E-Commerce

E-commerce is not about technology.

It is not a new business.
E-commerce is a method for companies to create and operate their
business in new and efficient ways using internet and ICT infrastructure .
Introducti
on
• E-commerce is Electronic commerce is a industry where buying &
selling of products is conducted online or via electronic systems
like Internet, computer networks.
• It draws on technologies like
• electronic funds transfer(EFT),
• Internet marketing,
• electronic data interchange
(EDI) &
• automated data collection
system
• Doing Business in the
Information Age
E-business :
e-commerce is nothing but buying and selling of goods around the web.
On the contrary, e-business is a little different as it is not limited to,
What is e-commerce?
Includes:
• Online business to business transactions
• Online business to consumer transactions
• Digital delivery of products and services
• Online merchandising
• Automated telephone transactions eg phone banking
• EFTPOS (Electronic Fund Transfer at the point of sale)
and other automated transfer systems
E-Commerce
• Electronic commerce was identified as the facilitation of commercial transactions electronically,
using technology such as Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT).
• What is EDI?
• What is EFT?
• EDI is the structured
transmission of data
between organizations
by electronic means. It is
used to transfer
electronic documents or
business data from one
computer system to
another computer
system.
• EFT is the electronic
exchange or transfer of
money from one account
to another.
Types of E-commerce/Types of E-commerce
Business
• Business to Business (b2b)
• - this form is the common association of "e-commerce." Amazon
• Business to Consumer (b2c)
• Consumer to Business (c2b)
• In this scenario, a consumer would post a project with a set budget online,
and companies bid on the project.
• Consumer to Consumer (c2c)
• this type of e-commerce is made up of online classifieds or forums where
individuals can buy and sell their goods.
• ebAY
• Business to Employee (or B2E) e-commerce
 BUSINESS TO BUSINESS (B2B)
• B2B can be open to all interested
parties or limited to specific,
pre- qualified participants
(private electronic
market).
• Companies doing business with each
other such as manufacturers selling
to distributors and wholesalers
selling to retailers.
• Businesses sell products or services to
other businesses
 BUSINESS TO
CONSUMER
• Businesses selling to the general public (B2C)
typically through catalogs utilizing
shopping cart software.
• B2C is the indirect trade between the company and consumers.
• It provides direct selling through online.
• If you want to sell goods and services to customer so that anybody can
purchase
any products directly from supplier’s website.
• Muncha.com
 CONSUMER TO BUSINESS (C2B)
• A consumer posts his project with a set budget online and within
hours companies review the consumer's requirements and bid on
the project.
• The consumer reviews the bids and selects the company that will
complete the project.
• C2B empowers consumers around the world by providing the meeting
ground and platform for such transactions.
 CONSUMER TO CONSUMER (C2C)
• It facilitates the online transaction of goods or
services between two people.
• Though there is no visible intermediary involved but
the parties cannot carry out the transactions
without the platform which is provided by the
online market maker such as eBay.
• eBay’s auction service
E-COMMERCE EXAMPLES:
• An individual purchases a book on the Internet.
• A government employee reserves a hotel room over the Internet.
• A business buys office supplies on-line or through an electronic
auction.
• A manufacturing plant orders electronic components from another
plant within the company using the company's intranet.
Benefits of E-Commerce
• No barriers of time or distance.
• Past five years resulting in more businesses transferring sections of their operations onto
the internet, potentially cutting operation costs.
• Cost Efficiency and Receiving the Best Price
• Price is usually 2x to 5x the initial price
• Benefit of Free
• Free Shipping or Free Returns in case of wrong size or color
• The Art of Individualism and Personal Satisfaction
• Companies are offering clothing that is accustomed to fit the many types of bodies that
resemble the consumer.
• Accustom Apparel, which uses 3Dbody scanners along with pattern making software
to scale the creation of custom fitted clothing at a digestible price point.
• The Self-Appointed Shopper
• Organizing a consistent purchase for the consumer to obtain routine goods and services.
Some critics may view this as a lazy shopper, while others say it is a matter of
convenience.
Challenges of e-commerce
• Some business processes are not suited to e-commerce, even
with improvements in technology
• Many products and services require a critical mass of potential buyers
(e.g. online grocers)
• Costs and returns on e-commerce can be difficult to quantify and
estimate
• Cultural impediments: People are reluctant to change in order to
integrate new technology
• The legal environment is uncertain: Courts and legislators are trying
to catch up
Issues and Limitations in E-
Commerce
E-Commerce and Media Convergence
• Convergence broadly defined is the melding of consumer electronics,
televisions, publishing, telecommunications, and computers for the
purpose of facilitating new forms of information based commerce.
• Multimedia convergence applies to the conversion of text, voice,
data, image, graphics, and full-motion video into digital content.
`` refers to the integration of various industries –
entertainment, publication, and communication media- based
on multimedia content.
• Convergences of content
• Convergence of transmission
• Convergence of information access devices:
Inventory Management and Organizational
Applications
• Just –In- Time Manufacturing
• Japanese approach to manufacturing and initially introduced for the Toyota
production system, is based on two principles:
• elimination of waste and
• empowering workers
• Quick Response Retailing System (QR)
• Quick response (QR) is a version of JIT purchasing tailored for retailing
• To reduce the risk of being out of stock, retailers are implementing QR systems
• Supply Chain Management System (SCM)
• Supply Chain Management (SCM) is also called “extending” which means integrating
the internal and external partners on the supply and process chains to get raw
materials to the manufacturer and finished products to the consumer.
• Supplier Management
• Inventory Management
• Distribution Management
• Channel Management
• Payment Management
• Financial Management
• Sales Force Productivity
Business Models for E-Business
• Business model can be described as a means and methods a firm
employs to earn the revenue projected in its plans. It views the
business as a system and answers the question, “How are we going to
make money to survive and grow?”
• business model is a representation of the activities of a business
Types of E-Commerce Business Model
• Business model has been classified into two categories on the basis of:
• Involvement of business partners
• Style of Business Transaction

