BA9177 E-COMMERCE TECHNOLOGY AND MANAGEMENT UNIT I.

BA9177E-COMMERCE TECHNOLOGY AND MANAGEMENT

UNIT I

ELECTRONIC COMMERCE & PHYSICAL COMMERCE

E-commerce Traditional commerceE-Commerce involves buying and selling of goods and services on internet

It involves physical exchange of goods and services.

E-Commerce means anytime anywhere service. (It provides 24 hrs service online)

Traditional commerce is restricted to working hours.

It doesn't require involvement of wholesaler and retailer.

It requires involvement of wholesaler and retailer.

It frees staff from customer service and sales support

It needs to employ, large number of staff who provide customer service and sale support.

It does not involve physical exchange of currency. Its convenient to make payment via network.

Physical exchange of currency

FORCES FUELLING E-COMMERCEa) Economic Forces

a) reduction in communications costsb) low-cost technological infrastructure,c) speedier and more economic electronic transactions with suppliersd) lower global information sharing and advertising costse) cheaper customer service alternatives.f) Economic integration is either external or internal. g) External integration refers to the electronic networking of corporations,

suppliers, customers/clients, and independent contractors h) Internal integration, on the other hand, is the networking of the various

departments within a corporation, and of business operations and processes.

b) Market Forces Corporations are encouraged to use e-commerce in marketing and promotion to capture international markets, both big and small. The Internet is likewise used as a medium for enhanced customer service and support. It is a lot easier for companies to provide their target consumers with more detailed product and service information using the Internet.

c) Technology Forces The development of ICT is a key factor in the growth of e-commerce. This in turn has made communication more efficient, faster, easier, and more economical as the need to set up separate networks for telephone services, television broadcast, cable television, and Internet access is eliminated.

ADVANTAGES OF E-COMMERCE• 24 x 7 operation

• Global reach

• Cost of acquiring, serving and retaining customers

•  An extended enterprise is easy to build

•  Disintermediation

•  Improved customer service to your clients

• Power to provide the ‘best of both the worlds”

•  A technology-based customer interface

• The customer controls the interaction

• Knowledge of customer behavior

DISADVANTAGES OF E-BUSINESS

• Time for delivery of physical products

• Physical product, supplier & delivery uncertainty

• Perishable goods

• Limited and selected sensory information.

• Returning goods.

• Privacy, security, payment, identity, contract.

MYTHS OF E-COMMERCE

Myth #1 – E-commerce is “easy” Myth #2 – E-Commerce is inexpensive

Myth #3 – No Experience Required Myth #4 - It’s not a business.  Myth #5 – Manufacturer Photos are

Good Enough 

MYTHS OF E-COMMERCE

Myth #6 – You will get the sale if you have the best price

 Myth #7 - Build it and they will come Myth #8 – Fraud Myth #9 - Competition Myth #10 - One year, one million dollars.

BUSINESS MODEL

Business model – set of planned activities designed to result in a profit in a marketplace

Business plan – document that describes a firm’s business model

E-commerce business model – aims to use and leverage the unique qualities of Internet and Web

ECOMMERCE BUSINESS MODELS

1. Stores Model - e.g. Dell

2. Brokerage Model1. Online Market Place - e.g Amazon,

Taobao2. Group Buying - e.g Groupon 3. Comparison Shopping - e.g.

Shopping.Com,4. Online Auction - e.g. Auctionair

3. Social Commerce – e.g ShopSocially

UNIT II

 INTERNET VS WWW

Internet WWW

Established in 1969 through opening of network to commercial interest began in 1988

1983

It comprises of Network of Computers, copper wires, fibre-optic cables & wireless networks

Files, folders & documents stored in various computers

It is governed by Internet Protocol (IP)

Governed by Hyper Text Transfer Protocol (HTTP)

This is the base; Independent of the World Wide Web

It depends on Internet to work

Hardware Software

INTERNET PROTOCOLS

• The Internet Protocol (IP) is the principal communications protocol used for relaying datagrams (also known as network packets) across an internetwork using the Internet Protocol Suite.

• Responsible for routing packets across network boundaries, it is the primary protocol that establishes the Internet.

