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INTRODUCTION Networks and Commercial Transactions Internet and Other novelties Electronic Transactions Today Commercial Transactions Establishing Trust Internet Environment Internet Advantage World Wide Web Internet No world wide organization running the Internet. Rules have to be followed which is defined by standard bodies. Network Network is an Interconnection of Computers Commerce Commerce is a division of trade or production which deals with the exchange of goods and services from producer to final consumer . It comprises the trading of something of economic value such as goods , services , information or money between two or more entities. E- Commerce The marketing buying and selling of products and services over electronic systems such as the Internet and other computer networks . "Electronic commerce" or "e-commerce" refers to all commercial transactions in which one or more of the following stages are processed electronically:

advertising and product promotion selection ordering payment delivery use

- 2 -ELECTRONIC COMMERCE Dangers associated with electronic commerce One of the distinguishing features of e-commerce is use of the internet. The main problems can be broken down into three areas: Communication: In open networks communications can pass through many nodal points. The user does not know how well messages are protected by other systems or network operators and there is a wide range of opportunities to read and/or tamper with the communication. Component security: All the components which are connected to the internet - whether a user PC or a retailer's server - must be adequately protected against possible attacks, including against local attacks. The insiders also cause greatest danger to the companys data for the reason of the personal gain. Establishment of identity: Another security aspect of e-commerce systems is the unequivocal establishment of the identity of the persons one is communicating with. Similarly, it is easy to falsify the name that appears as the sender of an email. Therefore additional measures must be taken for mutual identification and authentication.

Benefits of e-commerce E-commerce offers following benefits to the companies: Reduction in cost due to 1. Cheaper Internet prices. 2. Less paper work involved due to digitization of information. 3. Reusing the digitized information in many different ways. E.g. catalog data stored in database can be presented electronically via web and also it can be printed in customized catalogs targeted at specific market niches. 4. Reduction in support staff. E.g. compiling and publishing Frequently Ask Questions (FAQ) can help user to get the answer to these questions at their finger tips 24 hrs a day, 7 days a week.

- 3 -ELECTRONIC COMMERCE 5. Outsourcing of products and services globally. Improving the quality of goods Direct contact with customers can help tracking customer satisfaction, requesting more customer feedback and presenting custom solutions. Increase in the speed of services Because all the information is available right at fingertips, and because only one medium is involved, everything right form advertising, marketing, purchasing to customer support can be done at the fastest rate. Increase in the market share It opens avenues for new markets and new customers. E.g. by expanding the business globally.

Electronic commerce on different Perspectives (viewpoint) From a Communication Perspective : E-Commerce is the ability to deliver products , services, information or payments via networks such as the Internet and World Wide Web From an Interface Perspective: E-Commerce involves various information and transaction exchanges Business to Business, business to consumer, consumer to consumer From a Business process Perspective : E-commerce includes activities that directly support commerce electronically by means of networked connections From an Online Perspective : E-commerce is an electronic environment that makes it possible to buy and sell products, services and information on the Internet. The products may be physical such as cars or services such as news or consulting. From a Structural Perspective : E-commerce involves various media data text, web pages, Internet telephony or IP telephony or voice over the Internet. VOI Products (Voice over the Internet) Telephony applications: IP connections available Cool talk NetMeeting From a Market Perspective : E-commerce is a world wide network for doing business. INTERNET AND OTHER NOVELTIES

