E Commerce

E - COMMERCEBusiness Model For E-Commerce

Business Models used by companies to define their market strategy and to earn revenue.

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E Commerce:

E – Commerce is a concept of covering any business transactions or information exchange using the communication and business technology. The e-commerce is take place between companies & consumers and companies & companies and public administration.

Business Models of E-Commerce

A business model can be defined as architecture for a product, service and information flow, including a description of business personalities and their roles, and revenue (money) sources.

The business model specifies how the company makes money by specifying their position in the value chain. The models used for market strategy.

Following Entities can be considered through business models

1) Why the consumers choose to business with you?2) What your firm provide that the other firm cannot provide?3) What special advantage your firm brings to market?4) Who else occupy your intended market space?5) What market space you intend to serve and what is its use?

Categories of Business Models

A) E-business model based on the relationship of transactions parties.B) E-business model based on the relationship of transactions types.

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E- Business transaction model

E-business model based on the relationship of transactions parties.

1. Business-to-Consumer (B2C)

Sell products or services directly to the customer

Examples: amazon.com, autobytel.com

Consumers are increasingly going online for purchase products and services, arranging finance through E-Payments. By this model companies con sell products and services directly to the consumer without involvement of any third party. B2C includes retail sales, often called e-retail, and other online purchase such as online airline tickets, entertainment venue tickets, hotel rooms etc.

B2C includes Virtual Malls, which are websites that host many online merchants (sellers or companies). Virtual malls typically charge setup, listing, or transaction fees to online merchants.

Advantages of B2B

1. Inexpensive costs, big opportunities: By the internet companies can market their product to the whole world without mush additional cost.


Business

Consumer

Business

Consumer

Government

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2. Globalization: The web can make a small company to be appearing a big player. It provides much space to capture some customers.

3. Reduced Operational Cost: Selling through the web means cutting down the paper cost, customer support cost, advertising cost, and order processing costs.

4. Customer Convenience: Shopping carts, promotions, interactive user friendly interfaces facilitate towards the customer convince thus generating more business.

5. Knowledge Management: Through database management we store information of customers more efficiently.

B2C Working


Customer Identifies the need

Searches for the product or servies to satisfy the need

Select a vendor to negotiate a price

Receives the product or service (delivery, insepection,acceptance)

Makes Payment

Get Servies and warrenty claims

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2. Business-to-Business (B2B)

Sell products or services to other businesses or brings multiple buyers and sellers together in a central market place.

Examples: MetalSite.com, Shop2gether.com, VerticalNet.com

B2B is that model of e-commerce whereby a company conducts its trading and other commercial activity through the Internet and the customer is the business itself. Or we can say that buy and sell of products between companies.

Companies have to setup B2B applications to collects customer requirements on the web by they achieved a huge saving in distribution-related cost due to their B2B applications.

Advantages of B2B

1. Direct Interaction with customers: This is the great advantage of e-commerce that the customer can direct buy products from the company without any third party.

2. Focused Sales promotions This information gives authentic date about the likes and dislikes and preferences of clients and help the company to bring out focused sales promotions.

3. Building Customer Loyalty If the customer are made to feel special and their privacy has been respected then the customer develop a binding relationship with the site and its output they do not shift loyalties to another site.

4. Scalability If the company uses this business model it can handle many more customers geographically spread.

5. Saving in distribution cost A company can save huge saving in distribution (product) and after-sales support cost by using e-business models.

B2B contain websites that bring multiple buyers and sellers can buy from and sell to each other at dynamic prices determined by business exchange rules.


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The exchange entities are aggregators, trading hubs, auction markets etc.

B2B Transactions (Working)

(i) Review of catalogues.(ii) Identify specification.(iii) Define the requirements.(iv) Post request for proposals.(v) Review vendor reputation.(vi) Select the vendor(vii) Fill out the purchase order.(viii) Send purchase order to vendor.(ix) Prepare invoice.(x) Make payment.(xi) Arrange shipment(xii) Organize product inspection and reception.

B2B Aggregators: It Provide a single market space for business so it can purchase products and services from multiple suppliers.B2B Trading Hubs:

Provide a market space for multiple vertical markets (a trading community for a specific industry).

B2B Auction markets: Provide a market space for buyers and sellers to enter competitive bids.