INVOLVEMENT OF BUSINESS PARTNERS STYLE OF BUSINESS TRANSACTION

 Brokerage
1. Business-to-Business (B2B)
 Advertising
2. Business-to-Consumer (B2C)
 Infomediary
3. Consumer-to-Business (C2B)
 Merchant
4. Consumer-to-Consumer (C2C)
 Manufacturer (Direct)
 Affiliate
 Community
 Subscription
 Utility
 Value Chain Model
Electronic Payment System
• E- Payment is a subset of an e-commerce transaction to include
electronic payment for buying and selling goods or services offered
through the Internet.
• Payment processes carried out electronically.
• A real revolution in the meaning of electronic payment system came
with the development of EFT (Electronic Fund Transfer)
technology.
• EFT- is a technology (one of the electronic commerce technologies)
that allows the transfer of funds from the bank account of the
one person or organization to that another.
TYPES OF ELECTRONIC PAYMENT
 Banking and financial payments
SYSTEMS
 Large-scale or wholesale payments (e.g., bank-to-bank transfer)
 Small-scale or retail payments (e.g., automated teller machines and cash dispensers)
 Home banking (e.g., bill payment)
 Retailing payments
 Credit cards (e.g., VISA or MasterCard)
 Private label credit/debit cards (e.g., J.C. Penney Card)
 Charge cards (e.g., American Express)
 On-line electronic commerce payments
 Token-based payment systems
 Electronic cash (e.g., DigiCash)
 Electronic checks (e.g.; NetCheque)
 Smart cards or debit cards (e.g., Mondex Electronic Currency Card)
 Credit card-based payment systems
 Encrypted credit cards (e.g., World Wide Web form-based encryption)
 Third-party authorization numbers (e.g., First Virtual)
TYPES OF ELECTRONIC PAYMENT
 Electronic payment system can be broadly divided into four general
SYSTEMS
types :
 Online Credit Card Payment System
 Electronic Cheque System
 Electronic Cash System and
 Smart Card based Electronic Payment System
Electronic Payment
System- Types
E-
• A system that allows a person to pay for goods or services by
Cash
transmitting a number from one computer to another.
• Like the serial numbers on real currency notes, the E-cash numbers
are unique.
• This is issued by a bank and represents a specified sum of real
money.
• It is anonymous and reusable.
E-Cash Security
• Complex cryptographic
algorithms prevent
double spending
• Anonymity is preserved
unless double
spending is attempted
• Serial numbers can allow
tracing to prevent
money laundering
E-Wallet
• The E-wallet is another payment scheme that operates like a carrier of
e-cash and other information.
• The aim is to give shoppers a single, simple, and secure way of
carrying currency electronically.
• Trust is the basis of the e-wallet as a form of electronic
payment.
Procedure for using an e-wallet
1. Decide on an online site where you would like to shop.
2. Download a wallet from the merchant’s website.
3.Fill out personal information such as your credit card number, name,
address and phone number, and where merchandise should be shipped.
4.When you are ready to buy, click on the wallet button, the buying
process is fully executed.
What Is Payment Gateways
• A payment gateway is an e-commerce application service provider
service that authorizes payments for e-businesses, online
Shopping, etc.
• Payment gateway protects credit cards details encrypting sensitive
information, such as credit card numbers, to ensure that
information passes securely between the customer and the
merchant and also between merchant and payment processor.
Secure Electronic Transaction (SET)
Protocol
• Jointly designed by MasterCard and Visa with backing of Microsoft,
Netscape, IBM, etc.
• Designed to provide security for card payments as they travel on the
Internet
• Contrasted with Secure Socket Layers (SSL) protocol, SET validates
consumers and merchants in addition to providing secure
transmission SET specification
• Uses public key cryptography and digital certificates for validating
both consumers and merchants
• Provides privacy, data integrity, user and merchant authentication,
and consumer nonrepudiation
EDI: Electronic Data Interchange
•What is EDI?
•Exchange of electronic data between companies using
precisely defined transactions

•Set of hardware, software, and standards that

accommodate the EDI process

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Electronic Data Interchange : Benefits
of EDI

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Electronic Data Interchange

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Electronic Data Exchange
• How does EDI work?
• Supplier’s proposal sent electronically to purchasing organization.