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Customer can gain access to an Internet merchants system across the Internet without having to know anything about the intervening Networks Customer The Internet Merchant Standard representation of the Internet is the Cloud to stress the fact that there is something going between systems communicating across the Internet.The something encompasses any number of intermediate computers and networks. There are standard bodies for both network who defines the protocols to be used by anyone connecting to those network. If the rules are properly implemented then the telephone or computer will be able to pass signals to and from the network. E-COMMERCE DRIVERS Drivers promote E- Commerce. 1. Digital Convergence All digital devices can communicate with one another. Video,film,documents,voice,data. 2. Anytime anywhere anyone- 24/7.It ties together the industrial sector,merchants,the service sector, 3. Changes in organization i. downsizing of large organization ii. outsourcing of specialized tasks iii. encouraging cross functional business process all require better communications. 4. Widespread access to IT The exponential increase in the number of PCs world wide means greater for information and communication for business. 5. Increase pressure on operating costs and profit margins global company of products. 6. Demand for customized products and services organization should go with the choice of the customers. Customers expect better quality and performance. If the firm does move with the trend they will fail. NETWORKS AND ELECTRONIC TRANSACTIONS TODAY While considering online commerce, it is important to maintain 1. Perspective

- 5 -ELECTRONIC COMMERCE 2. Define a context (circumstance) Earlier Days Broadcasting network, particularly television was used to market products (but orders cannot be placed using television) one way approach. Telephone lines were used for many by consumers and merchants for business transactions(placing orders,etc) Payments have been made using credit cards and cheques, etc. Highly sensitive business transactions have been processed through ATM network.

Present Days Buying and selling of products in electronic market place will be as simple and trusted as buying by phone or in person. A MODEL FOR COMMERCIAL TRANSACTIONS There will be differences between different types of transactions. Large corporation buys raw material from its supplier is different from a child getting a candy from corner store. Some issues involved in E- Commerce: Establishing Trust Retail Store Before purchase can be made from a retail store, a customer must enter it. Most shops are open to public and customer can walk in. Merchant may control access to the goods it offers in several ways It can sell to all comers through an open store front Selling to a certain clientele (wholesalers selling to resellers only) Doing business only with referred customers. Degree of restrictions a merchant make on his product will depend upon his business. o An automobile ask for license before a test drive o Book store dont mind strangers browsing through their books. Customer choice of doing a transaction(buying a product) Whether the establishment carries the product being sought. Is it reliable establishment?

- 6 -ELECTRONIC COMMERCE Payment method displayed on the stickers of the door(one criteria) Both customer and merchant each establish a level of trust with each other. Merchant Customer is a potential purchaser. Capable of selecting and paying products in time. Customer Merchant is a reliable seller Capable of delivering and serving the product if necessary.

After confinement from both parties a higher level of trust is required. Issues Concerned By Both Buyer And Seller Many products have distribution limits(to whom It can be given and whom not) e.g. Prescription drugs may not be dispensed to anyone without a legitimate prescription. Alcoholic beverages may not be sold to minors and may be subject to other sales restrictions.(National holiday not to be sold) Firearms and Ammunition are subject to a wide range of restrictions Tobacco-not to minors. Establishing trust between partners in a commercial transaction taking placing in public network is very difficult. Merchant Merchant can judge in person during transaction(an oldman whitehaired customer not to show any ID to buy a six pack of beer) Online transaction offers no opportunity for judgement. Correlating identities on the Internet with actual individuals is difficult. E-Merchants cannot afford to trust everyone or even anyone. Customer How long a webpage of a company will exist? Constructing a counterfeit webpage representing itself as a part of large corporation

- 7 -ELECTRONIC COMMERCE Trust is required between buyers and sellers. Negotiating A Deal (Try To Reach An Agreement By Discussion) Trivial matters in retail stores 1. Determining the item to be purchased. 2. Price to be charged. Common method adopted: 1. Selects the desired item. 2. Price clearly marked in the product. 3. Desired product not available (color, size, flavor version is not in stock) 4. Retailer may have to order the product or offer an alternative deal. 5. Special price is also applied for products that are special but out of stock. Retail store E-Com Validity of the merchant Required special mechanism offering price to ensure that buyer placed an order. Identity of the item desired Seller offered the same by the customer. product for the specified price. Ordering products over the Internet does not offer a. An explicit method to reference the offering price b. Nor an explicit method to reference the original order. Payment & Settlement Heart of any transaction is the exchange of values(Money). Normal 1. 2. 3. Procedure Purchase item in person. Buyers give a cash or cheques or credit card. Receives the product in return and a receipt.

