E-Commerce

By: JAY, JALAJ, PRACHI,

9.1 © 2007 by Prentice Ha

 Introduction

 Commerce refers to all the activities the purchase and sales of goods or services.
– Marketing, sales, payment, fulfillment, customer service.

 Ecommerce (e-commerce) or electronic commerce is the purchasing, selling, and

exchanging of goods and services over computer networks (such as the Internet)
through which transactions or terms of sale are performed electronically.

 Electronic commerce is doing commerce with the use of computers, networks and
commerce-enabled software (more than just online shopping)

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 Introduction
 It has revolutionize the process of buying or
selling by enabling paperless transaction using
computer technology.

 It helps organizations in moving to a fully

electronic environment.

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 Brief History
 1970s: Electronic Funds Transfer (EFT)
– Used by the banking industry to exchange account information over secured
networks
 Late 1970s and early 1980s: Electronic Data Interchange (EDI) for e-
commerce within companies
– Used by businesses to transmit data from one business to another
1990s: the World Wide Web on the Internet provides easy-to-use
technology for information publishing and dissemination
– Cheaper to do business (economies of scale)
– Enable diverse business activities (economies of scope)

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 Types of E-Commerce

 1.Business-to-Consumer:-

 Online marketing and distribution of products and services is done over the internet.
 Natural cycle for retailers who sell goods directly to the consumers

 General idea lies in reaching more customers, providing better service and making
more sales while spending less.

 2.Business-to-Business:-
 Used in a pure business environment.

 It is also known as EDI(Electronic Data Interchange).

 Emphasis lies on developments such as e-marketplaces etc.

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  3.Business-to-Adminsitration:-

 Business community interacts electronically with the public sector .

 Includes submission of planning applications, income tax return etc.

 potential to increase the domestic and business use of ecommerce

 4.Customer-to-Customer:-

 It includes person-to-person transaction that excludes business from the equation

 Customers Directly deal with each other.

 Uses action style model.
 Example: www.ebay.com and www.amazon.com

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 Ecommerce infrastructure

• Information superhighway infrastructure

– Internet, LAN, WAN, routers, etc.
– telecom, cable TV, wireless, etc.
• Messaging and information distribution
infrastructure
– HTML, XML, e-mail, HTTP, etc.
• Common business infrastructure
– Security, authentication, electronic payment,
directories, catalogs, etc.

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 Infrastructure for E-commerce
• The Internet
– system of interconnected networks that spans the globe
– routers, TCP/IP, firewalls, network infrastructure, network
protocols
• The World Wide Web (WWW)
– part of the Internet and allows users to share information with
an easy-to-use interface
– Web browsers, web servers, HTTP, HTML
• Web architecture
– Client/server model
– N-tier architecture; e.g., web servers, application servers,
database servers, scalability

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 Web-based E-commerce
Architecture

Tier 1 Tier 2 Tier 3 Tier N

DMS

Client
Web Server Application Database
Server Server

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 E-commerce Technologies
• Internet
• Web architecture
• Data exchange
• Multimedia
• Search engines
• Data mining
• Payment systems

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 E-Commerce Software
• Content Transport
– pull, push, web-caching, MIME
• Server Components
– CGI
• Object Technology
– CORBA, Java Beans
• Technology of Fulfillment of Digital Goods
– Secure and fail-safe delivery, rights management

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 System Design Issues

• Good architectural properties

– Functional separation
– Performance (load balancing, web caching)
– Secure
– Reliable
– Available
– Scalable

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 Security
• Concerns about security
• Client security issues
• Server security issues
• Security policy, risk assessment
• Authentication methods
– Something you know: passwords
– Something you have: smart card
– Something you are: biometrics
• Firewalls, proxy servers
• viruses, worms

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 Cryptography
• Keeping secrets
– Privacy: interceptor cannot use information
– Authentication: sender’s identity cannot be forged
– Integrity: data cannot be altered
– Non-repudiation: sender cannot deny sending
• How to evaluate cryptography
• Secret key (symmetric) cryptography; e.g., DES
• Public key (asymmetric) cryptosystems; e.g, RSA
• Digital signatures, digital certificates
• Key management; e.g., PKI

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 FIGURE 1: Three types of cryptography: secret-key, public key, and hash function.

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 Creating and Managing Content

• What the customer see

• Static vs. dynamic content
• Different faces for different users
• Tools for creating content
• Multimedia presentation
• Integration with other media
• Data interchange
• HTML, XML (Extensible Markup Language)
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 Payment Systems
• Role of payment
• Cash
– properties: wide accept, convenient, anonymity,
untraceability, no buyer transaction cost
• Online credit card payment, Smart Cards
– Secure protocols: SSL, SET
• Internet payment systems
– Electronic cash, digital wallets
• Micro-payments
• Wireless devices

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 Transactions Processing

• Transactions and e-commerce

• Overview of transaction processing
• Transaction processing in e-commerce
• Keeping business records, audit, backup
• High-availability systems
• Replication and scaling
• Implementation

9.18 © 2007 by Prentice Ha

 Other System Components

• Taxes
• Shipping and handling
• Search engines
• Data mining
• Intelligent agents
• Inventory management, enterprise resource
planning (ERP)
• Customer relation management (CRM)
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 E-commerce applications

• Supply chain management

• Video on demand
• Remote banking
• Procurement and purchasing
• Online marketing and advertisement
• Home shopping
• Auctions

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 The Growth of E-Commerce

 Began in 1995 and grew exponentially; still growing at an annual rate of

25 percent

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 The process of e-commerce
1. Attract customers
– Advertising, marketing
2. Interact with customers
– Catalog, negotiation
3. Handle and manage orders
– Order capture
– Payment
– Transaction
– Fulfillment (physical good, service good, digital good)
4. React to customer inquiries
– Customer service
– Order tracking

9.22 © 2007 by Prentice Ha

 Advantages of Electronic
Commerce
• Increased sales
– Reach narrow market segments in geographically
dispersed locations
– Create virtual communities
• Decreased costs
– Handling of sales inquiries
– Providing price quotes
– Determining product availability
• Being in the space

9.23 © 2007 by Prentice Ha

 Disadvantages of Electronic
Commerce
• Loss of ability to inspect products from remote
locations
• Rapid developing pace of underlying
technologies
• Difficult to calculate return on investment
• Cultural and legal impediments

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