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E Commerce Basics
- 1. E-Commerce (Electronic CommerceOr EC) TAHIR RASHID HAKEEM KSU - Riyadh
- 2. E-commerce (electroniccommerce or EC) is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the Internet. These business transactions occur either business-to-business, business-to-consumer, consumer-to-consumer or consumer-to- business. E-Commerce (Electronic Commerce Or EC) Definition
- 3. The Internet, intranets,and extranets are the foundation of e-commerce. Customers must be provided with a range of secure information, marketing, transaction, processing, and payment services. Trading and business partners rely on Internet and extranets to exchange information(EDI) and accomplish secure transactions. Company employees depend on a variety of Internet and intranet resources to communicate and collaborate in support of their EC work activities. Information system professionals and end users can use a variety of software tools to develop and manage the content and operations of the websites and other EC resources of a company. E-COMMERCE TECHNOLOGIES What technologies are necessary for e-commerce?
- 4. 1. Selection andValue. Attractive product selections, competitive prices, satisfaction guarantees, and customer support after the sale. 2. Performance and Service. Fast, easy navigation, shopping, and purchasing, and prompt shipping and delivery. 3. Look and Feel. Attractive web storefront, website shopping areas, multimedia product catalog pages, and shopping features. INCENTIVES FOR ENGAGING IN E-COMMERCE The key to e-commerce success is to optimize several key factors, The incentives for engaging in e-commerce are listed as follows:
- 5. 4. Advertising andIncentives. Targeted web-page advertising and e-mail promotions, discounts and special offers, including advertising at affiliate sites. 5. Personal Attention. Personal web pages, personalized product recommendations, web advertising, and e-mail notices, and interactive support for all customers. 6. Community Relationships. Virtual communities of customers, suppliers, company representatives, and others via newsgroups, chat rooms, and links to related sites. 7. Security and Reliability. Security of customer information and website transactions, trustworthy product information, and reliable order fulfilment. INCENTIVES FOR ENGAGING IN E-Commerce cont..
- 6. NEEDS OF ECOMMERCE 1. Free and faster shipping. Businesses now have the option to partner with companies that work with retailers to offer customers free or faster shipping. 2. Consumer-driven demand and personalization. Consumers want unique, original products and businesses need to be able to deliver that in increasingly creative--and profitable— ways. 3. Growth of guided discovery To make shoppers' lives easier, more and more online businesses will start engineering the right mix of "guided discovery" to provide targeted and welcome suggestions that help consumers make purchases. 4. Business without borders.
- 7. Advantages of E-commerce •Faster buying/selling procedure, easy to find products. • Buying/selling 24/7. • Low operational costs and better quality of services. • Easy to start and manage a business. • No need of physical company set-ups. • Customers can easily select products from different providers without moving around physically.
- 8. Advantages of E-commerce Instant worldwide availability Reduced paperwork Reduced errors Reduced time Easier entry into new markets New business opportunities Wider access to assistance and advice Improved product analysis
- 9. Disadvantages of E-commerce There is no guarantee of product quality. There are many hackers who look for opportunities, and thus an ecommerce site, service, payment gateways, all are always prone to attack.
- 10. • Confidentiality issues •Credit card fraud • Security issues • Trust issues • Round-the-clock availability issues Disadvantages of E-commerce
- 11. Application services. Brokerage services, data or transaction management. Interface and support layers. Secure messaging, security and electronic document interchange. Middleware and structured document interchange, and Network infrastructure and the basic communication services. FRAMEWORK FOR E-COMMERCE The architectural framework for e-commerce consists of six layers of functionality or services as follows:
- 12. Applications: In theapplication layer services of e-commerce, it is decided that what type of e-commerce application is going to be implemented. (B2B, B2C, C2C, B2G) Information Brokerage and Management Layer: This layer is rapidly becoming necessary in dealing with the voluminous amounts of information on the networks. This layer works as an intermediary who provides service integration between customers and information providers, given some constraint such as low price, fast services or profit maximization for a client. Interface and Support Services: The third layer of the architectural framework is interface layer. This layer provides interface for e- commerce applications. Interactive catalogs and directory support services are the examples of this layer. FRAMEWORK FOR E-COMMERCE CONT . . .FRAMEWORK FOR E-COMMERCE CONT . . .
