E-commerce

INTRODUCTION TO E-COMMERCE
Internet has become an important medium for doing global business based on the state of the art technology.
Electronic commerce has two major aspects: economical and technological.
This course will show you how to get started in the complex and exciting world of E-Commerce. New standards
and new facilities are constantly emerging and their proper understanding is essential for the success of
an operation, and especially for those who are assigned a duty to select, establish, and maintain the
necessary infrastructure.
What is e-Commerce?
• E-commerce is an emerging concept that describes the process of buying and selling or exchanging of
products, services, and information via computer networks including the Internet.
Definition of E-C from Diff Perspectives
1.Communications Perspective
EC is the delivery of information, products/services, or payments over the telephone lines, computer networks or
any other electronic means.
2.Business Process Perspective
EC is the application of technology toward the automation of business transactions and work flow.
3.Service Perspective
EC is a tool that addresses the desire of firms, consumers, and management to cut service costs while
improving the quality of goods and increasing the speed of service delivery.
4.Online Perspective
EC provides the capability of buying and selling products and information on the Internet and other online
services.
Benefits of e-Commerce
Access new markets and extend service offerings to customers
Broaden current geographical parameters to operate globally
Reduce the cost of marketing and promotion to improve customer service
Strengthen relationships with customers and suppliers
Streamline business processes and administrative functions
Scope of E-Commerce
Marketing, sales and sales promotion
Pre-sales, subcontracts, supply
Financing and insurance
Commercial transactions: ordering, delivery, payment
Product service and maintenance
Co-operative product development
Distributed co-operative working
Use of public and private services
Business-to-administrations (e.g. customs, etc)
Transport and logistics
Public procurement
Automatic trading of digital goods
Accounting
Dispute resolution
History of E-commerce
The history of e commerce is a history of how Information Technology has transformed business processes.
Some authors will track back the history of e commerce to the invention of the telephone at the end of last
century.
EDI (Electronic Data Interchange) is widely viewed as the beginning of ecommerce if we consider ecommerce
as the networking of business communities and digitalization of business information.
Large organizations have been investing in development of EDI since 60s. It has not gained reasonable
acceptance until 80s.
EDI has never reached the level of popularity of the web-based ecommerce for several reasons:
High cost of EDI prohibited small businesses and medium-sized companies from participating in the electronic
commerce;
Slow development of standards hindered the growth of EDI; and
The complexity of developing EDI applications limited its adaptation to a narrow user base.
The Internet and the Web
The Internet was conceived in 1969, when the Advanced Research Projects Agency (a Department of Defense
organization) funded research of computer networking. The Internet could end up like EDI without the
 emergence of the World Wide Web in 1990s. The Web became a popular mainstream medium (perceived
as the fourth mainstream medium in addition to print, radio and TV) in a speed which had never been
seen before. The Web users and content were almost doubled every a couple of months in 1995 and
1996.
XML and Web Services Besides the availability of technical infrastructures, the popularity of the Web is largely
attributed to the low cost of access and simplicity of HTML authoring, which are the obstacles of EDI
development. The Internet and the Web have overcome the technical difficulty of EDI, but it has not
solved the problem of slow development of e commerce standards.
Concepts of Electronic Commerce
• Electronic commerce is narrowly defined as buying and selling products/services over the Internet. The
concept has been broadened to include all business activities of a sales cycle. The distinction between E-
commerce and E-business has become blurred. Ecommerce and Electronic Commerce has been used
interchangeably, Electronic Business, however, has not been a widely accepted terminology.
How e-Commerce Works
The consumer first moves through the internet to the merchant’s web site. At the web site, the
consumer is briefly given an introduction to the product or services the merchant offers. It is
at this point that the consumer makes the decision to visit the web store by clicking on a link
or button located on the web page (e.g., Buy Now, Shop Online, or an image of a shopping
cart button are common entry points into a web store).
After choosing to visit the web store, the consumer is typically connected to an online transaction
server
located somewhere else on the internet which runs software commonly referred to as a shopping
cart application.
The shopping cart application has been setup by the merchant to display all products and services
offered, as well as calculate pricing, taxes, shipping charges, etc.
From there, the consumer decides that he wants to purchase something, so he enters all pertinent
credit card information and a sales order is produced. Depending on the ecommerce
implementation, the sales order can now take two totally different paths for confirming to the
consumer that the order is officially placed.