• Version—Indicates the version of IP currently used.

• IP Header Length (IHL)—Indicates the datagram header length in 32-bit words.

• Type-of-Service—Specifies how an upper-layer protocol would like a current datagram to be handled, and assigns datagrams various levels of importance.

• Total Length—Specifies the length, in bytes, of the entire IP packet, including the data and header.

• Identification—Contains an integer that identifies the current datagram. This field is used to help piece together datagram fragments.

• Flags—Consists of a 3-bit field of which the two low-order bits control fragmentation. The low-order bit specifies whether the packet can be fragmented. The middle bit specifies whether the packet is the last fragment in a series of fragmented packets. The third or high-order bit is not used.

• Fragment Offset—Indicates the position of the fragment’s data relative to the beginning of the data in the original datagram

• Time-to-Live—Maintains a counter that gradually decrements down to zero, at which point the datagram is discarded. This keeps packets from looping endlessly.

• Protocol—Indicates which upper-layer protocol receives incoming packets after IP processing is complete.

• Header Checksum—Helps ensure IP header integrity.

• Source Address—Specifies the sending node.

• Destination Address—Specifies the receiving node.

• Options—Allows IP to support various options, such as security.

• Data—Contains upper-layer information.

FTP

This is both a program and a method used to transfer files between computers on the Internet.

Anonymous FTP is an option that allows users to transfer files from thousands of host computers on the Internet to their personal computer account.

File transfer is quite rapid.

FTP sites contain books, articles, software, games, images, sounds, multimedia, course work, data sets and more.

FTP transfers can be performed on the World Wide Web even without special software. In this case, the Web browser will suffice.

FTP can be retrieve files via search engines such as FAST FTP search, located at http://ftpsearch.lycos.com/. This option is convenient because you do not need to know FTP program commands.

INTRANET AND EXTRANET

• Intranet Intranet is the generic term for a collection of private computer networks within an organization.

An intranet uses network technologies as a tool to facilitate communication between people or work groups to improve the data sharing capability and overall knowledge base of an organization's employees.

INTRANET AND EXTRANET

• ExtranetAn extranet is a computer network that allows controlled access from the outside, for specific business or educational purposes.

In a business-to-business context, an extranet can be viewed as an extension of an organization's intranet that is extended to users outside the organization, usually partners, vendors, and suppliers, in isolation from all other Internet users.

 A buzzword that refers to an intranet that is partially accessible to authorized outsiders.

CRYPTOGRAPHY• The art of protecting information by

transforming it (encrypting it) into an unreadable format, called cipher text.

• Only those who possess a secret key can decrypt the message into plain text.

• Encrypted messages can sometimes be broken by cryptanalysis, also called codebreaking, although modern cryptography techniques are virtually unbreakable.

SYMMETRIC-KEY CRYPTOGRAPHY

PUBLIC-KEY CRYPTOGRAPHY

CRYPTANALYSIS

Cryptanalysis is the art and science of analyzing information systems in order to study the hidden aspects of the systems.

Cryptanalysis is used to defeat cryptographic security systems and gain access to the contents of encrypted messages.

CRYPTOSYSTEM

• A cryptosystem is pair of algorithms that take a key and convert plaintext to ciphertext and back.

• Plaintext is what you want to protect; ciphertext should appear to be random gibberish.

• The design and analysis of today’s cryptographic algorithms is highly mathematical.

CRYPTOGRAPHIC PRIMITIVES

• Much of the theoretical work in cryptography concerns cryptographic primitives—algorithms with basic cryptographic properties—and their relationship to other cryptographic problems.

• More complicated cryptographic tools are then built from these basic primitives.

• These primitives provide fundamental properties, which are used to develop more complex tools called cryptosystems or cryptographic protocols, which guarantee one or more high-level security properties.

INFORMATION PUBLISHING TECHNOLOGY - Advantages

• Platform Transparency: data residing on variety of server platforms is available

• Distribution Transparency: A page displayed on a browser screen may contain text coming from a IBM server in New York, an image from Windows NT servers located in Delhi.

• Information Type Transparency: The text, graphics, sound, video and various other data formats can be integrated and displayed uniformly through the browser interface.