Business-to-Business marketplace


Buyers Sellers

Aggregators

Auctions

Hubs

Contents

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3. Consumer-to-Consumer (C2C)

Consumer sells directly to other consumer

Examples: InfoRocket.com, Askme.com, ebay.com

With the C2C e-business model, consumers sell directly to other consumers via online ads and auctions. Several websites such as ebay.com use auctions to sell and buy products interested person accept the bid value for buy and sell products.

For more details visit www.ebay.com

4. Consumer-to-Business (C2B)

Consumer fix price according to them, which business accept or decline. Sell products and services directly to business

Examples Priceline.com

This model is also called reverse auction or demand collection model. It enables buyers to name their own price basically through to biding for specific goods or services for generating demands of products. The website collects the “demand bids” and then offers the bids to participating sellers. If the sellers seem the bid appropriate to its expectations it except the bid for the product or service.

For more details visit www.reverseauction.com

www.priceline.com

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http://www.priceline.com/

http://www.reverseauction.com/

http://www.ebay.com/

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E-Business Models Based on the Relationship of Transaction Types

This type of business model is based on following two parameters

On the basis of value addition value addition is addition of value to a product or service because of the opportunities it offers on the web.

On the basis of control the policies that define everything.

1. Brokerage ModelIt is free market based model. The brokerage model provides a meeting point for the buyers and sellers. It consists of Global Network of Buyers and Sellers. This business model provides a virtual market space enabled by internet. All the transactions are carried forward through internet between buyers and sellers such as information exchange, product exchange, funds transfer etc.

Examples: www.baazee.com www.indiacar.com www.automartindia.com

Advantages of Brokerage Model

C2C trading facility. Global reach Efficient information access. Sense of community through direct buyer and seller communication. Trading convenience, which allows trading 24 X7 and continually updated

information.

Brokerage-Price Discovery Mechanism

Defining the price of product or service

There are three kinds of price discovery mechanism they are:


http://www.automartindia.com/

http://www.indiacar.com/

http://www.baazee.com/

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A. Auction

The English auction is the one of the most auction formats. It is also known as open-outcry auction or the ascending-price auction. In this type of auction the auctioneer starts off the auction with lowest acceptable price or the reverse price. He then receives bids from the bidders until the point which there is no raise in the bid. At the point the auctioneer “knocks down” the item, which indicates that the highest bidder will receive the item in exchange of the money he bid for.

Two main objectives of auctions are indentified from an economic point of view

First: Auctions as a mechanism to determine the price for products that are not traded on the traditional markets. Like rare antique items, or for the products with high prices such as stocks, currencies etc.

Second: Auctions as a distribution allocation mechanism indentifies auctions for consumer products which are difficult to sell in the market because of their limited life.


Online Auction Model

Buyer and Seller Registration

Setting up a particular auction

Scheduling and

Advertising

Bidding

Bid evaluation and

Auction

Trade

Settlement

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B. Reverse Auction

This is a unique type of e-commerce model known as demand collection system. That enables the consumers to use the internet to save money on a wide range of products and services while enabling sellers to generate revenue (money).

Key: - Name Your Price

It is the world first buyer-driven commerce system that benefits both consumers and sellers by providing a unique platform where demand and supply meet.

2. Aggregator Model

The aggregator model is based on the virtual merchant. Virtual merchant is a business that operates only form the web and offers web specific goods and services. The price discovery is through auction. Aggregators are connectors between the buyers and sellers. The aggregators are involved in the overall process of selection, organization, matching the buyer’s requirement with the available goods.


Sellers Buyers

Aggregator

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The Aggregator Model

3. Info-Mediary model

This model helps sellers to collect, manage and maximize the value of information about consumers. This model provides data about consumers their buying habits that are extremely valuable for the companies. The information provided by this model is analyzed and used to target market campaigns. The info-mediary model can also work in the other direction it provide information about the products and services, latest market segments (offers). The firms that provide information to both parties are called info-mediares. These websites accepts payment from suppliers based on advertisement, number of user page view, and transaction fees. Info mediares also assists buyers to make their purchasing decisions by offering suggestions about the products facility to compare multiple items. These lead the consumer to a good buying decision.


