STID1013

TOPIC 8

Electronic Commerce Systems

Dr. Wiwied Virgiyanti

Learning Objectives
Identify the major categories and trends of
e-commerce applications
Identify the essential processes of an
e-commerce system, and give examples of
how they are implemented in e-commerce applications
Identify benefits and threats of e-commerce
Identify and give examples of several key factors and
Web store requirements need to succeed in e-commerce

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Learning Objectives (cont)

Identify and explain the business value of several types
of e-commerce marketplaces
Discuss the benefits and trade-offs of several
e-commerce clicks and bricks alternatives

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CONTENTS
E-commerce

concept of e-commerce application

types of e-commerce transaction
technology infrastructure
methods of payment
benefits and threats

ELECTRONIC COMMERCE
The process of buying, selling, transferring, or
exchanging products, services, and/or
information via computer networks, including the
Internet.
Business transactions conducted via electronic
means.
Most often referring to Internet-based
relationships between customers and vendors.
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Introduction to e-Commerce
Electronic commerce encompasses the entire online
process of:

Developing
Marketing
Selling
Delivering
Servicing
Paying for products and services

It relies on the Internet and other information

technologies to support every step of the process
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ELECTRONIC COMMERCE

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http://2.bp.blogspot.com/-HyMskiu0gYg/T8dqJuKBIYI/AAAAAAAAAFE/_G3oMa2hrUo/s400/ecommerce.jpg

E-commerce Processes

e-COMMERCE TRANSACTIONS
An individual purchases a book on the Internet
A government employee reserves a hotel room over the Internet
A business calls a toll free number and orders a computer using
the seller's interactive telephone system
A business buys office supplies on-line or through an electronic
auction
A retailer orders merchandise using an EDI network or a
supplier's extranet
A manufacturing plant orders electronic components from
another plant within the company using the company's intranet
An individual withdraws funds from an automatic teller machine
(ATM)
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e-COMMERCE TRANSACTION
A consumer visits a bookstore and inquires
about the availability of an out-of-stock book. A
bookstore employee downloads a digital copy of
the book and prints it along with cover.
Not an e-commerce retail transaction since
agreement to purchase did not occur over an
electronic network. However, the right to access the
digital archived copy is an e-commerce service
transaction.
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e-COMMERCE TRANSACTION
Consumer uses Internet to research the purchase
of a computer, but calls a toll free number and
places the order with an operator.
Not an e-commerce transaction because agreement to
transfer ownership did not occur over computer-mediated
network; neither telephone was computer-enabled.

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The Scope of e-Commerce

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The Scope of e-Commerce

e-Commerce applications are supported by an
infrastructure that includes hardware, software,
and networks, ranging from browsers to
multimedia, and also by five support areas:
People
Public Policy
Marketing and advertising
Support services
Business Partnerships
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E-Commerce
Technologies
The steps:
1. QuickSource user submits a
request for quote (RFQ) for
publication via internet
2. Web server HTTP request,
validates user identity and
authorization, and processes
request
3. Database server updates RFQ
status as published.
4. Transactions and user activity
logged for billing and marketing
purposes.
5. Application servers notify suppliers
of the new RFQ via e-mail.
6. Web server sends confirmation to
browser
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Categories of e-Commerce
Business-to-Consumer (B2C)
Virtual storefronts, multimedia catalogs, interactive order
processing, electronic payment, online customer support

Business-to-Business (B2B)
Electronic business marketplaces, direct links between
businesses, auctions and exchanges

Consumer-to-Consumer (C2C)
Online auctions, posting to newspaper sites, personal websites,
e-commerce portals

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Essential e-Commerce
Architecture

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Access Control and Security

E-commerce processes must establish mutual trust and
secure access between parties
User names and passwords
Encryption key
Digital certificates and signatures

Restricted access areas

Other peoples accounts
Restricted company data
Webmaster administration areas

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Profiling and Personalizing

Profiling gathers data on you and your website behavior
and choices
User registration
Cookie files and tracking software
User feedback

Profiling is used for

Personalized (one-to-one) marketing

Authenticating identity
Customer relationship management
Marketing planning
Website management
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Search Management
Search processes help customers find the
specific product or service they want
E-commerce software packages often include
a website search engine
A customized search engine may be acquired from
companies like Google or Requisite Technology
Searches are often on content or by parameters

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Content and Catalog

Management
Content Management Software
Helps develop, generate, deliver, update, and archive text and
multimedia information at
e-commerce websites

Catalog Management Software

Helps generate and manage catalog content

Catalog and content management software works with

profiling tools to personalize content
Includes product configuration and
mass customization

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Workflow Management
E-business and e-commerce workflow management
depends on a workflow software engine
Contains software model of business processes

Workflow models express predefined

Sets of business rules

Roles of stakeholders
Authorization requirements
Routing alternative
Databases used
Task sequences

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Example of Workflow
Management

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Event Notification
Most e-commerce applications are event-driven
Responds to such things as customers first website
visit and payments
Monitors all e-commerce processes
Records all relevant events, including problem
situations
Notifies all involved stakeholders
Works in conjunction with user-profiling software

