Workshop in Electronic Workshop in Electronic Commerce Commerce Presented by: Dr. Kelly Burke – UH Hilo School of Business Dr. Eric Jeschke – UH Hilo Computer Science Department Funded by: Department of Business, Economic Development, and Tourism University of Hawaii Hilo School of Business
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Workshop in Electronic Commerce Presented by: Dr. Kelly Burke – UH Hilo School of Business Dr. Eric Jeschke – UH Hilo Computer Science Department Funded.
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Workshop in Electronic CommerceWorkshop in Electronic Commerce
Presented by:
Dr. Kelly Burke – UH Hilo School of Business
Dr. Eric Jeschke – UH Hilo Computer Science Department
Funded by:
Department of Business, Economic Development, and Tourism
University of Hawaii Hilo School of Business
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PreviousKelly Burke
University of Hawaii at Hilo
Workshop in Electronic Workshop in Electronic CommerceCommerce
Objectives
Business Problem
EC Models
Facts and Forces
EC Levels
The WWW
Planning
Getting Started
Site Design
Security
Marketing
Payment
Infrastructure
Site Performance
Wrap Up
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PreviousKelly Burke
University of Hawaii at Hilo
Workshop ObjectivesWorkshop Objectives
You are planning to establish an eBusiness in the future
Whether you intend to: Plan and develop the site yourself Have an employee plan and develop the site Plan the site and have an ISP/Host develop it Have an ISP/Host plan and develop the site
You need to understand what Electronic Commerce is, how it works, how to plan and manage it.
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PreviousKelly Burke
University of Hawaii at Hilo
Workshop ObjectivesWorkshop Objectives
What is EC? What forms can EC take? How can EC help? How do I get started? How do I build a simple web page? What is involved in building a full web site?
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PreviousKelly Burke
University of Hawaii at Hilo
Workshop ObjectivesWorkshop Objectives
What are my options for doing E-Commerce? What software and hardware do I need? What makes a good web site? How do I market my site? What concerns should I have for security? How can I settle transaction payment? What future issues should I be aware of?
E-Commerce— selling more goods via the Web E-care for customers— providing all kinds of customer
support on-line E-care for business partners— dedicated services
providing faster, better information for these important groups E-care for employees— improving their effectiveness by
making the right information and services available to them
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PreviousKelly Burke
University of Hawaii at Hilo
E-procurement— working closely with customers and suppliers to improve the tendering process and to better administer the huge number of transactions involved
E-marketing communications— using the Internet to better communicate marketing stance
Enhance product value Benefits work both ways – selling or buying
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PreviousKelly Burke
University of Hawaii at Hilo
Disadvantages of E-CommerceDisadvantages of E-Commerce
High ticket and perishables don’t work Costs / benefits can be hard to quantify Difficult to integrate with existing databases Fast pace of technology change Potential legal issues
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PreviousKelly Burke
University of Hawaii at Hilo
Big Business Survey ResultsBig Business Survey Results
Have a systematic, strategic approach to internet-based initiatives with top-level executive involvement (69% )
Have full time units dedicated to e-business development (47%)
Extent of e-business functionality isn’t beyond basic “brochure ware” (25%)
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PreviousKelly Burke
University of Hawaii at Hilo
Big Business Survey ResultsBig Business Survey Results
E-business accounts for less than 5% of revenues (79%)
Able to process payments online (25%) Creation of a convenient buying experience for
customers on the Web is “extremely important” (80%)
Convenience (75%) Cost (38%) Context – opportunity to buy at right time
and right place (e.g., from work when I am thinking about that book)
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PreviousKelly Burke
University of Hawaii at Hilo
The Typical Online CustomerThe Typical Online Customer
Age: 30-49 Gender: Male Family status: Married with children Household annual income: $60,000 Amount spent online per year: $460
Source: Harris Interactive, Nielson Netratings
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PreviousKelly Burke
University of Hawaii at Hilo
The Typical Online CustomerThe Typical Online Customer
Completed online transactions: 10 Online sessions per week: 6 Unique sites visited per week: 6 Average surfing session: 31 minutes Time per site per week: 32 minutes Time online per week: 3 hours, 8 minutes
Source: Harris Interactive, Nielson Netratings
The WWW and How it Works The WWW and How it Works for E-Commercefor E-Commerce
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PreviousKelly Burke
University of Hawaii at Hilo
The “Big Picture” In ECThe “Big Picture” In EC
WWW architecture How the web works Internet protocol URLs / domain names Internet communication
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PreviousKelly Burke
University of Hawaii at Hilo
Client(Browser)
Web Server
Commerce Server
ProductDatabase
Shopping Cart
Secure Transaction
Server
Dynamic
Static
PagesPagesPages
Pages
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PreviousKelly Burke