- 13. Secure Messaging Layer:electronic messaging services like e-mail, enhanced fax and EDI. Middleware services: The enormous growth of networks, client server technology and all other forms of communicating between/among unlike platforms is the reason for the invention of middleware services. The middleware services are used to integrate the diversified software programs and make them talk to one another. Network Infrastructure: We know that the effective and efficient linkage between the customer and the supplier is a precondition for e-commerce FRAMEWORK FOR E-COMMERCE CONT . . .FRAMEWORK FOR E-COMMERCE CONT . . .
- 14. EC APPLICATIONS EC applicationsare supported by infrastructure and by five support areas: People Public policy Marketing and advertising Support services Business partnerships
- 16. IMPACT OF E-COMMERCEON BUSINESS The new technology will transform business processes, the way products and services are created and marketed. Local proximity may no longer be a significant factor in retaining customer. Local markets will be replaced by global markets. Transparency and openness continue and will continue, to be effective business strategy. The change in the business functions will lead to new business models and create new set of facts and circumstances The Internet will emerge as a new platform for marketing of products and services that will displace and rebuild existing economy.
- 17.
- 18. • Business-to-Business (B2B)Business-to-Business(B2B) • Business-to-Consumer (B2C)Business-to-Consumer (B2C) • Business-to-Government (B2G)Business-to-Government (B2G) • Consumer-to-Consumer (C2C)Consumer-to-Consumer (C2C) Models of E-Commerce
- 19. B2B e-commerce issimply defined as e-commerce between companies. This is the type of e-commerce that deals with relationships between and among businesses. • B2B is all about transactions between one organization and their partners. • Most B2B applications are in the areas of supplier management, inventory management, distribution management and payment management Business-to-Business (B2B)
- 20. Business-to-consumer e-commerce, orcommerce between companies and consumers, involves customers gathering information; purchasing physical goods or information goods ( software's ). It is the second largest and the earliest form of e-commerce. Its origins can be traced to online retailing (or e-tailing). such as Amazon.com, Drugstore.com, Beyond.com, Barnes and Noble and ToysRus. Business-to-Consumer (B2C)
- 21. An extended listof types of B2C electronic commerce: Storefront (Retail Shop) - products offered for sale with revenue on sale. Shopping mall - multiple retailers with revenue from commission or space hire Auction - vendors or buyers pay fixed price or percentage Business exchanges - site facilitates transactions between companies for a fee Types of B2C e-commerce
- 22. Business-to-government e-commerce orB2G is generally defined as commerce between companies and the public sector. It refers to the use of the Internet for public procurement, licensing procedures, and other government-related operations. This kind of e-commerce has two features: first, the public sector assumes a pilot/leading role in establishing e-commerce; and second, it is assumed that the public sector has the greatest need for making its procurement system more effective. Business-to-Government (B2G)
- 23. • Consumer-to-consumer e-commerceor C2C is simply commerce between private individuals or consumers. • This type of e-commerce is characterized by the growth of electronic marketplaces and online auctions Consumer-to-Consumer (C2C)
- 24. C2C e-commerce comesin at least three forms: • auctions facilitated at a portal, such as eBay, which allows online real-time bidding on items being sold in theWeb; • peer-to-peer systems, such as the Napster model (a protocol for sharing files between users used by chat forums similar to IRC) and other file exchange and later money exchange models; and • classified ads at portal sites such as Excite Classifieds and eWanted (an interactive, online marketplace where buyers and sellers can negotiate and which features “Buyer Leads & Want Ads”).
- 25. E-commerce infrastructure • E-commerceinfrastructure requires a variety of hardware, software, and networks. • The key infrastructures that are needed to support EC applications are networks, Web servers, Web server support and software, electronic catalogs, Web page design, and Internet access components.
