E Commerce

E Commerce Concepts and Issues David Miller Jay Roloff

E Commerce Definition The process of selling or buying products or services via the Internet

Questions Don’t Hesitate Ask Questions

Traditional Commerce Model Personal Retail Outlets Shopping Malls Business Individual Purchasing Agents Based on ERP requirements

E Commerce Model Personal Web Based Retail Outlets Amazon.com BarnesAndNoble.com Comparison Services Shopper.com

E Commerce Model Business e-Procurement Commerce One Ariba Industry Purchasing Portals Airline Portal TradeXchange GM Supply Power (Commerce One) Auto Xchange (Ford – Oracle)

Web Servers Apache ($free) 63% Microsoft Internet Information Server ($free) Netscape Enterprise Server ($1,295) Novell Enterprise Server ($1,295)

Database Servers IBM DB2 v7.1 Holds Transaction Processing Performance record with 440,000 TPM 32 Servers $14.2 Million for Equipment Oracle8 Microsoft SQL Server 2000

Content Development Microsoft FrontPage Microsoft InterDev Site Builders Storefront 2000 (Frontpage 2000) eStore Builder (Active Server) ezMerchant (Lotus Domino)

Active Server Pages Microsoft Technology Runs on the Server Creates Standard HTML code Compatible with many different Browsers Barnes and Noble

Content Development Back-end Integration can cost 25% Large ongoing Cost ERP Integration Oracle mySAP J.D. Edwards Baan E-Enterprise eStore (PeopleSoft) #12

B2B E Commerce 2000 - $131 Billion 2003 - $1.55 Trillion

B2B Concepts Common Portals for Exchange Ability to Integrate Data Requisition to Sales Order Cost decrease from $100 to $20/Transaction Production Schedules feed Forecasts

B2B Portals Ariba Commerce One Provide Common Ground for Exchange Replaces EDI for Transactions

Case Study GM Supply Power (www.gmsupplypower.com) Quality Information (Real Time) Engineering Information and Collaboration Financial Information System Resources (Provided by Commerce One) Windows NT Server Microsoft SQL Server Database

GM TradeXchange Catalog Online catalog that are used to purchase standard parts through Fulfillment was Costs $55 Buyer/$45 Seller Now $10 total Auction Used for Special Catalog Purchases RFQ’s or “reverse” auctions Bid-Quote Complex part Purchases

GM TradeXchange Price Waterhouse Coopers Provide Back Office Integration Work With Commerce One to Develop Portal Developed Initial Portal in 3 Weeks (Dec 99) 200,000 Catalog Items $4,000,000 Supplies First Bid/Quote for $147 Million GM Currently Spends $87 Billion with 30k Suppliers

Automotive Trade Exchange GM TradeXchange Ford AutoXchange Daimler – Chrysler $240 Billion of $500 Billion Total Big Three Purchases Commerce One and Oracle

Airline Purchasing Portal Six Major Airlines American Airlines Air France British Airways Continental Delta United

Airline Purchasing Portal $32 Billion Annual Purchases Fuel Fuel Services Airframe Avionics Engine Components Services

B2B Future e-Business in Only 1 Year Old By 2003, 2/3 of Online Transactions to be B2B e-Supply Chain Synthesis Seamless integration from end to end Collaboration with Competition

Where To From Here? Eliminate Human Contact Current e-Commerce Sites have Poor Customer Service Sell Only Commodity Items Low Margins Have Lowest Price and Highest Selection No Profits From Sales

The Future Voice Browsers 2000 – 1.4 Million Users Worldwide 2005 – 300 Million Users Worldwide Text – Speech Conversion MapQuest.com Request Direction via Phone Directions Will Be Read Back In the Future, Maps Will be Sent to PDA

Entry Into e-Commerce Barriers to Entry development of Web infrastructure integration with existing infrastructure multiple databases multiple transaction channels performance and scalability technology deployed changes in business processes customer/supplier relationships data access data ownership

Entry Into e-Commerce Barriers to Entry For successful, effective, sustainable strategy barriers are high.

Entry Into e-Commerce It is expensive $750,000 for baseline technology multiple vendors required transactions security must be heavily marketed branding mass marketing

Entry Into e-Commerce Must be a compelling business reason for many EDI serves purpose few Amazon.com opportunities exist in B-2-C, consumers prefer less subjective items like books, software to apparel online sales less than 5% of total retail revenue middlemen still necessary for B-2-B

Entry Into e-Commerce Performance and size matter Brand power, trust and consumer confidence are critical Credibility is gained through performance smalls can enter the fray but price will prevail Reliability, availability and service are still the necessary fundamentals .