Sellers BuyersInfo-mediary

Flow of products/services

Information Flow

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Info-Mediary Model

Classification of info-mediares

The info mediares are classified in terms of their relationship with sellers and buyers into four types.

i. Specialized Agents: These info mediares consist of closed relationship with buyers and sellers. To register in this type of info mediary both parties have to pay fees for the membership.

ii. Generic Agents: These info mediares maintain open relationship with both buyer and seller. These types of info mediares provide various types of services to the consumer such as comparison of products, profile management, personalization services. Ex. Google.com, hotspot.com, yahoo.com

iii. Supplier Agents: These info mediares are sponsored by other companies who want sell their products. These websites acts as a content provider.

iv. Buyer Agent: These info mediares are fully based on the consumers. They contain a large base of consumers by the help of these websites the companies communicate with the customers.

4. Community Model

Community is concern as a group of peoples with common interest interacting with each other.

Electronic communities are came is existence when a group of peoples meet online to fulfill their needs which include personnel interest, relationship etc. these


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peoples share information, trade goods and services. The community model is based on all these entities. Community based websites are fully handled by the user the user is like a worker in the site. They suggests, improve site services, editing messages etc.

Function of Communities on Web

They can be used to share information among users at geographical locations.

Communities also improve the business of the companies. The users quiet feel comfortable with purchasing from the site rather than an unknown source.

Types of Communities

1) Newsletters: Newsletters are one way communication .it consist of (list server) software that send the particular message to all the people in the list. It also handles new subscribes and those who want to unsubscribe.

2) Discussion Lists: In this arrange the list server allow the list member to send message to all list members. The discussion list are of three types:i) E-mail discussion list: All messages are sending and received

through the emails. The basic scenario is number of messages=number of emails.

ii) E-mail discussion list digest: The digest list collects all the message send to the list bundled them into one e-mail and send to the subscriber according to sending criteria(daily, weekly, no. of messages) .

3) Bulletin Boards: Topic is available of various categories people can talk on that. It also allows messages to be read, searched, or reviewed later.

4) Chat Rooms: Chat rooms are another type of community tool. It is a great source of information and knowledge for the users. Using chat rooms they can share information, products reviews more efficiently. All we have to do is just become the member of the chat room.


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Building a community is very good approach for developing the business. The success of the community model is based on the user loyalty. The user of these community based websites spends a much time to browse the content available on the site.

Examples: sify.com, rediffmail.com, sulekha.com

5. Value Chain Model

Value chain model is one of the most advance e-business models. This model is based on a company its suppliers and customers. The value chain consists of the connected arrangement of all the components that framed together to form the final product. The goal of this model is to develop the interaction between all members of the chain. This model specifies the relationship between the company and its suppliers. The quality of the product is not fully depending on the efficiency of the company also on its suppliers, wholesalers, retailers etc.

Example: An automobile value chain model


Internal Supplies

Component Suppliers Vehicle Assembler Dealer Network

Consumer

Dealer 2

Dealer 1

Dealer N

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Example: My Yahoo!

News, weather, stock prices, sports


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E – Marketing

With the growth of internet and presentation media marketers of the world are taking advantages of these technologies to achieve an interactive and rich relationship with the customers, suppliers, public entities.

The internet changes the design of the market strategy. These dynamic environments provide the marketers (Companies) with efficient and powerful methods of promotions, distribution, advertisement of the product and services. E – Marketing helps in conducting research and gathering market information.

E-Marketing is concern as any internet-based promotions, including websites, targeted e mail, internet bulletin boards where customer can view and download the content.

Traditional Marketing is concern as promote the sale of your product and services. It includes:

1) Market research for gathering competitive information and soliciting customer opinions and preferences.

2) Publicity from press release to the positing of your company.3) Advertising Text-Based or Graphics-Based.4) Customer Service and Support.5) Sales including distribution.

Web Presence Goals

On the web businesses and organizations can make their own space where they present their goals, objectives, milestones and the offers. In E –Marketing presentations is everything. How will you represent your product or service so achieve good attention over the internet.


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Achieving Web presence goals

i. Attracting visitors to website.ii. Making the site interesting so that the visitor stay and explore the site.

iii. Convincing the visitor to follow the site’s links to obtain information.iv. Building a trusting relationship with customer. v. Encouraging visitors to return to the site.

vi. Reinforcing the positive image that the visitor has already about the organization.

E-Marketing Value Chain

E-Marketing survival is based on the maintenance of strong relationship between the companies and the customers. It like a chain the company acquires customers, fulfills their needs and offers support and gains their confidence so they return to the website again.

