Transcript
E CommerceConcepts and Issues
David MillerJay Roloff
E Commerce Definition
The process of selling or buying products or services via the
Internet
Questions
Don’t Hesitate Ask Questions
Traditional Commerce Model
PersonalRetail OutletsShopping Malls
BusinessIndividual Purchasing AgentsBased on ERP requirements
E Commerce Model
PersonalWeb Based Retail OutletsAmazon.comBarnesAndNoble.com
Comparison ServicesShopper.com
E Commerce Model
Businesse-Procurement• Commerce One• Ariba
Industry Purchasing Portals• Airline Portal• TradeXchange
– GM Supply Power (Commerce One)– Auto Xchange (Ford – Oracle)
Building an E Commerce Site
DatabaseServer
Internet
Router/Firewall
Web PageServer
Web PageServer
Web PageServer
Web PageServer
Load Balancer
DatabaseServer
DatabaseServer
DatabaseServer
Web Servers
Apache ($free) 63%Microsoft Internet Information Server ($free)Netscape Enterprise Server ($1,295)Novell Enterprise Server ($1,295)
Database Servers
IBM DB2 v7.1Holds Transaction Processing Performance record with 440,000 TPM32 Servers$14.2 Million for Equipment
Oracle8Microsoft SQL Server 2000
Content Development
Microsoft FrontPageMicrosoft InterDev
Site BuildersStorefront 2000 (Frontpage 2000)eStore Builder (Active Server)ezMerchant (Lotus Domino)
Active Server Pages
Microsoft TechnologyRuns on the ServerCreates Standard HTML codeCompatible with many different BrowsersBarnes and Noble
Content Development
Back-end Integration can cost 25%Large ongoing Cost
ERP IntegrationOraclemySAPJ.D. EdwardsBaan E-EnterpriseeStore (PeopleSoft) #12
B2B E Commerce
2000 - $131 Billion
2003 - $1.55 Trillion
B2B Concepts
Common Portals for ExchangeAbility to Integrate DataRequisition to Sales Order
Cost decrease from $100 to $20/Transaction
Production Schedules feed Forecasts
B2B Portals
AribaCommerce One
Provide Common Ground for ExchangeReplaces EDI for Transactions
Case Study
GM Supply Power (www.gmsupplypower.com)
Quality Information (Real Time)Engineering Information and CollaborationFinancial Information
System Resources (Provided by Commerce One)
Windows NT ServerMicrosoft SQL Server Database
GM TradeXchange
CatalogOnline catalog that are used to purchase standard parts throughFulfillment was Costs $55 Buyer/$45 SellerNow $10 total
AuctionUsed for Special Catalog PurchasesRFQ’s or “reverse” auctions
Bid-QuoteComplex part Purchases
GM TradeXchange
Price Waterhouse Coopers Provide Back Office IntegrationWork With Commerce One to Develop PortalDeveloped Initial Portal in 3 Weeks (Dec 99)
200,000 Catalog Items$4,000,000 SuppliesFirst Bid/Quote for $147 MillionGM Currently Spends $87 Billion with 30k Suppliers
Automotive Trade Exchange
GM TradeXchangeFord AutoXchangeDaimler – Chrysler
$240 Billion of $500 Billion Total Big Three PurchasesCommerce One and Oracle
Airline Purchasing Portal
Six Major AirlinesAmerican AirlinesAir FranceBritish AirwaysContinentalDeltaUnited
Airline Purchasing Portal
$32 Billion Annual PurchasesFuelFuel ServicesAirframeAvionicsEngine ComponentsServices
B2B Future
e-Business in Only 1 Year OldBy 2003, 2/3 of Online Transactions to be B2Be-Supply Chain Synthesis
Seamless integration from end to end
Collaboration with Competition
Where To From Here?
Eliminate Human ContactCurrent e-Commerce Sites have Poor Customer Service
Sell Only Commodity ItemsLow Margins
Have Lowest Price and Highest Selection
No Profits From Sales
The Future
Voice Browsers2000 – 1.4 Million Users Worldwide2005 – 300 Million Users WorldwideText – Speech Conversion
MapQuest.comRequest Direction via PhoneDirections Will Be Read BackIn the Future, Maps Will be Sent to PDA
Issues Regarding E Commerce
Entry Into e-Commerce
Barriers to Entrydevelopment of Web infrastructureintegration with existing infrastructure
• multiple databases• multiple transaction channels
performance and scalability• technology deployed
changes in business processes• customer/supplier relationships• data access • data ownership
Entry Into e-Commerce
Barriers to EntryFor successful, effective, sustainable strategy barriers are high.
Entry Into e-Commerce
It is expensive$750,000 for baseline technologymultiple vendors required
• transactions• security
must be heavily marketed• branding• mass marketing
Entry Into e-Commerce
Must be a compelling business reasonfor many EDI serves purposefew Amazon.com opportunities existin B-2-C, consumers prefer less subjective items like books, software to apparelonline sales less than 5% of total retail revenuemiddlemen still necessary for B-2-B
Entry Into e-Commerce
Performance and size matterBrand power, trust and consumer confidence are criticalCredibility is gained through performancesmalls can enter the fray but price will prevail
Reliability, availability and service are still the
necessary fundamentals.