B-2-C Issues Consumer purchasing is on the increase acceptance of medium trust entry of big name creditors i.e. VISA Service and support are critical responding to e-mail inquiries speed of response volume capability development of Web based systems chat, e-mail, voice, self-help

B-2-C Issues Service is the only means of differentiation. You must have price and selection. adding content creating links to other sites and services personalizing the shopping experience

Security What parts of the transaction are vulnerable and in need of protection? data in transit susceptible to modification, monitoring web servers http server security flaws common gateway interfaces customer data credit card #’s stored in unencrypted server databases

Security Advances in technology html extension languages greater control given to client system more powerful programming languages like JAVA and Visual Basic creation of credit card stealing applet ability to access keystrokes circumvent encryption

Security Current security technology Firewalls Hardware and software to protect internal network from external attack Location of web server is critical Ahead of firewall site is vulnerable but more user friendly and less cumbersome data must be moved behind firewall for safety Behind firewall site is secure data can be stored in server database

Security Current security technology Encryption uses a public/private key pair to encode, authorize and decode data transmissions data is encoded with a 48 to 126 bit random alphanumeric string the message then can only be opened with the proper key located at the receiving end. attempts are being made to use this public key technology to handle e-commerce transactions

Security Current security technology Encryption SSL(Secure Sockets Layer) authenticates server to client SHTTP(Secure http) authenticates both client and server SET(Secure Electronic Transactions) authenticates both client and server securely carries payment through to bank

Security Current security technology 3rd party payment systems Cybercash intermediary between merchant and customer/bank merchant never sees customer credit card # Digicash digital tokens used like travelers checks Virtual PIN payments authorized via e-mail difficult to intercept credit card enrollment via phone

Security Current security technology Uniform standards must be developed and adopted to provide interoperability between systems. Current payment systems require both the client and the server to register. As standards are developed and proposed they must be easy to employ. The entire transaction process must be incorporated; from the point of sale to the merchant to the bank and to the credit clearing house.

Security Recent Developments Microsoft fix Active Setup download program which detects which files are needed and downloads relevant ones. Microsoft files are automatically downloaded without approval can specify download locations on user’s hard disk vulnerable to denial-of-service attacks

Security Recent Developments Approximately 50% of organizations in a 1997 survey reported security breaches up from 37% in the previous year Nike.com hackers seized domain name and routed users to an Australian site with anti-Nike messages problem lasted for days due to ISPs’ use of cached versions of web pages to speed access

Privacy The need for e-Marketing information How do you turn browsers into purchasers? How do you identify and retain repeat customers? Who are the most profitable customers? What marketing and promotional efforts attract them? What content leads them to buy? What products should be marketed through which channels? You cannot personalize the shopping experience without some knowledge of the individual.

Privacy How is this accomplished without jeopardizing privacy? Technology has been focused on the marketer consumers cannot manage personal data Value, Control and Security must have a perceived benefit must have control as to how information is used must be secure from theft, unauthorized modification Demographics may be skewed data could be misleading if only those willing to release information can be tracked

Privacy Recent Developments FTC involvement from consumer protection standpoint, many online privacy policies are confusing, contradictory and ambiguous changing its stance on self-regulation congressional action possible

Privacy Recent Developments Essential Elements of Privacy Policies (FTC) Notification defining privacy policies Choice as to what data are collected and how it can be used Customer access to data Assurances of security from theft and improper usage Effects on business consumer choice could hurt many business models based on data warehousing and data mining requirements for access would increase expenditures for technology and security

Privacy Recent Developments U.S./Europe hammer out safe harbor agreement designed to set policy for U.S. based firms to engage in e-commerce in Europe establishment of an independent body and process for handling consumer complaints compensation for damages from violations of privacy rules

Privacy Recent Developments Toysmart attempted sale of customer data as part of its bankruptcy liquidation. Toysmart had a contract with TRUSTe a privacy watchdog group TRUSTe is suing for breach of contract

Ethical/Legal Issues B-2-B exchanges Created to achieve marketplace efficiencies Targets of Antitrust investigations price signaling collusion freezing out competitors Threat of one online marketplace for each industry via shakeouts and mergers

Ethical/Legal Issues Methods to avoid legal issues FTC recommendations keep prices and trade secrets private establish firewalls and procedures to keep competitors from learning one another’s prices from e-catalogs, bids and auctions allow competitors to move freely from one marketplace to another Identify which players will be hurt by an exchange limit their exposure where there are losers there will be litigation

Ethical/Legal Issues Methods to avoid antitrust litigation MetalSite.com extensive controls and audits require antitrust education for employees

Ethical/Legal Issues Recent ethical and legal developments Nike.com a recent attack sent users to a Scotland based web hosting firm, tying up its system web hosting company is threatening legal action against Nike and its internet provider who bears the responsibility for such injuries?

Ethical/Legal Issues Recent ethical and legal developments Napster Inc. - Internet music sharing service allows users to share MP3 files suits brought on by record labels and music industry institutions for copy right infringement company claims it is a ‘mere conduit’ for digital information claims that fair use doctrine applies

E Commerce

More Related Content

What's hot

Viewers also liked

Similar to E Commerce

Recently uploaded

E Commerce