- 26. THE HARDWARE INFRASTRUCTURE •Computers connected by a data connection (45 megabits/second) • ISP hosts and other powerful computers connect using (Broadband) lines • Leased lines (some businesses) • Modem dial-up connections • Cable modems • ADSL - Asymmetric Digital Subscriber Line
- 27. WEB STORE REQUIREMENTS •An organization's first venture into EC is the development of a Web site and the creation of a presence on the Internet. • E-commerce transactions must be executable worldwide, without any delay or mistake. • On a very basic website, an organization provides information about itself, its products and its services. • A more developed Web site will allow some interactions, such as sending an e-mail to request for the information or schedule an appointment, or ordering.
- 28. Good designscan be very rewarding. Outsourcing Web page designs should be carefully evaluated because of the high cost. The company can register its Web site within a domain name as well as registering it with the major Web search engines. A good web site must have a fast catalog search engine, special discounts, credit card and other payments, and shipping alternatives so that it can attract new customers. It must offer customer support via help menus, tutorials, and list of FAQs. WEB STORE REQUIREMENTS
- 29. ELECTRONIC PAYMENTS Paymentsare an integral part of doing business, whether in the traditional way or online. Traditional payment systems are not effective for EC (using cash, writing a check, sending a money order have several limitations in EC) . Usually in e-commerce, payments between buyers and sellers can take place electronically. These include EFT (Electronic Fund Transfer), electronic checks, electronic credit cards, electronic wallets.
- 30. ELECTRONIC FUNDTRANSFER (EFT) • Electronictransfer of money using telecommunications networks. • EFT is fast. • Handle daily large volume of financial transactions. • EFT-based ATMs are available in shopping centers and business areas.
- 31. ELECTRONICWALLETS • Eliminating entryand storage of information on a merchant’s server. • One-click shopping. • Credit card companies like Visa and Master card offer e-wallet services, as do Yahoo!, America Online (called Quick Checkout) and Microsoft (Passport).
- 32. Issues of E-Commerce Lackof planning Unrealistic goals No business focus or site not integrated with your overall business. No promotion or misplaced promotion Spending a lot of money just to develop a site without also investing in promotion is wasteful Doing promotion and not following up. Bad site design & poor usability Simplicity works. Sometimes, it is more important to have targeted content with an overall customer focus than to have the latest whiz-bang gizmos and a flashy site. Is content easily found and is the site easy to navigate? Are fonts too small or set against the wrong background colour? Is it intuitive to visitors to know the next steps? Do you have a strong call to action?
- 33. Slow performance Potentially goodsites fail because of performance when visitors wait for the site to load. A site that takes more than a couple of seconds to load will not be successful Slow sites are usually the result of bad design, a poorly selected host, non-optimised images, or sites overloaded with widgets and gizmos. Coding errors The site may look and perform well on newer browsers but it can also crash on older browsers “Page Not Found” and other coding errors.
- 34. Security & hackingissues Non-secure online payments Spam attacks on a blog or user comments Hacked or defaced site Viruses on your site. Going cheap - you get what you pay for When outsourcing, if the price sounds too good to be true then it just might be Free hosting in foreign countries are generally slower with more downtime than local hosting DIY and not relying on expert advice/help.
- 35. M-commerce (mobilecommerce) is the buying and selling of goods and services through wireless handheld devices such as cellular telephone and personal digital assistants (PDAs). M-Commerce is also Known as next-generation e-commerce. M-commerce enables users to access the Internet without needing to find a place to plug in. M-commerce
- 36. Wireless ApplicationProtocol (WAP) is a technical standard for accessing information over a mobile wireless network. A WAP browser is a web browser for mobile devices such as mobile phones that uses the protocol. WAP supports HTML and XML, the WML language (an XML application) is specifically devised for small screens and one-hand navigation without a keyboard. Wireless Application Protocol (WAP)
- 37. • Switching Architecture •ATM is a Broadband cell relay method – Therefore also known as cell relay. • It is an advanced form of packet switching. • The WAN technology of the moment for businesses. • Very High Speed (155 Mbps to 622 Mbps) e.g. can transmit the entire Encyclopedia Britannica in one second. • There are variable rates of transmission but much faster than frame relays. • Multimedia technology that allows WAN to have simultaneous transmission of voice, video and data. ATM (Asynchronous Transfer Mode)
- 38. ISDN is aswitched digital network service that accommodates voice, data and imaging to other ISDN end users. It converts analog telephone lines to digital. Its goal is to link homes and businesses over telephone wires. Sometimes known as narrowband ISDN. Local Loop Transmission Technology. Around for 10 years but is only widely used in last 3 to 4 years. Not designed to be 24hr like T-1 or bandwidth on demand like frame relay service Main problems are cost current availability of infrastructure. ISDN (Integrated Services Digital Network)
- 39. Frame relay isa fast packet switching technology. It is a point-to-point system that transmits variable length frames at the Data Link layer through the most cost effective path. Requires frame relay routers or bridges. Network Service It is a Switching Architecture Primarily for the purpose of LAN interconnection Frame Relay
Editor's Notes
- #5 The key to e-commerce success is to optimize several key factors such as selection and value, performance and service efficiency, the look and feel of the site, advertising and incentives to purchase, personal attention, community relationships, and security and reliability.