E-Marketing Value Chain


Customer acquistion (Before purchase support)

Customer support (During Purchase)

Customer fullfillment (Purchase Dispatch)

Customer support (After Purchase)

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The Browsing Behavior Model

Customers of an e-commerce site interact with it through a series of consecutive and related requests made during a single visit called Session. Within a session a customer can made different types of request such as Login, Browse, Search, and Add to shopping cart, Payment. Different customers use different approach to surf the site and invoke different types of functions of the site at a particular instance. This model helps us to understand the browsing behavior of the customer or viewer. By the help of this model we can enhance the presentation view of our site and improve the features.

Example: Online Video Store

Consider an online video store in which customers can perform following functions:

Connect to the homepage and browse the site by following links to move towards the videos.

Search for the titles according the various keywords and titles. Select the video that results from the search and view additional information

about the video such as price, ranking and reviews. Register a new customer to the online video store. Login with a username and password. Pay for the items added in the shopping cart.

States of online video store

Entry: This is the state when the customer enters to the online store. It is the starting point of the Browser Behavior Model

Home: The Home page that will be displayed on the browser screen.

Login: A customer moves to this state after requesting a login to the site.

Register: If a new user it can create its account on the video store by filling the registration form.


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Search: A customer issues a search for content.

Browse: This state is reached after a customer selects one of the links available at the site to view any of the pages.

Select: selecting one of the links.

Add to Cart: Adding the selected video to the shopping customer.

Pay: Done Payment for the items in the shopping cart using the various methods of E-Payment.

Exit: Customer leaves the site from any of the above states.


Entry Home Login Select

Add to cart

Pay

Exit

Register

Search

Browse

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Online Market Research

The internet is powerful tool for conducting online market research. It includes consumer behavior, indentifying new markets and testing consumer interest in new products. The online market research allows researcher to access a more geographically distributed peoples it allows more and more public participation.

The internet based research is often done in interactive manner by allowing personal contacts with customers and it provides a greater ability to researcher to understand the customer choice, market and competitions.

Steps in Online market research

Steps in collecting Market Research Data

1) Define the research issue and target market.2) Indentify the news groups and internet communities to study.3) Indentify specific topics for discussions.4) Subscribe to the various groups and communities.5) Search discussion group topic and content lists to find the target market.6) Search e-mail discussion group lists.7) Enter to chat rooms.


Prblem Definition and resear

ch objecti

ves

Research

methodology,

Data collection plan

Data Collection, Data Analy

sis

Results, Recommadtio

ns, Implementatio

ns

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Data Mining and Marketing Research

Data mining is concept of finding valuable business information in large database. In Data Mining various searching techniques are used to intelligently find the exact information.

Tools of Data Mining

Neural Computing: It is a machine learning approach by which historical data can be examined for patterns (our required content).

Example: - Identifying a potential customer for a new product.

Intelligent Agents: One of the most fast and efficient approach to retrieve information from internet based database is intelligent agents. As the number of customers, products, vendors, and information increases, it becomes impossible to match customers and products and consider relevant information. To solve this problem we use intelligent software agents. An intelligent agent works on the concept of “Search and E-Match” it monitors the website and check whether the user seems lost into areas that not fit into its profile, and the agent can notify the user and provide assistance.

Functions of Intelligent agents

1. Need Identification2. Product Brokering3. Merchant Brokering 4. Negotiation5. Purchase and Delivery


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E-Branding

A brand is a powerful statement of quality value and other desirable qualities in one recognizable element. Branded products are easier to advertise and promote, because each product carried out the reputation of the brand name. There are thousands of brand names in the traditional market such as Ford Automobiles, Walt Disney Entertainment, Microsoft, SAMSUNG, AHPL etc.

Elements of Branding

1. Differentiation: - In what significant manner the product or service is different from the competitors. The manufacturer must differentiate its product from others in the market.