Translating these actions into electronic form takes some procedures. There are mechanisms which allow payment information to be kept private by encrypting it by keeping it entirely offline or by using third parties to settle transactions. In Internet transactions

- 8 -ELECTRONIC COMMERCE 1. Unless product available digitally, the buyer has to trust the seller until goods are delivered. 2. Customer can avoid problems by patronizing trusted Internet vendors (a person giving financial or other support to a person or organization) 3. To use a major credit card company that will back up the consumer in the event of a problem with the vendor. Vendor takes smaller risk. When selling online since credit cards are authenticated through automated connections. Payment vehicles and currencies: A great deal of attention is focused on the online transaction. The offline buyer has many options for transaction exchanges. 1. Common are cash 2. Providing an audit trial and a paper record of transaction( Personal check)(Claim of petrol allowance) 3. Credit cards

the

E-Com 1. Digital currencies are developed. 2. Digital signature technologies permit the authentication and certification of digital transmitted documents. Products of delivery: 1. Any products, food football or even a computer can be delivered physically to the customer. 2. Greater level of trust is required between merchant and customer. 3. Customer must wait until the product is delivered.

- 9 -ELECTRONIC COMMERCE Digital products: Digital products that can be delivered electronically are being sold electronically.

New s paper

Digitised Photo

Book (no Photo)

music CD

Full Movie

S/W

1000 900 800 700 600 500 400 300 200 100 0 0 200 400 600 800 1000 1200 News paper, 100, 100 ` Digitised Photo, 300, 350 music CD, 375, 700 Book (no Photo), 400, 600 Full Movie, 750, 900 S/W, 1000, 800

Online Accessibility and Sale of Various Digital Products Information products such as news articles information from databases and other traditional text or data and all can be delivered immediately after purchase over a network connection. S/W Example of Digital Product Some vendors want to ensure that a third party cannot eaves drop on the product transaction and gain use of the material being sold without paying for it THE INTERNET ENVIRONMENTS On the personal side, Internet is growing power they had never before. Email, Message goes quickly and cost is almost zero. On the business side, the rise of the Internet as the enabler of Commerce is changing how companies manage their business. The Internet is the 1. Fastest growing 2. Most user Friendly 3. Most commercially popular technology. Advantages of Internet

E-

- 10 -ELECTRONIC COMMERCE 1. Marketing and selling products and services: 1. Advertisement reaching customers quickly and cheaply. 2. Reaching any one anywhere without paying extra for distance or duration. 3. The Internet is host thousands of electronic publications that provide promotional opportunities for any business. 4. Website attracts millions of readers on a daily basis. 5. Company use Internet to send email mass mailing to customer surveys are send to selected customers, notices about special cases. 6. Electronic media are also much easier to update. 2. Internet is open 1. All the Internet protocols are open and public and any one can use them to write s/w implementations that can interoperate with other computers and network. 2. A wide range of implementation available from free ware and share ware versions of the Internet. 3. Doing business fast 1. E-Selling is conducted in minutes rather than hours/days. 2. Waiting on phone to place order is reduced. 3. This speed compresses business processes and promotes the growth of a customer base. 4. Gathering opinions and trying out new ideas: 1. Internet is the ideal place for trying out new ideas at low cost. 2. Opinions can be gathered from anywhere. 5. Promoting a paper free environment: 1. Company memos, handbook, catalogs, promotional material, employee handbook, report can be placed on the company intranet and retrieved or circulated electronically anytime by authorized personnel. 6. Providing a superior customer service and support resource 1. Most websites generate customer feed back in the way of comments, suggestions and complaints. 2. A common support resource is FAQ (Frequently Asked Question). 3. A FAQ eliminates having staff answer the same questions over and over again. 4. If a new question comes the answer is added to the list.