- #13 Applications: In the application layer services of e-commerce, it is decided that what type of e-commerce application is going to be implemented. There are three types of distinguished e-commerce applications i.e., consumer to business application, business-to-business application and intra-organizational application. 2. Information Brokerage and Management Layer: This layer is rapidly becoming necessary in dealing with the voluminous amounts of information on the networks. This layer works as an intermediary who provides service integration between customers and information providers, given some constraint such as low price, fast services or profit maximization for a client. For example, a person wants to go to USA from India. The person checks the sites of various airlines for the low-price ticket with the best available service. For this he must know the URLs of all the sites. Secondly, to search the services and the best prices, he also has to feed the details of the journey again and again on different sites. If there is a site that can work as information broker and can arrange the ticket as per the need of the person, it will save the lot of time and efforts of the person. This is just one example of how information brokerages can add value. Another aspect of the brokerage function is the support for data management and traditional transaction services. Brokerages may provide tools to accomplish more sophisticated, time-delayed updates or future-compensating transactions. Interface and Support Services: The third layer of the architectural framework is interface layer. This layer provides interface for e-commerce applications. Interactive catalogs and directory support serviceInteractive catalogs are the customized interface to customer applications such as home shopping. Interactive catalogs are very similar to the paper-based catalog. The only difference between the interactive catalog and paper-based catalog is that the first one has the additional features such as use of graphics and video to make the advertising more attractive. Directory services have the functions necessary for information search and access. The directories attempt to organize the enormous amount of information and transactions generated to facilitate e-commerce. The main difference between the interactive catalogs and directory services is that the interactive catalogs deal with people while directory support services interact directly with software applications.s are the examples of this layer.
- #14 Secure Messaging Layer: In any business, electronic messaging is an important issue. The commonly used messaging systems like phone, fax and courier services have certain problems like in the case of phone if the phone line is dead or somehow the number is wrong, you are not able to deliver the urgent messages. In the case of courier service, if you want to deliver the messages instantly, it is not possible as it will take some time depending on the distance between the source and destination places. The solution for such type of problems is electronic messaging services like e-mail, enhanced fax and EDI. The electronic messaging has changed the way the business operates. The major advantage of the electronic messaging is the ability to access the right information at the right time across diverse work groups. The main constraints of the electronic messaging are security, privacy, and confidentiality through data encryption and authentication techniques. 5. Middleware services: The enormous growth of networks, client server technology and all other forms of communicating between/among unlike platforms is the reason for the invention of middleware services. The middleware services are used to integrate the diversified software programs and make them talk to one another. 6. Network Infrastructure: We know that the effective and efficient linkage between the customer and the supplier is a precondition for e-commerce. For this a network infrastructure is required. The early models for networked computers were the local and long distance telephone companies. The telephone company lines were used for the connection among the computers. As soon as the computer connection was established, the data traveled along that single path. Telephone company switching equipment (both mechanical and computerized) selected specific telephone lines, or circuits, that were connected to create the single path between the caller and the receiver. This centrally-controlled, singleconnection model is known as circuit switching.