2. Relevance: - How does the product or service will be useful to the customer. It must deliver good quality.

3. Perceived Value: - Value for money.


Need IdentifiactionAwarness of Unmeet NeedsRequirements possible fullfillment

Product Brokering What to buy , Product evaluation Match product to needs, compare alternatives

Merchant Brokering Comparisons Price and other creteria comparisions

Negotiation . Negotiate the terms and

transactions. Price and other criteria

comparions

Purchase and Delivery. Pay and take the product

. Product delivered

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Examples of E-Brands

Yahoo | AOL Mail | Amazon.com | Dell

Marketing Strategies

Permission-marketing Strategies

The practice of sending e-mail messages to people who have requested information on a particular topic or about a specific product is called opt-in email and is part of a marketing strategy called permissions-marketing. A marketing strategy that only sends specific information to persons who have indicated an interest in receiving information about the product or service. To make attention to the email message the seller must give offers such as win prizes, gift cheques etc.

Brand-Leveraging Strategies

Hyper threaded branding is not only the way to build brands on the web. The branded websites must have to extend their scope to other products and services.

Adding new context to their brands to gain more public attention for example Yahoo started with a search engine and now it enters into the digital and print media by collaborating with “Fox Entertainment Channel”. The basic thing is to add new features that are useful to new and existing users.

Affiliate-marketing Strategies

In affiliate marketing one firm’s (the affiliate firm) website include descriptions, reviews, rating or other information about a product that is linked to another firm site that offer the item for sale. For every visitor who follows the links from the affiliate site to the seller site, the affiliate site will receive a commission from the seller. This strategy is also used in charity.


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Viral-Marketing Strategies

The internet technology has expanded the channels of communications between the companies and customers. This dynamic environment introduces new marketing strategies. Such type of technique is viral-marketing strategy. The basic concept is as follows “Introduce the product or service with greater quality. The customer uses it and impressed by the quality and features of product. Now let the existing customer to tell the other persons about the company product or service they have enjoyed”. Viral marketing allow the customer to do marketing of the company. The number of customer increases much as a computer virus multiplies itself.

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E- Customer Relationship Management (CRM)

Customer relationship management is a business strategy that includes the information technology and customer information to develop a beneficial bind relationship between the customer and the business.

The internet provides a new way for a business to interact with the customer using electronic communication medium. The internet shifted all business activities to the virtual market place.

Customer information is very necessary to build a healthy relationship between the customer and the business. It covers the customer behavior, likes and dislikes, needs of the customer etc. all this aspects must be covered in the relationship management to increase the customer satisfaction and loyalty.

E-CRM Solution

E-CRM solutions are provided to increase revenue (money) and decrease cost for companies while improving customer service. E-CRM goals can be achieved through the internet business strategies. These solutions is divided into three stages


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1) Customer Information Environment

The first step of CRM is building a customer information environment. Collect the information about the customer.

2) Customer Value Orientation

In this stage operational effectiveness is in focus. Customer wants value for their money. They want more benefits from the product and service. In this stage the behavior analysis and profitability analysis is also concern.

3) Customer Loyalty

The third stage pay attention on providing e-services to the customer via the internet. Interactive communication and technology can assist in the sales and support. Telephone, E-Mails, Live Chat is the tools to develop customer relationship.

Advantages of Information Technology in E_CRM

i. Lower cost per contact.ii. An emotional bonding with the customer.

iii. Few errors.iv. Greater customer interactivity with the website.v. Improved reliability.

vi. Greater Responsiveness.vii. Less variability in the quality and content of communication.

E-CRM Toolkit

An E-CRM toolkit covers the elements that are used to enhance the customer relationship. They are as follows:


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E-CRM TOOLKIT

CRM and Customer life cycle

Customer Life Cycle (CLC) is a tool that represents the interaction between the customer and enterprise (company).

To support the transition of the company from a customer the companies have to establish the set of capabilities necessary to plan and manage customer interaction over the internet. These capabilities are divided into two categories:

(i) Operational, Tactical, or strategic capabilities to the enterprise.(j) Acquisition, Retention and Expansion of the customer relationship.


Customer

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Customer Life Cycle

Acquisition: customer acquisition consists of the business process in the CLC. It includes awareness generation, knowledge transfer, pre-sales etc. in acquisition we acquire new customers by promoting products and service and acquire as much customer as we can.

Evaluation: Value for money.

Service: services provided by the company to the customers

Retention: Retention is considered as focus on the customer service. It delivers not what the market wants, but what the customer want. By this company enhance the relationship with the customer. Today leading companies focuses on the existing customers of the company.

“If you want to make money hold on to your good customer”


Consumers

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CRM capabilities supported by the Business Operation:

Consumer surveys and focus groups. Delivering information to the consumers. Tracking Promotional Materials. Billing Invoicing. Fulfilling orders. Mass customizing of products and services.