• Interactive: In addition, it also supports forms with input windows, radio buttons, options lists, checkboxes for submitting the data.

• Dynamic: If the information is updated at the server site, the latest version is made available. The web publishing does not incur any cost of reproducing the copies.

• Graphical and Navigational: Capable of integrating & displaying graphics, text and other multimedia formats in same page & user can jump from pages on a server to other servers by clicking on links.

BASICS OF WEB SERVER

• The main job of a Web server is to respond to requests from Web client computers

• There are 3 components of a Web server: – Hardware– Operating system software–Web server software

TYPES OF WEB SITES

• Development sites: Used to evaluate different Web designs

• Intranets: Corporate networks that house internal memos, corporate policy handbooks, and a variety of other corporate documents

• Extranets: Intranets that allow authorized parties outside the company to access information stored in the system

• Transaction-processing sites: Commerce sites that must be available 24 hours a day, seven days a week

• Content-delivery sites: Deliver content such as news, histories, summaries, and other digital information

WEB CLIENTS AND WEB SERVERS• Client/server architectures

– Client computers request services – A server processes the clients’ requests

• Web software is platform neutral, meaning that it lets different types of servers communicate with a variety of clients

• Dynamic content is non static information constructed in response to a Web client’s request– Dynamic page: Web page whose content is shaped by a program in

response to user requests– Static page: An unchanging page retrieved from disk

• Server-side scripting -Programs running on a Web server create Web pages before sending them back to the requesting Web clients

• Dynamic page-generation technologies: Server side scripts are combined with html tags to create dynamic content - Active Server Pages (ASP), JavaServer Pages (JSP), PHP: Hypertext Preprocessor (PHP)

• Server: Computer used to provide files or make programs available to other computers.– Server software: Used by a server to make files and programs

available to other computers– Database server: Server on which database management software

runs

TWO-TIER CLIENT/SERVER ARCHITECTURE

THREE-TIER AND N-TIER CLIENT/SERVER ARCHITECTURES

UNIT III

DIFFERENT TYPES OF GOODS

ETAILING

• E-Tailing – electronic retailing

• E-tailing (less frequently: etailing) is the selling of retail goods on the Internet.

TRADITIONAL VS E-RETAILING• Traditional retailing: involves selling to a

final customer through a physical outlet involves a fairly extensive chain from a manufacturer to wholesaler to the retailer Examples of physical outlets: Malls, generalized stores, specialized stores, franchise stores

• E-retailing: The Internet has allowed a new kind of specialization to emerge. Example: lastminute.com - allows last minute purchases of travel, gift and entertainment

MAPPING TRADITIONAL VS E-RETAILING

• Specialized stores – Specialized e-stores

• Generalized sores – Generalized e-stores

• Malls - E-malls

• Franchise stores - ?

• New form of business - e-broker

BENEFITS OF E-RETAILING

To the Customer • Convenience • Better information • Competitive pricing • Customization • Shopping anywhere• Anytime

To the Business • Global reach • Better customer service • Low capital cost • Mass customization • Targeted marketing • More value added services • New forms of specialized stores and niche marketing

Models of E-Tailing

• Brick & Mortar

• Click & Mortar

• Click & Conquer

GOALS OF E MARKETING

Sell – Grow sales

Speak – Get closer to customers

though dialogue and participation

Serve – Add value

Save – Save costs

Sizzle – Extending your brand online

TYPES OF INTERNET MARKETING

• Display advertising• Search engine marketing (SEM)• Search engine optimization

(SEO)• Social media marketing• Email marketing• Referral marketing• Affiliate marketing• Inbound marketing• Video marketing

BUSINESS MODELS OF INTERNET MARKETING

• E-commerce: a model whereby goods and services are sold directly to consumers

• Lead-based websites: a strategy whereby an organization generates value by acquiring sales leads from its website.

• Affiliate Marketing: a process wherein a product or service developed by one entity is sold by other active sellers for a share of profits.

• Local Internet marketing: a strategy through which a small company utilizes the Internet to find and to nurture relationships that can be used for real-world advantages.