- 11 -ELECTRONIC COMMERCE 5. Using email, customer support also frees company personnel from being tied to a telephone. 7. Efficiency and unequaled cost effectiveness 1. Major corporation are spending hundreds of million of dollars on sales promotion. 2. Cost of establishing and maintaining even sophisticated website for that purpose is affordable. 8. Supporting Managerial functions, spreading ideas, Ease of Technical support The traditional managerial function of 1. Planning 2. Organizing 3. Directing 4. Controlling All the above requires managers to Collect Evaluate Distribute management information In organization with branches worldwide, 1. Internet sends business information through a companys network and across network around the globe. 2. Email is convenient tool for managers to reach employees, bosses, customers and supplies quickly and at no charge. 3. The Internet has spawned discussion groups chat rooms, and online interactive session in which technical and managerial staff evaluates products and processes and arrives at value added decisions. 4. Better technical support is one of the key benefits of linking to the Internet. Example IBM offers customers and technical support fixes bugs and handles software upgrades on the Internet. 1000 of free software programs available for anyone to download. Internet continues to deliver thousand of database of research data from medicine, vehicles, and food preparation to hundreds of R&D discussion group. For thousands of research journals, automated searches through current and back issues are available in minutes. Company research, they uses Internet to seek information about customer tastes and preferences to profile a customer base for a new product or test a new concept to see if it is worth developing.

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9. Triggering New Businesses Given the world wide networking of business and commerce, mere presence is bound to trigger one type of business activity or another. Eg. Tiny commercial filter makes in Lynchburg Virginia landed $6 million contract with government of Saudi arabia from the Internet. A startup company owned by students generated $11 million in revenues in 1999 from selling used books nationwide. Internet is truly moving from novelty to necessity. Limitations 1. Security & privacy 2. Fakes & forgeries 3. Other threats (Hackers, worms, viruses, Trojan horse) WORLD WIDE WEB World wide web is the fastest 1. growing market place. 2. Research facility 3. Communication tools in the world. Internet: It is an infrastructure that links hundreds and thousands of network to one another. World Wide Web: It is the whole constellation of resources that can be accessed using tools such as FTP,HTTP and TELNET. An organization of files designed around a group of servers on the Internet, programmed to handle requests from browser software that resides on user pcs. 1. World wide web is not limited to text & graphics, listening of Audio& video files is also possible. 2. Users must first download the file and then use a s/w application to play the file. TCP/IP- A set of protocols that provide the basis for operating the Internet. TCP/IP does not include any ability to control the speed or consultancy at which information is transferred. Some packets may more quickly while other are slowed down because of congestion at a particular network site.

- 13 -ELECTRONIC COMMERCE Streaming Technology has provided an adequate but far from ideal solution to the audio and video streaming application begin playing the file as it is being downloaded rather than waiting until the entire file is received. This means that the user does not have to wait for the file to the completely downloaded. WORLD WIDE WEB STANDARDS 1. The www is defined by handful of protocol specifications. 2. Software developers use these specifications to implements the web browser & web server programs. 3. browser HTTP Server. Interaction between server and browser are made through HTTP. www is a client server system. Content is held by web servers and requested by clients of web browsers. 4. URL(Uniform Resource Locator) protocol specifies how individual resources( files, documents or even a specific location of a document) are to be identified with www. 5. Web browsers use these URL in HTTP requests to remote servers. 6. Web documents stored on the server that have been specially tagged using HTML tags. 7. Tags allows different parts of a document to behave differently. Most important are the abilities of text & graphics to behave as pointers to other parts of a document. Web Page: A document on the web is called a webpage. Home Page: The first page in a series of related documents or a site is called a homepage. Browser: A browser is a software program loaded on a pc that allows the user to read or access information stored on the Internet. It is a vehicle that enables the user to interface with the Internet. The browser takes the user instructions and converts them into a language and a format that can be sent to remote site and executed. Web server: A web server is the destination point on the Internet to offer web services, a computer must be connected to the Internet, be running a webserver program and have web documents available.

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