CRM capabilities supported by Business Management:

Managing customer mails, faxes, calls etc. Managing marketing campaigns. Managing inventory levels. Personalizing communication. Customizing market channels such as web. Capturing key performance metrics. Managing cross sell and up sell opportunities.

CRM capabilities supported by Business Intelligence

Click stream analysis. Market analysis Customer segmentation Cross-selling analysis

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E- Supply Chain Management

E supply chain management refers to management of supply chain through the internet technology.

Supply Chain: - supply chain is a process in which products are created by an organization and delivered to the customer. A company conducts a market research and collects the consumer data. According to the requirements of the consumers the products are manufactured. Then they are marketed and according to the customer order the product is delivered to the customer this is called supply chain.

Electronic supply chain refers to connected arrangement of the network relationship which the organization maintain with the trading partners to source (raw material), manufacturer, and customers.

The flow of information from the initial purchasing to deliver to the customer is called electronic supply chain. The basic concept of supply chain management (SCM) is to provide high speed, low cost communication between customer and supplier.

Examples of E-SCM: - Federal Express (FedEx), United Parcel Service (UPS), DHL etc.


Product Purchase

Vendor Product Packaging Customer

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UPS: - United parcel service has introduced UPS e-logistics a provider of integrated, end-to-end supply chain management packages for e-business. The company’s service includes warehousing and inventory management, order fulfillment inbound and outbound transportation, returns management, customer call center and management reporting. UPS serve both B2B and B2C e-commerce clients.

Benefits/Advantages of E-SCM

i. Global trading capabilities.ii. Global knowledge exchange.

iii. Mass customization and personalization.iv. It is a web based (client-server) architecture.v. It supports the exchange of “real time” information through trading

communities.vi. It is platform independent.

vii. It runs 24 X 7viii. It is a fully integrated system.

E-supply chain components


Customer Order

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Advanced Scheduling: - this section provides the detailed coordination and supply efforts based on individual customer orders. Scheduling is based on the real time analysis of changing constraints throughout the process. From product manufacturing to supply.

Demand Forecasting: - various tools and techniques applied to forecast the demands of a particular entity.

Transportation: - this section facilitates resources allocation and execution to ensure that materials and finished goods are delivered at the right time and right place, according to the planning scheduling at minimal cost.

Distribution Planning: - this is integrated with the above three phases to reach the customer.

Order Commitment: - Accurate delivery of goods and services.

E- Supply Chain Architecture

Dell supply Chain


Commit

Schedule

Make

Deliver

Manufacturer

Customer

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Cyber Laws

Information Technology (IT) Act 2000

The parliament of India passed its first cyber law on the 17 October 2000, the Information Technology (IT) Act 2000. Which provide the legal infrastructure for e-commerce in India. The act is as follows

To provide legal infrastructure for transactions carried out by means of electronic data interchange and other means of electronic communication, commonly referred as electronic commerce. Which involve the use of alternative paper-based methods of communication and storage of information, to facilitate electronic filing of documents with the government agencies and further to amend the Indian Penal Code, the Indian Evidence Act, 1872, the Banker’s Book Evidence Act, 1891 and the Reserve Bank of India Act, 1934, and for matters connected there with or incidental thereto.

Highlights of the IT Act, 2000

Electronic contracts are legally valid- EDI accorded legal recognition. Legal recognition according to digital signature. Digital signature to be affected by use of crypto system and hash function. Security procedure for electronic records and digital signature. Appointment of Certifying Authorities (CA) and the Controller of Certifying

Authorities (CCA). Certifying authorities require getting license to issue digital signature

certificates. Establishment of Cyber Appellate Tribunal under the act. Appeal from order of Cyber Appellate Tribunal to High Court. Power to Police Officers and other officers to enter into any public place and

search and arrest without warrant. Various types of computer crimes defined and stringent penalties provided

under the Act. Constitution of Cyber Regulations Advisory Committee to advice the

Central Government and Controller.


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Concepts Introduced in the IT Act 2000

Electronic Record: - The data in electronic format.

Secure Electronic Record: - When any security procedure has been applied to an electronic record at a specific point of time then, such record shall be deemed to be secure electronic record from such point of time to the time of verification.

Digital Signature: - An asymmetric encrypted method to certify the electronic document.