University of Hawaii at Hilo
How the Web Works: How the Web Works: Uniform Resource LocatorsUniform Resource Locators
Browsers differ in the way they are programmed But if WWW is to be useful to many – we need standard
way to identify a resource Example:
http://www.hawaii.edu:2074/~kburke/494/ch_3.ppt
URLs specify: protocol (e.g. http) host name (e.g., www.hawaii.edu) connection port on host (e.g. 2074) path on host to resource (494/ch_3.ppt)
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University of Hawaii at Hilo
How the Web Works: How the Web Works: The Internet ProtocolThe Internet Protocol
TCP / IP protocol for communicating IP addressing Network Information Center allocates blocks
Class Address Network part Host part
A 18.155.32.5 18 155.32.5
B 128.171.12.237 128.171 12.237
C 192.66.12.56 192.66.12 56
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PreviousKelly Burke
University of Hawaii at Hilo
How the Web Works:How the Web Works:Domain NamesDomain Names
IP addresses are unfriendly Assign a human readable name to IP addresses Placed in a distributed, hierarchical, lookup
system (DNS) Domains and Hosts - pahuleka.uhh.hawaii.edu
There are many web-based services for looking up names and/or registering them
Most of the popular names are taken, many by “squatters”
Registration of a name requires an annual fee and agreements with third parties for name service referral
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PreviousKelly Burke
University of Hawaii at Hilo
Domain Names.Domain Names.
Once you’ve registered a name, you have first right of renewal, unless…
Disputes are arbitrated by ICANN; most established trademark names and brands are recognized
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PreviousKelly Burke
University of Hawaii at Hilo
Getting StartedGetting Started
Components of the Firm’s Business Model Customer value Scope of products/services Price of value delivered Revenue sources Connected activities Implementation Capabilities Sustainability of advantage
To maintain a successful online business, you MUST
Secure your E-Commerce transactions Secure your servers and data Formulate, post and follow a customer
privacy policy
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PreviousKelly Burke
University of Hawaii at Hilo
Securing TransactionsSecuring Transactions
Need to secure communications between client (customer at a web browser) and server (your web site and beyond)
What kinds of data need securing? Credit card data (card number, expiration date, etc.) Personal data (phone #, address, etc.) Order data Etc.
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University of Hawaii at Hilo
Secure Communications MeanSecure Communications Mean
Authentication: want to make sure that each side is actually dealing with the right host and not some impostor or "man-in-the-middle"
Integrity: want to make sure that data is not altered during transit in any way
Privacy: want to ensure that data is not snooped by a third party in transit
Problem: how to achieve this on the insecure Internet?
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University of Hawaii at Hilo
EncryptionEncryption
A secret "key" is used to encrypt ("scramble") and decrypt ("unscramble") any data passed between browser and server.
The encryption technique and key are chosen so that it would be computationally infeasible to decipher the data without the key (i.e. break the code).
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University of Hawaii at Hilo
If the key is kept secret, the "right" encrypted data can only be generated by the browser or the server. Encrypted data is meaningless to snoopers and cannot be altered without detection.
This provides authentication, integrity and privacy.
EncryptionEncryption
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University of Hawaii at Hilo
Sender
Original Message
Scrambled Message
Scrambled Message
Public Keyreceiver
Original Message
Receiver
Private Keyreceiver
Internet
Public Key CryptographyPublic Key Cryptography
Message
Sender
Original Message
Scrambled Message
Scrambled Message
Private Keysender
Original Message
Receiver
Public Keysender
InternetDigital
Signature
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PreviousKelly Burke
University of Hawaii at Hilo
Key Distribution ProblemKey Distribution Problem
Problem: how to get the key to the other party over an insecure network like the Internet?
Answer: public key encryption PKE uses two keys: whichever one is used to
encrypt, the other one must be used to decrypt Typically, one key is made public, the other is
kept secret. How does this help?
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PreviousKelly Burke
University of Hawaii at Hilo
Session KeysSession Keys
If the browser can get the public key of the merchant, it could encrypt a one-time session key and send it over.
Then the two sides could use the shared session key to encrypt and communicate securely.
To get the merchant's public key, the server could send it over to the browser when it first connects.
Problem: how does the browser know if it has the real public key and not a fraudulent one?
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PreviousKelly Burke
University of Hawaii at Hilo
Digital SignaturesDigital Signatures
A merchant's public key can be digitally signed. A digital signature is a token (a little bit of data)
attached to the end of the key. Using encryption technology, it is possible to verify the
authenticity of the key by examining the "signature". If you trust the key signer, you can trust that the key
is valid. Who can be trusted to sign (vouch for) a merchant's
public key?
