI apart from other ways of exchanging information. First, EDI only involves business-to-business transactions; individual consumers do not directly use EDI to purchase goods or services. Secondly, EDI involves transactions between computers or databases, not individuals. Therefore, individuals sending e-mail messages or sharing files over a network does not constitute EDI. Benefits of EDI Cost & time savings, Speed, Accuracy, Security, System Integration, Just-In-TimeSupport.• Reduced paper-based systems, i.e. record maintenance, space, paper, postage costs• Improved problem resolution & customer service• Expanded customer/supplier base or suppliers with no EDI program lose business EDI layered architecture Semantic (or application) layer Standards translation layer Packing (or transport) layer Physical network infrastructure layer 1. Semantic layer: Describes the business application Procurement example–  Requests for quotes–  Price quotes–  Purchase orders–  Acknowledgments–  Invoices Specific to company & software used
  11. 11. 2. Standards translation:  Specifies business form structure so that information can be exchanged•  Two competing standards– o American National Standards Institute(ANSI)X12– o EDIFACT developed by UN/ECE, Working Party for the Facilitation of International Trade Procedures 3. EDI transport layer  How the business form is sent, e.g. post, UPS, fax  Increasingly, e-mail is the carrier  Differentiating EDI from e-mail– o Emphasis on automation– o EDI has certain legal status 4. Physical network infrastructure layer Dial-up lines, Internet, value-added network, etc ROLE OF EDI IN INTRENATONAL TRADE:- EDI facilitates the smooth flow of information It reduces paper work EDI benefits for international trade are. o Reduced transaction expenditures. o Quicker movement of imported & exported goods. o Improved customer service through “track & trace” programs. o Faster customs clearance & reduced opportunities for corruption, a huge problem in trade