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Collaboration and Trading

Processes that support vital collaboration
arrangements and trading services
Needed by customers, suppliers, and other
stakeholders

Online communities of interest

E-mail, chat, discussion groups
Enhances customer service
Builds loyalty

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Electronic Payment Processes

Complex processes
Near-anonymous and electronic nature
of transactions
Many security issues
Wide variety of debit and credit alternatives
Financial institutions may be part of the
process

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Electronic Payment Processes

Web Payment Processes
Shopping cart process
Credit card payment process
Debit and other more complex processes

Electronic Funds Transfer (EFT)

Major payment system in banking, retail
Variety of information technologies capture
and process money and credit card transfers
Most point-of-sale terminals in retail stores
are networked to bank EFT systems
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ELECTRONIC PAYMENTS
Electronic Checks
Electronic Credit Cards
Purchasing Cards
Electronic Cash
Electronic Bill Presentment and Payments
Paying Bills at ATMs.
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Electronic Payment Example

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Securing Electronic Payments

Network sniffers easily recognize credit
card formats
Encrypt data between customer and merchant
Encrypt data between customer and financial
institution
Take sensitive information off-line

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E-Commerce Application Trends

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E-Commerce Success Factors

Some of the success factors in e-commerce

Selection and value

Performance and service
Look and feel
Advertising and incentives
Personal attention (one-to-one marketing)
Community relationships
Security and reliability

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E-Commerce Success Factors

Some of the success factors in e-commerce

Selection and value

Performance and service
Look and feel
Advertising and incentives
Personal attention (one-to-one marketing)
Community relationships
Security and reliability

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Differences in Marketing

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Web Store Requirements

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Developing a Web Store

Build a website
Choose or set up web hosting
Use simple design tools and templates
Include a shopping cart and payment support
Market the website
Include Web page and e-mail advertising and
promotions
Exchange advertising with other Web stores
Register with search engines and directories
Sign up for affiliate programs
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Serving Your Customers

Convert visitors into loyal customers
Develop one-to-one relationship with customers
Create incentives to encourage registration
Use Web cookies to identify visitors
Use tracking services to record and analyze website behavior
and customer preferences
Create an attractive, friendly, efficient store
Offer fast order processing and payment
Notify when orders are processed and shipped
Provide links to related websites

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Managing a Web Store

Manage both the business and the website
Record and analyze traffic, inventory, sales
Use CRM features to help retain customers
Link sales, inventory data to accounting systems

Operate 24 hours a day, seven days a week (24/7)

Protect transactions and customer records

Use security monitors and firewalls

Use redundant systems and power sources
Employ passwords and encryption
Offer 24-hour tech support

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B2B E-Commerce
B2B is the wholesale and supply side of
the commercial process
Businesses buy, sell, or trade with other businesses

Relies on multiple electronic information

technologies

Catalog systems
Trading systems
Data interchange
Electronic funds transfers
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E-Commerce Portals
B2B e-commerce portals offer multiple
marketplaces
Catalogs
Exchanges
Auctions

Often developed and hosted by third-party

market-maker companies
Infomediaries serve as intermediaries in e-business
and e-commerce transactions
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B2B E-Commerce Web Portal

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BENEFITS E-COMMERCE
Lower transaction costs
Larger purchases per transaction
Amazon.com offers a feature that no
normal store offers
Integration into the business cycle

BENEFITS E-COMMERCE
People can shop in different ways. The
ability to build an order over several days
The ability to configure products and see actual prices
The ability to easily build complicated custom orders
The ability to compare prices between multiple
vendors easily
The ability to search large catalogs easily

Larger catalogs
Improved customer interactions company

Most Common Security Threats

in the E-commerce Environment
Malicious code

Viruses
Worms
Trojan horses
Bots, botnets

Unwanted programs
Browser parasites
Adware
Spyware

Most Common Security Threats

Phishing
Deceptive online attempt to obtain confidential information
Social engineering, e-mail scams, spoofing legitimate Web sites
Use information to commit fraudulent acts (access checking accounts),
steal identity

Hacking and cybervandalism

Hackers vs. crackers
Cybervandalism: intentionally disrupting, defacing, destroying Web site
Types of hackers: white hats, black hats, grey hats

Most Common Security Threats

Credit card fraud/theft
Fear of stolen credit card information deters online purchases
Hackers target merchant servers; use data to establish credit under
false identity
Online companies at higher risk than offline
Spoofing: misrepresenting self by using fake e-mail address
Pharming: spoofing a Web site
Redirecting a Web link to a new, fake Web site
Spam/junk Web sites
Splogs (Spam blogs): a blog which the author uses to promote affiliated
websites, to increase the search engine rankings of associated sites or
to simply sell links/ads.

Most Common Security Threats

Denial of service (DoS) attack
Hackers flood site with useless traffic to overwhelm network

Distributed denial of service (DDoS) attack

Hackers use multiple computers to attack target network

Sniffing
Eavesdropping program that monitors information traveling over a
network

Insider jobs
Single largest financial threat

Poorly designed server and client software

The End