ADVANTAGES AND LIMITATIONS OF INTERNET MARKETING

• Inexpensive

• Wider audience for a small fraction of traditional advertising budgets

• Consumers to research

• Brings results quickly

LIMITATIONS

• Outright scams - Empty boxes, Pyramid Schemes

• Unable to physically feel or try on the product

• Marketer will not be able to use the x-factor/personal touch factor/human touch factor to influence the audience

E-ADVERTISING• E-Mail

• Banners

• Skyscrapers

• Banner Swapping

• Streaming Video and Audio

• Effectiveness Tracking

• Mini-sites, Pop-ups

E-ADVERTISING

• Interstitials

• Sponsorships

• Coupons (www.coolsavings.com)

• Pay Per Advertising View

(cybergold)

• Loyalty Programs (clickwards.com)

• Partnerships

E-CRM

PHASES OF E-CRM

1. Acquisition

2. Enhancement

3. Retention

BUSINESS ORIENTED ECOMMERCE

Business oriented E-commerce features B2B E-Commerce.

Main features of B2B e-commerce are

• High volumes of goods traded

• High net value of goods traded

• Multiple forms of electronic payment

• Other payment methods permitted

• Prior agreements or contracts between the partners

• Higher level of information exchange

THREE BASIC TYPES OF MODELS

• Buyer Oriented E-commerce: Corporation does not have to physically go out there searching for suppliers.

• Seller-Oriented E-Commerce: Producing or marketing products to a large number of small and large corporations. i.e one (supplier) to many (buyers) system. Example: Dell and Cisco

• Virtual Market Place: It provides a meeting place for many vendors and many buyers.

FOUR PILLARS OF E-GOVERNMENT

E-GOVERNMENT

E-Government should enable

anyone visiting a city website to

communicate and interact with

city employees via the Internet in

more sophisticated way than

sending a E-Mail.

OBJECTIVES OF E-GOVERNANCE

• To support and simply governance for all stakeholders

• To increase the efficiency and speed in a transparent manner

• To interconnect citizens, businesses and government to save significant cost

• Citizens have access to information and knowledge about the political.

STAGES OF E-GOVERNANCE

• Computerization

• Networking

• On-line presence

• On-line interactivity

TYPES OF E-GOVERNANCE INTERACTIONS

• G2G (Government to Government)– Ex: egovstandards.gov.in

• G2C (Government to Citizens)– Ex: India.gov.in

• G2B (Government to Business)– Ex: Business.gov.in

• G2E (Government to Employees)– Ex: Egovonline.net

EDI

• Electronic data interchange (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 to another, i.e. from one trading partner to another trading partner without human intervention.

PROCESS OF EDI

SOME MAJOR SETS OF EDI STANDARDS

• UN/EDIFACT - Electronic Data Interchange for Administration Commerce and Transport

• ANSI ASC X12 (X12) is predominant in North America

• TRADACOMS -Trading Data Communications

• ODETTE - Organisation for Data Exchange through Tele-Transmission in Europe

BENEFITS OF EDI• EDI can streamline companies' interactions with trading

partners. • It increases inventory turns.• It decreases inventory• Improves speed flow of information between businesses.• Improved product and sales forecasting• Improved time-to-market• Increased customer satisfaction• Decreases shipping costs• Reduced product returns• Improve cash flow• Integrate supply chain, and • Improved relationships with trading partners

SCM• Supply chain management (SCM) is the

management of a network of interconnected businesses involved in the provision of product and service packages required by the end customers in a supply chain.

• Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption.

BENEFITS OF E-SCM

• It is Web-based (client and server), not Web-enabled

• It incorporates broadcast and active messaging to proactively notify an individual of a condition that requires attention

• It supports the exchange of “real-time” information through trading communities such as employees, customers, suppliers, distributors and manufacturers

• It has open Internet Application Architecture which allows for rapid deployment and scalability, combining unlimited internal/external users in a “real-time” environment

• It has an interface capability with any third party software

• It is platform independent and fully integrated system

• It has Web visibility and processing capability – 24 x 7.

COMPONENTS OF E-SCM

WEB AUCTIONS

• An online auction is an auction which is held over the internet.

• Virtual auctions on the internet.

• The seller sells the product or service to the person who bids the highest price.