B-2-C Issues
Consumer purchasing is on the increaseacceptance of mediumtrustentry of big name creditors i.e. VISA
Service and support are criticalresponding to e-mail inquiriesspeed of responsevolume capabilitydevelopment of Web based systems
• chat, e-mail, voice, self-help
B-2-C Issues
Service is the only means of differentiation. You must have price and selection.
adding contentcreating links to other sites and servicespersonalizing the shopping experience
Security
What parts of the transaction are vulnerable and in need of protection?
data in transit• susceptible to modification, monitoring
web servers• http server security flaws• common gateway interfaces
customer data• credit card #’s stored in unencrypted server
databases
Security
Advances in technologyhtml extension languages
• greater control given to client system
more powerful programming languages like JAVA and Visual Basic
• creation of credit card stealing applet
ability to access keystrokes• circumvent encryption
Security
Current security technologyFirewalls
• Hardware and software to protect internal network from external attack
• Location of web server is critical– Ahead of firewall
– site is vulnerable but more user friendly and less cumbersome
– data must be moved behind firewall for safety– Behind firewall
– site is secure– data can be stored in server database
Security
Current security technologyEncryption
• uses a public/private key pair to encode, authorize and decode data transmissions
• data is encoded with a 48 to 126 bit random alphanumeric string
• the message then can only be opened with the proper key located at the receiving end.
• attempts are being made to use this public key technology to handle e-commerce transactions
Security
Current security technologyEncryption
• SSL(Secure Sockets Layer) – authenticates server to client
• SHTTP(Secure http)– authenticates both client and server
• SET(Secure Electronic Transactions)– authenticates both client and server– securely carries payment through to bank
Security
Current security technology3rd party payment systems
• Cybercash– intermediary between merchant and customer/bank– merchant never sees customer credit card #
• Digicash– digital tokens used like travelers checks
• Virtual PIN– payments authorized via e-mail – difficult to intercept– credit card enrollment via phone
Security
Current security technologyUniform standards must be developed and adopted to provide interoperability between systems.Current payment systems require both the client and the server to register.As standards are developed and proposed they must be easy to employ.The entire transaction process must be incorporated; from the point of sale to the merchant to the bank and to the credit clearing house.
Security
Recent DevelopmentsMicrosoft fix
• Active Setup download program which detects which files are needed and downloads relevant ones.
• Microsoft files are automatically downloaded without approval
• can specify download locations on user’s hard disk
• vulnerable to denial-of-service attacks
Security
Recent DevelopmentsApproximately 50% of organizations in a 1997 survey reported security breaches
• up from 37% in the previous year
Nike.com• hackers seized domain name and routed users to
an Australian site with anti-Nike messages• problem lasted for days due to ISPs’ use of
cached versions of web pages to speed access
PrivacyThe need for e-Marketing information
How do you turn browsers into purchasers?How do you identify and retain repeat customers?Who are the most profitable customers?What marketing and promotional efforts attract them?What content leads them to buy?What products should be marketed through which channels?You cannot personalize the shopping experience without some knowledge of the individual.
Privacy
How is this accomplished without jeopardizing privacy?
Technology has been focused on the marketer• consumers cannot manage personal data
Value, Control and Security• must have a perceived benefit• must have control as to how information is used• must be secure from theft, unauthorized
modification
Demographics may be skewed• data could be misleading if only those willing to
release information can be tracked
Privacy
Recent DevelopmentsFTC involvement
• from consumer protection standpoint, many online privacy policies are confusing, contradictory and ambiguous
• changing its stance on self-regulation• congressional action possible
PrivacyRecent Developments
Essential Elements of Privacy Policies (FTC)• Notification defining privacy policies• Choice as to what data are collected and how it can
be used• Customer access to data• Assurances of security from theft and improper
usage
Effects on business• consumer choice could hurt many business models
based on data warehousing and data mining• requirements for access would increase
expenditures for technology and security
Privacy
Recent DevelopmentsU.S./Europe hammer out safe harbor agreement designed to set policy for U.S. based firms to engage in e-commerce in Europe
• establishment of an independent body and process for handling consumer complaints
• compensation for damages from violations of privacy rules
Privacy
Recent DevelopmentsToysmart attempted sale of customer data as part of its bankruptcy liquidation.
• Toysmart had a contract with TRUSTe a privacy watchdog group
• TRUSTe is suing for breach of contract
Ethical/Legal Issues
B-2-B exchangesCreated to achieve marketplace efficienciesTargets of Antitrust investigations
• price signaling• collusion• freezing out competitors
Threat of one online marketplace for each industry via shakeouts and mergers
Ethical/Legal Issues
Methods to avoid legal issuesFTC recommendations
• keep prices and trade secrets private• establish firewalls and procedures to keep
competitors from learning one another’s prices from e-catalogs, bids and auctions
• allow competitors to move freely from one marketplace to another
Identify which players will be hurt by an exchange
• limit their exposure• where there are losers there will be litigation
Ethical/Legal Issues
Methods to avoid antitrust litigationMetalSite.com
• extensive controls and audits• require antitrust education for employees
Ethical/Legal Issues
Recent ethical and legal developmentsNike.com
• a recent attack sent users to a Scotland based web hosting firm, tying up its system
• web hosting company is threatening legal action against Nike and its internet provider
• who bears the responsibility for such injuries?
Ethical/Legal Issues
Recent ethical and legal developmentsNapster Inc. - Internet music sharing service
• allows users to share MP3 files• suits brought on by record labels and music
industry institutions for copy right infringement• company claims it is a ‘mere conduit’ for digital
information• claims that fair use doctrine applies
Questions
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