- #17 The new technology will transform business processes, the way products and services are created and marketed, dynamics of competitions, the organization structure of the enterprise and the nature of the enterprise itself. This will include marketing, supply management, customer and sales management, product development etc. • Local proximity may no longer be a significant factor in retaining customer. Local markets will be replaced by global markets. Indeed it may bring to reality the goal of making the whole world as one family. • Transparency and openness continue and will continue, to be effective business strategy. Already many businesses have started recognizing key customers, employees and suppliers more like a partner in the business. E-commerce will lead to better customer service, more personalized products, reduced costs, supply chain efficiency and faster time to market. The most significant aspect of e-commerce is new market development. The e-commerce links and the infrastructure, initially set up, can be successfully used in other sectors. • The change in the business functions will lead to new business models and create new set of facts and circumstances that can materially change the incidence of taxation.
- #20 supplier management (especially purchase order processing), inventory management (i.e., managing order-ship-bill cycles), distribution management (especially in the transmission of shipping documents), payment management (e.g., electronic payment systems or EPS). Business to Business or B2B refers to e-commerce activities between businesses. An e-commerce company can be dealing with suppliers or distributors or agents. These transactions are usually carried out through Electronic Data Interchange or EDI. EDI is an automated format of exchanging information between businesses over private networks. This allows more transparency among business involved; therefore business can run more efficiently, for instance, a supplier can respond faster to diminishing stock of a particular product. EDI is composed of standards that enable businesses’ computers to conduct transactions with each other without human intervention. In general, B2Bs require higher security needs than B2Cs. For example, manufacturers and wholesalers are B2B companies. With the help of B2B e-commerce, companies are able to improve the efficiency of several common business functions, including supplier management, inventory management and payment management. Using e-commerce enabled business applications, companies are able to better control their supplier costs by reducing PO (purchase order) processing costs and cycle times. This has the added benefit of being able to process more POs at a lesser cost in the same amount of time. E-commerce technology can also serve to shorten the order-ship-bill cycle of inventory management by linking business partners together with the company to provide faster data access. Businesses can improve their inventory auditing capabilities by tracking order shipments electronically, which results in reduced inventory levels and improves upon the ability of the company to provide “just-in-time” service. This e-commerce technology is also being used to improve the efficiency of managing payments between a business and its partners and distributors. By processing payments electronically, companies are able to lower the number of clerical errors and increase the speed of processing invoices, which results in lowered transaction fees.
- #21 physical goods (i.e., tangibles such as books or consumer products) information goods (or goods of electronic material or digitized content, such as software, or e-books); The more common applications of this type of e-commerce are in the areas of purchasing products and information, and personal finance management, which pertains to the management of personal investments and finances with the use of online banking tools (e.g., Quicken). B2C e-commerce reduces transactions costs (particularly search costs) by increasing consumer access to information and allowing consumers to find the most competitive price for a product or service. B2C e-commerce also reduces market entry barriers since the cost of putting up and maintaining a Web site is much cheaper than installing a “brick-and-mortar” structure for a firm. In the case of information goods, B2C e-commerce is even more attractive because it saves firms from factoring in the additional cost of a physical distribution network. Moreover, for countries with a growing and robust Internet population, delivering information goods becomes increasingly feasible.
- #23 Business to Government (B2G) It is a new trend in e-commerce. This type of e-commerce is used by the government departments to directly reach to the citizens by setting-up the websites. These websites have government policies, rules and regulations related to the respective departments. Any citizen may interact with these websites to know the various details. This helps the people to know the facts without going to the respective departments. This also saves time of the employees as well as the citizens. The concept of Smart City has been evolved from B2G e-commerce.