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PreviousKelly Burke
University of Hawaii at Hilo
Certificate AuthorityCertificate Authority
A certificate authority is a trusted third party that is in the business of signing public keys. A key signed by a CA is called a digital certificate.
A merchant purchases a certificate and puts it on his server.
When a browser makes a connection the certificate is downloaded. The browser verifies the signature on the certificate and extracts the public key.
The browser encrypts a session key and sends it to the server. Both sides can now securely communicate.
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PreviousKelly Burke
University of Hawaii at Hilo
Digital CertificatesDigital Certificates
Certificates are available from a number of certificate authorities. One of the first, and biggest, is Verisign (www.verisign.com)
Certificates start at about $150 and go up from there, depending on the expected use of the certificate.
A certificate is dated and is only good for a certain time period. After that date a browser will reject it.
To keep current, a merchant will need to purchase new certificates just before the old ones expire.
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PreviousKelly Burke
University of Hawaii at Hilo
Name : “Richard”key-Exchange Key :Signature Key :Serial # : 29483756Other Data : 10236283025273Expires : 6/18/96Signed : CA’s Signature
CertificateCertificate
Identifying the holder of a public key (Key-Exchange)
Issued by a trusted certificate authority (CA)
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PreviousKelly Burke
University of Hawaii at Hilo
Securing Your SiteSecuring Your Site
Disable all nonessential services, programs and user accounts
Use complex passwords and change them reasonably often
Keep up with the latest security bulletins (CERT) and software updates
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PreviousKelly Burke
University of Hawaii at Hilo
Monitor logs for suspicious activity Consider installing a firewall, monitoring
software and/or secure communications software
Have a periodic professional security audit Does your “Host” provide all of this?
Securing Your SiteSecuring Your Site
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PreviousKelly Burke
University of Hawaii at Hilo
Customer PrivacyCustomer Privacy
What does your company do with the data it collects from customers?
Does not release customer data outside the company, under any circumstances, except to legal authorities
makes names, addresses, etc. available to selected partners and third parties
sells customer data to marketers These are all valid policies! Need to be up front: formulate a privacy policy, post
SET is tailored to the credit card payment to the merchants.
SSL is a protocol for general-purpose secure message exchanges (encryption).
SET protocol hides the customer’s credit card information from merchants, and also hides the order information to banks, to protect privacy. This scheme is called dual signature.
SSL protocol may use a certificate, but there is no payment gateway. So, the merchants need to receive both the ordering information and credit card information, because the capturing process should be initiated by the merchants.
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PreviousKelly Burke
University of Hawaii at Hilo
Electronic PaymentElectronic Payment
Debit cards Used in B2C
Electronic funds transfer (EFT) / E-checks Electronic version of paper checking Combines certificates and signatures with payment Used in B2B ePay by Visa, SafeCheck (see www.echeck.org)
• battery operated card readers• swipe card• value transferred to retailer’s terminal• no authorization required
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PreviousKelly Burke
University of Hawaii at Hilo
Electronic PaymentElectronic Payment
Electronic wallet (Fujitsu, Mondex) can be used for Internet transaction settlement handheld terminal values are transferred from customer’s account to
customer’s card or to merchant’s account via either the card or a Web
connection can store values for different currencies http://www.mondex.com/
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PreviousKelly Burke
University of Hawaii at Hilo
Electronic PaymentElectronic Payment
Closed e-cash system Values recharged (transferred) only by bank VisaCash
Open e-cash system Values can be transferred between cards Mondex
eMail-grams Pay money to or receive money from anyone with email e.g., www.Paypal.com
Marketing Issues Marketing Issues in E-Commercein E-Commerce
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PreviousKelly Burke
University of Hawaii at Hilo
Marketing Your Web SiteMarketing Your Web Site
One-to-one marketing Customer service Banner ads Search engines
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PreviousKelly Burke
University of Hawaii at Hilo
One-to-One MarketingOne-to-One Marketing
Relationship marketing “Overt attempt of exchange partners to build a
long term association, characterized by purposeful cooperation and mutual dependence on the development of social, as well as structural, bonds”
“Treat different customers differently” Able to change the manner its products are
configured or its service is delivered, based on the individual needs of individual customers
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PreviousKelly Burke
University of Hawaii at Hilo
One-to-One MarketingOne-to-One Marketing
Customer loyalty Purchase behavior One of the most significant contributors to
profitability Increase profits; strengthen market position; become
less sensitive to price competition; increase cross-selling success; save cost, etc.