TYPES OF ONLINE AUCTIONSEnglish auctions• English auctions are where bids are announced by either an

auctioneer or by the bidders and winners pay what they bid to receive the object.

• English auctions are claimed to be the most common form of third-party on-line auction

• Most simplistic of all the forms. • It is an ascending bid auction in which bids are open for all to

see. • The winner is the highest bidder and the price is the highest

bid.

Dutch auctions• Dutch auctions are the reverse of English auctions whereby

the price begins high and is systematically lowered until a buyer accepts the price.

• Sites that offer Dutch auction services are usually misleading • It is originally intended for that of a declining price auction.

TYPES OF ONLINE AUCTIONSFirst-price sealed-bid• First-price sealed-bid auctions are when a single bid is

made by all bidding parties and the single highest bidder wins, and pays what they bid.

• The main difference between this and English auctions is that bids are not openly viewable or announced

Vickrey Auction (Second-price sealed-bid auction)• A Vickrey auction, sometimes known as a Second-

price sealed-bid auction, uses very much the same principle as a first-price sealed bid.

• The highest bidder and winner will only pay what the second highest bidder had bid.

TYPES OF ONLINE AUCTIONSReverse auction• Reverse auctions are where the roles of buyer and seller are

reversed. Multiple sellers compete to obtain the buyer's business and prices typically decrease over time as new offers are made.

• They do not follow the typical auction format in that the buyer can see all the offers and may choose which they would prefer.

• The term reverse auction is often confused with Unique bid auctions, which are more similar to traditional auctions as there is only one seller and multiple buyers. However, they follow a similar price reduction concept except the lowest unique bid always wins, and each bid is confidential.

Bidding fee auction• A Bidding fee auction (also known as a penny auction) requires

customers to pay for bids which they can increment an auction price one unit of currency at a time.

• The auction owner (typically the owner of the website) makes money in two ways, the purchasing of bids and the actual amount made from the final cost of the item.

LEGALITIES

• Shill Bidding

• Fraud

• Sale of Stolen Goods

VIRTUAL COMMUNITIES

A virtual community, also called a Web community

or an online community, is a gathering place for

people and businesses that do not have a physical

existence.

Virtual communities exist on the Internet today in

various forms, including Usenet newsgroups,

chat rooms, and Web sites. These communities

offer people a way to connect with each other and

discuss common issues and interests.

WEB LOGS (BLOGS)

• Web logs, or blogs, are Web sites that contain commentary on current events or specific issues written by individuals.

• Many blogs invite visitors to add comments, which the blog owner may or may not edit.

• The result is a continuing discussion of the topic with the possibility of many interested persons contributing to that discussion.

WEBPORTALS

• A web portal is a web site that brings information

from diverse sources in a unified way.

• web portals offer other services such as e-mail,

news, stock prices, information, databases and

entertainment.

• Examples of public web portals are AOL, iGoogle,

MSN, and Yahoo!.

TYPES OF WEB PORTALS

• Personal portals• News portals• Government web portals• Cultural Portals• Corporate web portals• Stock portals• Search portals• Tender's portals• Hosted web portals• Domain-specific portals

LEGAL, ETHICS AND PRIVACY ISSUES

• Illegal acts break the law while unethical acts may not be illegal

• Ethics– Branch of philosophy that deals with what is

considered right or wrong– Right and wrong not always clear– Consider

• Company sells profiles of customers with information collected through cookies

• Company allows personal use of Web but secretly monitors activity

• Company knowingly sells tax software with bugs

ETHICAL ISSUES

• Web tracking

 • Disintermediation and

Reintermediation

LEGAL ISSUES IN E-COMMERCE

• Fraud on the Internet

• Copyright

• Domain Names

CYBER LAWS

Cyber Law is the law governing cyber space.

Cyber space is a very wide term and includes computers, networks, software, data storage devices the Internet, websites, emails and even electronic devices such as cell phones, ATM machines etc.

CYBER LAW

• Cyber crimes

• Electronic signatures

• Intellectual property

• Copyright Law – Trademark law– Semiconductor law– Patent law

• Data protection and privacy

CONSUMER PROTECTION LAWS

• Consumer Protection Act enacted , to provide for the protection of the interest of consumers.