Scenario 1
• The consumer’s credit card information goes directly through a private gateway to a processing
network, where the issuing and acquiring banks complete or deny the transaction. This
generally takes place in no more than 5-7 seconds and the consumer is then informed that
the order was received, the credit card was authorized, and that the product will ultimately
be shipped.
Scenario 2
The consumer’s entire order and credit card information is electronically submitted back to the
merchant’s server (usually via email, FTP, or SSL connection) where the order can be
reviewed first and then approved for credit card authorization through a processing network.
The consumer then receives an email shortly afterwards, confirming the order being
received, the credit card being authorized, and status on when the product will exactly be
shipped.
In both scenarios, the process is transparent to the consumer and appears virtually the same.
However, the first scenario is a more simplistic method of setting up a shopping cart
application and does not take into consideration any back office issues that may delay
shipment (i.e., items out of stock, back orders, orders submitted after office hours or during
holidays, etc.).
For the sake of this tutorial, we will assume an ecommerce implementation that uses the second
scenario mentioned above There are several basic steps you will need to accomplish before becoming
Commerce Enabled.
Getting a Merchant Bank Account
Web Hosting
Web Design Considerations
Registering a Domain Name
Obtaining a Digital Certificate
Let us review each step in more detail below:
Getting a Merchant Bank Account
• In order to be able to accept credit cards, you must apply for an account with a credit card
merchant account provider. This can be relatively easy or somewhat difficult, depending on
which country you live in, and the type of business you are running. In the past, many
businesses would sign up for credit card processing through their own commercial banking
institutions. However, the internet has now made it simple to shop around for the best credit
 card discount rates from an endless amount of merchant account providers worldwide. A
simple web search on “credit card processor” should be enough to get you started.
Web Hosting
Web hosting is a very important step in this process, as this is how you gain a presence on the
internet in the first place. There are actually two scenarios that can be used for web hosting.
Scenario1 involves setting up and maintaining your own web server, while
Scenario 2 involves handing out all web hosting administration to an ISP. (Scenario 1 will not be
discussed further in this class as it pertains to larger organizations) An Internet Service
Provider (ISP) is a company that provides you with internet access and limited hard drive
space on their web servers for hosting your web site. You will need to setup an account for
internet access with the ISP of your choice.
The following should be noted when searching for an Internet Service Provider:
Always try to find an ISP that can provide a local telephone number for you to connect to the
internet.
Choose an ISP that is known for having few interruptions of service.
Choose an ISP that is known for good technical support and has knowledgeable people familiar
with ecommerce sites.
Choose an ISP that consistently has fast connection speeds.
As with any company you do business with, make sure the ISP is reputable.
The online transaction providers that offer the actual web store itself can sometimes be hosted by
your same ISP or may require a completely different provider, referred to as a Commerce
Service Provider (CSP). Many small businesses tend to choose CSP’s for creating a web
store because it gives them the flexibility of choosing a provider that offers competitive
pricing and the best shopping cart application for their needs.
Assignment 1
• Benefits of e-commerce to about 7 different sectors of the economyWeb Design Considerations
• Having knowledge of HTML and a lot of patience, you can probably create your own corporate
web site with the help of products like Ms FrontPage or DreamWeaver. However, when
adding a web store to your web site, you may want to seek the help of professional web
designers to make the look and feel of your web store consistent with the rest of your
corporate web site. Most shopping cart applications, like SoftCart by Mercantec, allow its
templates to be modified just for this purpose. In many cases, the same ISP or CSP you
choose can provide web design and consultation.
Registering a Domain Name
Domain names are the names for computers on the Internet that correspond to IP (Internet
protocol) numbers to route information to addresses on the Internet. Domain names serve
as a convenient way of locating information and people on the Internet.
Which of these will customers remember? “123.123.456.456” or “www.mybiz.com?” Registering a
domain name is one of the most important decisions to make for your online identity. One
place to go for checking availability of a domain name is www.whois.net3.
Digital Certificate
• A digital certificate, also known as a SSL Server Certificate, enables SSL (Secure Socket Layer
encryption) on the web server. SSL protects communications so you can take credit card
orders securely and ensure that hackers cannot eavesdrop on you. Any ecommerce
company that provides you with an online web store will require you to have SSL before you
can use their services. For a minimal fee, one can usually use the certificate owned by the
web hosting company where your page resides