Real world examples• 1-800-FLOWERS • Amazon.com• Federal Express (FedEx)
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PreviousKelly Burke
University of Hawaii at Hilo
One-to-One MarketingOne-to-One Marketing
Building and maintaining customer loyalty Maintain continuous interactions between
consumers and business Make a commitment to provide all aspects of the
business online Build different sites for different levels of
customers Willing to invest capital, both human and financial,
in the information systems, to insure continuous improvement in the supporting technology as it becomes available
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PreviousKelly Burke
University of Hawaii at Hilo
One-to-One MarketingOne-to-One Marketing
Building and maintaining customer loyalty Make a commitment to use the information collected
about customers in an ethical manner Realistic managerial expectations in the payback
period and cost recovery Set acceptable standards for response time in
customer service (24-48 hours); Use intelligent agents to expedite and standardize responses whenever possible
Ability to change and customize information and services quickly and inexpensively is a must
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University of Hawaii at Hilo
Customer service A new look and feel
Install Web serverswhich allow eachcustomer to create
individual web pagesthat can be customized
to record purchasesand preferences
Put the burden on thecustomer to treat a
problem or inquiry andreceive information
bit by bit
One-to-One MarketingOne-to-One Marketing
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University of Hawaii at Hilo
One-to-One MarketingOne-to-One Marketing
Customer service Information can be directed to the customer efficiently Creation of a database which records purchases,
problems, and requests is facilitated Information can now be traced and analyzed for
immediate response If customer service options and solutions do not
maintain the same level of excitement and interaction as the advertising and sales presentations, the level of intensity declines and the vendor runs the risk of losing customers
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University of Hawaii at Hilo
Implementing Customer Service Implementing Customer Service in Cyberspacein Cyberspace
Product Life Cycle Phase 1. Requirements : assisting the customer
to determine needs Phase 2. Acquisition : helping the customer to
acquire a product or service
Phase 3. Ownership : supporting the customer on an ongoing basis
Phase 4. Retirement : helping the client to dispose of a service or
product
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PreviousKelly Burke
University of Hawaii at Hilo
Types of Customer Service Functions
Answering customer inquires Providing technical and other information Letting customers track accounts or order
status Allowing customers to customize and order
online
Implementing Customer Service Implementing Customer Service in Cyberspacein Cyberspace
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University of Hawaii at Hilo
Implementing Customer Service Implementing Customer Service in Cyberspacein Cyberspace
Not customized, no personalized feeling, no contribution to relationship marketing
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University of Hawaii at Hilo
Tools of Customer ServiceTools of Customer Service
Help Desks and Call Centers A comprehensive customer service entity EC vendors take care of customer service issues
communicated through various contact channels Telewebs
• combines Web channels, such as automated e-mail reply, Web knowledge bases and portal-like self service with call center agents or field service personnel
Internet• a medium of instant gratification• demand for both prompt replies and proactive alerts
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PreviousKelly Burke
University of Hawaii at Hilo
Marketing Your Web Site: Marketing Your Web Site: Banner AdsBanner Ads
People don’t scroll sideways Get everything on one screen width
Studies find the lower right corner to be most effective location for an ad
http://www.webreference.com/dev/banners/ Placing banners last is more effective than
first Placing banners top and bottom is more
effective than just top
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PreviousKelly Burke
University of Hawaii at Hilo
Marketing Your Web SiteMarketing Your Web Site
Web malls Host sites and provide shopping “portals” e.g., http://store.yahoo.com/
Search engines Passive strategy – “meta” tags
• e.g., www.sba.gov Active strategy – submit site to search engines
• e.g., http://www.submitit.com/
E-mail list rental Opt-in mailing lists (direct marketing) e.g., http://www.netcreations.com/main?page=welcome
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University of Hawaii at Hilo
Publicizing your sitePublicizing your site
Simply registering your domain name will not bring people to your “door”
The ugly reality of search engines: pay to play How to get found in a billion web pages? Get
mentioned on TV Use your “bricks” to promote your “clicks” Develop relationships with other online sites
Infrastructure Issues Infrastructure Issues in E-Commercein E-Commerce
Visit details Hits What pages do they visit? How long do they spend on a page? What “areas” of a page did they scan? Relationship of hits/pages visited/orders
Feedback survey
Future Developments to WatchFuture Developments to WatchFor in E-CommerceFor in E-Commerce
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PreviousKelly Burke
University of Hawaii at Hilo
Future Developments in ECFuture Developments in EC
Public portals Content Community Commerce e.g., http://www.ivillage.com
Exchanges Industry sponsored Private Public
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PreviousKelly Burke
University of Hawaii at Hilo
Future Developments in ECFuture Developments in EC
Enterprise E-Portals E-Commerce systems and legacy systems focus
on transactions, Auctions focus on bringing together buyers and
sellers Operational systems track orders and inventory. E-Portals tie together all of these disparate
systems Enabling the flow of information to employees,
customers and partners
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PreviousKelly Burke
University of Hawaii at Hilo
Future Developments in ECFuture Developments in EC