• Enabling the Consumer to participate directly in market economy.

• Remove the helplessness of a consumer against powerful business

• Amount to unfair trade practice in clause (r) and even to define ‘defect’ and ‘deficiency’ by clauses (f) and (g)

CONSUMER PROTECTION LAWS

• A constructive approach subject to that it should not do violence to the language of the provisions and is not contrary to the attempted objective of the enactment.

• Caring pieces of legislation intended to protect a large body of consumers from exploitation.

TYPE OF COMPUTER CRIMINALS• Hacker-is a person who has good knowledge about computers and

tries to open the data packets and steal the information transmitted through the Internet.

• Cracker-is someone who specifically breaks into computer systems by bypassing or by guessing login passwords. These persons enter into the network as authenticated users and can cause any harm to the system.

• Phreaks-are persons who hack phone systems. These people specifically try to scam long distance phone-time for them to control phone switch capability or to hack company automated EBX systems to get free voice-mail accounts or to raid companies existing voice-mail messages.

• Phracker-is the combination of freak and cracker. A phracker breaks into phone systems and computer systems and specializes in total network destruction

TAXATION

• Business conducted through the internet caters to globally located customers.

• Raises cross border legal issues.• Creation of wealth through cyber space

would also entail the use of "offshore" financial institutions to store this wealth.

• This is not only a threat to national sovereignty but also overrides traditional principles of taxation

TAXATION

• Aspects of Internet Electronic Commerce Relevant For Tax Policy Makers(i) Lack of any user control to the location

of activity

(ii) No means of identification of users

(iii) Reduced use of information reporting and withholding

TAXATION

• Internet Tax Moratorium Act (1998-2001)– It prohibits states from taxing the fees that Internet

service providers collect for providing Internet service and from collecting Internet-specific taxes on e-commerce transactions.

• Discriminatory Taxes– If an ecommerce transaction is subject to a tax that

is any different from a tax imposed on similar property, goods or services through other means, then the tax is discriminatory.

– Example: If the purchase of a book over the internet is subject to a tax that is different from purchasing a book in a bookstore, the tax is discriminatory.

ENCRYPTION POLICY

• Encryption is a technique for hiding data.

• Secret-key cryptography• Public-key cryptography

DATA ENCRYPTION STANDARD (DES)

• A widely-adopted implementation of secret-key cryptography is Data Encryption Standard (DES).

• DES is secret-key, symmetric cryptosystem.

• When used for communication, both sender and receiver must know the same secret key, which is used both to encrypt and decrypt the message.

CONTRACTS • Any contract includes three essential elements: an offer, an

acceptance and consideration.

• The Contract is formed when one party accepts the offer of another party.

• An offer is a commitment with certain terms made to another party such as declaration of willingness to buy or sell a product or service.

• An acceptance is the expression of willingness to take an offer, including all of its stated terms.

• Consideration is the agreed upon exchange of something valuable, such as money, property or future services.

• Contracts are a key element of traditional business practice, and they are equally important on the Internet. Offers and acceptances can occur when parties exchange email messages, engage in electronic data interchange (EDI) or fill out forms on web pages.

• For example, courts have held the various actions—including mailing a cheque, shipping goods, shaking hands, nodding one’s head, taking an item off a shelf, or opening a wrapped package—are all, in some circumstances, legally binding acceptances of offers.

WRITING CONTRACTS ON THE WEB• An early decision in the 1800’s held that a telegraph

transmission was writing.

• Later courts have held that tape recordings of spoken words, computer files on disks and faxes are writings.

• Thus the parties to an electronic commerce contract should find it relatively easy to satisfy the writing requirement.

• Courts have generous in determining what constitutes a signature.

• A signature is any symbol executed or adopted for the purpose of authenticating writing.

WARRANTIES ON THE WEB

• Any contract for the sale of goods includes implied warranties.

• A seller implicitly warrants that the goods it offers for sale are fit for the purposes.

• Sellers could create explicit warranties, often unintentionally, by making general statements in brochures or other advertising materials about product performance or suitability for particular tasks.

• Electronic data interchange (EDI) or fill out forms on web pages.