• Electronic contract approved over network.

• Supplier manufactures and packages goods, attaching shipping data recorded

on a bar code.

• Quantities shipped and prices entered in system and flowed to invoicing

program; invoices transmitted to purchasing organization

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Electronic Data Exchange
• Manufacturer ships order.
• Shipment notice EDI transaction sent (not shown)
• Purchasing organization receives packages, scans bar code, and
compares data to invoices actual items received.

• Payment approval transferred electronically.

• Bank transfers funds from purchaser to supplier’s account

using
electronic fund transfer (EFT).

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Electronic Data Interchange

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Electronic Data Interchange
•EDI Standards
• EDI requires companies to agree on standards
• Compatible hardware and software
• Agreed upon electronic form format

• Established EDI standards

• Automotive Industry Action Group (AIAG)
• X.12 de facto umbrella standard in U.S. and Canada
• EDI for Administration, Commerce, and Trade (EDIFACT) umbrella of
standards in Europe

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Electronic Data Interchange
•How to Subscribe to EDI
•Larger companies purchase hardware and software
•Medium and small companies seek third-party service
• Value-added networking (VAN)
• Managed network services available for a fee

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Electronic Data Interchange
•EDI on the Web
•Advantages of Web EDI
• Lower cost
• More familiar software
• Worldwide connectivity

•Disadvantages of Web EDI

• Low speed
• Poor security

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Electronic Data Interchange
•The Importance of EDI
• Need for timely, reliable data exchange in response to rapidly changing
markets
• Emergence of standards and guidelines
• Spread of information into many organizational units
• Greater reliability of information technology
• Globalization of organizations

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Security and
• 2. Data and transaction security
Encryption
• 1. Client-server security • Encryption and Cryptography-
• Client Server Security Holes Basis for Data and Message Security
• Physical security holes, • Email Security (PEM-Privacy-
• Software security holes, Enhanced Mail, PGP-Pretty Good
• Inconsistent usage holes Privacy)
• Protection Methods • Digital Signature
• Trust-Based Security • Third-Party Authentication
• Security through Obscurity: • Kerberos
• Password Schemes • Secure Socket Layer (SSL)
• Biometric Systems
• Emerging Client Server Security
Threats Access Controls,
Firewalls,
• Software Agents
Types of
• Malicious Code firewalls and
• Threats to Servers network
security,
Security policies
and firewall
Internet Marketing and Advertising
• Method of Internet • Advertising on the Internet
Marketing • active or push-based
• Pay Per Click advertising
Advertising • The Broadcast
Model
• Banner Ads:
• The Junk Email
• E-mail Marketing Model
• Search Engine • passive or pull-based
Marketing advertising.
• Blog Marketing • The Billboard or World Wide
• Article Marketing Web (WWW) Model
• Catalog and Yellow Pages
Directory Model
• Customer Endorsement
Some Other
Terms
• Virtual Societies
• · Affiliate networks
• · Internet Communities
• · Interactive users group
• Localization
• “Act global, think local” philosophy
• Personalization
• Collaborative filtering
• User profiling,
• User Tracking:
• Counting:
• Auditing:
• Page view
• Hit
• Visit
• Visitor
• Log File Analyzer
Internetworking and E-Commerce
• Internet
• History of Internet
• Internet Connectivity Options Available
• Internet Service Providers
• Inter Net Protocols Suits
• Domain Name Services
• E-Commerce Infrastructure
• Information Superhighway,
• Content and Services,
• Protocols and
• Computing Devices
Web Technologies for E-Commerce
• Static vs Dynamic Websites
• WWW
• Web 2.0 Features and Services
• Web Servers and Web Clients
• Markup Languages
• HTTP
• HTTPS
• SSL
• FTP
• SMTP, POP, IMAP
• Internet telephony (VOIP)
• Web Browsers
The Internet and Web: Features
• Internet and Web features on which the foundations of e-commerce are
built include:
• E-mail
• Instant messaging
• Search engines
• Intelligent agents (bots)
• Online forums and chat
• Streaming media
• Cookies
SOME
• EDI (Electronic Data Interchange)
Terms
• ANSI X12 -American National Standards Institute- North America -In 1979,
• EDIFACT -United Nations Economic commission -Outside of North
America
• Electronic Data Interchange for Administration, Commerce and Transport
• FEDI (Financial Electronic Data Interchange)
• EFT (Electronic Funds Transfer)
• SWIFT (Society for Worldwide Interbank Financial Telecommunications)
• CHIPS (Clearing House Interbank Payments System)
• HIPAA (Health Insurance Portability and Accountability Act )- U.S
congress in 1996