- #24 Customer to Customer or C2C refers to e-commerce activities, which use an auction style model. This model consists of a person-to-person transaction that completely excludes businesses from the equation. Customers are also a par of the business and C2C enables customers to directly deal with each other. An example of this is peer auction giant,Ebay
- #33 Lack of planning Unrealistic goals No business focus or site not integrated with your overall business. No promotion or misplaced promotion Spending a lot of money just to develop a site without also investing in promotion is wasteful Doing promotion and not following up. Bad site design & poor usability Simplicity works. Sometimes, it is more important to have targeted content with an overall customer focus than to have the latest whiz-bang gizmos and a flashy site. Is content easily found and is the site easy to navigate? Are fonts too small or set against the wrong background colour? Is it intuitive to visitors to know the next steps? Do you have a strong call to action? Slow performance Potentially good sites fail because of performance when visitors wait for the site to load. A site that takes more than a couple of seconds to load will not be successful Slow sites are usually the result of bad design, a poorly selected host, non-optimised images, or sites overloaded with widgets and gizmos. Coding errors The site may look and perform well on newer browsers but it can also crash on older browsers “Page Not Found” and other coding errors. Security & hacking issues Non-secure online payments Spam attacks on a blog or user comments Hacked or defaced site Viruses on your site. Going cheap - you get what you pay for When outsourcing, if the price sounds too good to be true then it just might be Free hosting in foreign countries are generally slower with more downtime than local hosting DIY and not relying on expert advice/help. Content Spelling & grammar issues Incorrect or inaccurate content No contact information! Poorly written content that is difficult to read Inappropriate content.
- #38 Technology ATM networks have fixed length cells of 53 octets long (53 bytes) that are small and move very fast. 48 bytes are for data or information from higher-level protocols and the remaining 5 bytes for header information. It breaks packets down into a smaller size but doesn’t need much headers and footer data. ATM is a lot faster than frame relay switches because of the uniform cell length. Also provide predictable delivery times that frame relay cannot offer. ATM adaption layer (AAL) in the data link layer processes the input information into the fixed-length ATM cells so an ATM switch can send them on. The switch routes the information to other locally connected ATM devices as well as the wide area ATM network. AAL are designed to optimise the delivery of a wide variety of types of traffic. ATM protocols are supported from the LAN to the WAN, from network interface cards to ATM WAN switches, thereby removing the necessity for multiple protocol conversions from the desktop across enterprise networks. Just have general idea of packets in ATM Relies on carriers to implement ATM on WAN, leasing off local lines. ATM switches act as hubs and/or high-speed routers to remote networks. Permits several computers to transmit at once but its system works like an ambulance in traffic, giving priority to voice, visual and data. Business ATM has LAN and WAN functionality but frame relay has only WAN functionality. If business makes substantial use of multimedia it has to be considered over frame relay. Very expensive because it requires special hardware and exceptionally high speed bandwidth to reach its potential. This bandwidth is not yet fully available to support full speed ATM in a WAN environment. Installing requires extensive equipment replacement. The availability of components can sometimes be a problem as there are currently only a limited number of vendors. ATM will require considerable expertise.
- #40 Business Variable Length Frames: Advantage Unlike the uniform cells of ATM, Frame Relays transmit frames or packets of variable length with a maximum of 8,000 characters. The potentially large frames also create high throughput and low delay. Disadvantage As there is no defined length to a frame there is no guarantee as to how quickly a frame can be forwarded. This is only an issue with time-sensitive information such as digitised voice and video. For this reason if a business makes frequent use of either of these media, ATM is recommended instead. As a result of this drawback of variable length packets, frame relay is often described as a data-only service. Data frames need a lot slower end to end connectivity. Data is transmitted through the frame relay cloud along the fastest and most cost effective route. This transmission is transparent to the end user. A Committed Information Rate is supplied to businesses on leased lines. This refers to the minimum bandwidth guaranteed to users for normal transmission. When leasing a line the business can agree with the vendor (e.g. Eircom) on the information rate of e.g. ½ Mbps At some point the bandwidth requirement might rise and then there is the option available to pay for the additional requirements. This is cost efficient as the business only uses extra bandwidth when required. If cost were a big issue frame relays would be preferential choice over ATM if the business were only likely to be handling heavy bursts of traffic on dispersed occasions. The dynamic bandwidth allocation will handle this by assembling and forwarding more frames per second onto the frame relay network and over multiple permanent virtual circuits. Inter-LAN communication tends to have these large bursts of requests for data and file transfers. There is need for better coordination among different frame relay vendors in order to offer more transparent access between them. Frame relays are protocol independent or protocol transparent. What goes on inside the frame relay network cloud remains transparent to the end user.