Secure Digital Signature: - Secured procedure verified by the communicating parties.

IT (Amendment) Bill 2006

The IT (Amendment) Bill 2006 was introduced in the Lok Sabha on December 15 2006 by the Union Minister of State for Communication. According to the ‘statements of objects and Reasons’ of the Bill the purpose of the bill is:

Harmonization of electronic communication and services with Information Technology Act

Protection of Critical Information infrastructure To suggest penal provision in the IT Act, Penal Code, Indian

Evidence Act, and the Code of Criminal Procedure to prevent the publication of sexually explicit material, video voyeurism, breach of confidentiality and leakage of data info mediaries.

Actions to be taken in e-commerce frauds like phishing, identity theft, and transmission of offensive material through communication services.


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EDI Application in Business

The transfer of structure data by agreed message standards, from one computer system to another, by electronic means.

EDI is used for those transactions that are conducted in a predefined format such as Purchase transactions. EDI is normally used in settlement phase of the trade cycle.

Search

Negotiate Pre Sales

Order

Deliver Execution

Invoice

Payment Settlement

After Sales after Sale

The Credit Trade Cycle


EDI

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EDI Trade Exchange

The main use of EDI is for execution and settlement exchanges of the trade cycle. These exchanges take place within an agreed trade relationship and in the context of the formal contract. The trade exchange is as follows:

The customer sends an order to the supplier. The supplier sends the goods and delivery note. The supplier follows up the delivery note with an invoice. The customer makes payment against the invoice and sends a payment

advice.

EDI Trade Document Exchange

Order: - the order is a contract for one specific consignment of goods. It specifies what is wanted, in what quantity, where is to be delivered, who will pay. It provides the complete detail of the customer.


EDI

Order

Delivery Note

Invoice

Payment

Customer

Supplier

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Delivery Note: - Goods arriving at the customer doors should have documentation to indicate who they are from and why they have been sent; the document does this is the delivery note. It specifies the order no, product quantity based information.

Invoice: - when the goods are delivered the supplier issue the invoice (Bill). This says what has been supplied for which order and the cost. It a statement of payment request. By the EDI based approach the invoice is reached quickly with appropriate data.

Payment: - various E-payment techniques.

Organization Use EDI in their Business (Example)

BMW Motors USA Lucas Rist

BMW Motors car manufacturer make extensive use of the EDI as a facilitator of just-in-time manufacturing systems. BMW manufacture cars from complete chassis – Engine- Body. The seats and internal hosiery is provided by the Lucas Rist. BMW sends a build plan and provisional order to the Lucas Rist from EDI. When the car was passing through the assembly line to body segment. Lucas Rist informs the BMW again using EDI of when the seats and hosiery are to be dispatched. This gives BMW a chance to adjust the production schedule if there is


E-Commerce

Internet Commerce

EDI

Electronic Market

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any problem. BMW basic requirements is that the seats and hosiery need to be there, to be fitted to the body shell before it goes to the final assessment. Without the hosiery items the productions line stops.

Security Issues in E-Commerce

Risk Management Approach in E-Commerce

There are various types’ threats in the internet technology such as virus, worms, and hackers, to breach the security of the e-commerce application. We have some approaches to prevent from security attack they are as follows:

1. Protecting Internet Communication Security of Message Securing Channel for communication

Secure Socket Layer SHTTP (Secure Hyper Text Transfer Protocol) Virtual Private Network (VPN)

2. Protecting Networks Firewall Proxy Server

3. Protecting Client and server Operating System Controls Antivirus Software

Security of message:

For prevention from the security attack we have to secure the message. We have to stop the message alteration and unrestricted access to the message from the intruder. The techniques are as follows

Encryption art of secret writing Hash function algorithm that provides a fixed length number called

hash or message digest for security. Digital Signature


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Digital Envelopes technique using symmetric key encryption (public key) for large documents.

Digital certificates issued by the certification authority for transaction validation.

Secure Socket Layer

When we receive a message from the server through a secure channel. A secure session is created called secure session the URL of the requested document is send to the server in the session. The information is delivered in the encrypted format that is decrypted through the public key and displayed on the web browser. Digital certificates are used for the validation of the communication parties. The SSL protocols provide us the facility of data encryption, server authentication and message integrity on the communication channel.

SHTTP

It is a secure transmission protocol that is used with HTTP for communication in the web based application.

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