E-Commerce

E-commerce allows people to exchange goods and services electronically - The buying and selling of goods/services are performed on the Internet.

No barrier of distance you can buy things in Africa, Asia, America or Europe.

Around the world

Electronically via internet

Electronically You do not need to go to the shop personally.

You can do business at day or nightanytime. You can shop in summer or winter

You can shop anywhere

Any Places

Any things

Any Services

Idea

LectureAccounting

Advertising

MovingInformation

Technology

E-commerce can roughly bedivided into four categories

E-commerce

E-tailingElectronic Data Interchange

E-mail / FaxBusiness to Business

E-tailingOnline catalogue sales

1

In 1997, Dell Computers reported orders of a million dollars a day.

Exchange of business data using an understood data format among business partners

Electronic Data Interchange

2

EDI2

Companies use E-mail and Fax to send information to customers.

Customers use E-mail and Fax to place orders

3

E-mail/Fax3

Companies can sell products/services to other companies.

It is a quick way to reach the right people in a company for more information

4

Business to Business4

How does EDI work?

Buyer completes an electronic purchase order

1

2

Send order to the vendor electronically

3

Purchase order reaches vendor’s mail box via network .

Purchase order sits there waiting for vendor to open it

Open the purchase order please!

4

Vendor sends acknowledgement back to buyer and informs the buyer that the order is received and is being processed

5

Acknowledgement in the buyer’s network waiting for the buyer to open it

Buyer receives the acknowledgement

The Hong Kong government began accepting lodgment of

Import/Export Declarations through EDI in April 1997

Three Major Stepsof E-commerce

Great ProductGood Web Site

Attract Customer

Is there another online business with similar products?

Can you do it better?

Will your product promote well?

Is your product going to be fun to sell on Web?

Major Steps involving E-commerce

1

Major Steps involving E-commerce2

Customer management Order tracking, Subscription Services

Real-time credit card processing

Inventory control, Security

Web site hosting, Web site creation tools

Promotion, marketing

Detailed reporting functions

etc.

Major Steps involving E-commerce3

Affiliate Program

Mail Order

Online Catalogue

Online Shopping

Major Steps involving E-commerce

Affiliate Program

3a

In 1997, Amazon.com launched the first affiliate program. It allows owners of other web sites to refer customers to Amazon in exchange for a fee.

A good affiliate program must be

Easy to join

Good product and price

Major Steps involving E-commerce3b

Mail Order

Design a user friendly web site

Bring targeted customers to your mail order business

You can sell clothes, books, software, hardware, old things, etc.

Major Steps involving E-commerce3c

There are many things that you can sell through online catalogues:

Books

Computers

Food/Gifts

Clothing

Music

….

Online Catalogue

Major Steps involving E-commerce3d

Online Shopping

Make the online shopping experience a pleasure for your customers

such as providing them with music when they are shopping around

Getting them back for shopping again

E-commerce Essential Elements

High AvailabilityUnlimited concurrent connections

Modem dial-in and run-time event supportTraffic redistribution

Issue coupon to returning customersGood shopping cart

High Availability

5-1

Unlimited concurrent connections

5-2

Modem dial-in and run-time event support

5-3

Traffic redistribution

5-4

Issue coupon to returning customers

5-5

Good shopping cart

5-6

How does E-commerce work?

• Consumer visits Web to select products and submit purchase request

• Consumer is linked to an Internet secure site to exchange address / credit card information

• Internet secure server hands off to local application server

• Transaction approved and issue consumer with on-line receipt for printing

• Consumer returns to merchant’s web for further shopping

Steps Summary

Consumer visits Web to select products and submit purchase request

Internet

Merchant

Consumer

Consumer is linked to a Internet secure site to exchange address / credit card information

Internet Secure Server

Internet

Internet secure server hands off to local application server

Internet Secure Server

BANK

Local Server

Merchant

Transaction approved and issue consumer with on-line receipt for printing

Internet Secure Server

Consumer returns to merchant’s web for further shopping

Internet

Several basic steps involved in becoming E-commerce enabled

Getting an Internet Merchant Bank Account

Web Hosting

Authentication and obtaining Digital Certificate

Finding a provider of online transactions

Creating /purchasing a shopping cart

Getting an Internet Merchant Bank Account

In order to accept credit cards over the Internet, you must apply to your bank for an Internet Merchant Bank Account. Talk to your bank for this

Web Hosting

Good uptime

Good technical support

Fast connection to the net

staff that is knowledgeable about e-commerce

compatibility with major e-commerce providers

Finding a provider of online transactions

How many transactions do you expect to be completing in a month?

How many products do you have on your web?

How complex is the software?

How much do you want to spend ?

…...

Authentication and obtaining Digital Certificate

Authentication is the process to ensure that the organisation is what it claims to be

A digital certificate is the electronic equivalent of a business licence

Digital Certificate Sample

Digital Certificate is issued by a third trusted party. This third party is called Certificate Authority (CA). You may contact major software house, Hong Kong Post or your bank for more information

Digital certificates can be kept in registries so that authenticated users can look up.

A digital certificate enables SSL (secure socket layer encryption) on the Web server so that information can be transmitted securely and ensure that hackers cannot intercept it. SSL technology is fully supported with all major Web browsers such as Netscape and Internet Explorer

Creating /purchasing a shopping cart

Shopping cart is an operating system that allows people to purchase your items , keep track of your accounts and many other useful features. You can buy or rent this software from your service provider

Consumers

Merchants

Since payment is done via networking we must make sure it is not intercepted by illegal parties.

We do not even have to know the parties which we are dealing with.

Security is therefore the first priority in E-commerce

Cryptography is the science of information security. Cryptography includes techniques such as micro-dots, merging words with images, and other ways to hide information in storage or transit. Cryptography is most often associated with scrambling plain text into cipher text . This process is called encryption. The process of getting back the original text is known as decryption.

There are four objectives of cryptography: 1) Confidentiality2) Integrity3) Non-repudiation4) Authentication

1) Confidentiality The information cannot be understood by anyone for whom it was unintended

2) Integrity The information cannot be altered in storage or transitbetween sender and intended receiver without the alteration being detected

3) Non-repudiation The creator/sender of the information cannot deny at a later stage his or her intentions in the creation or transmission of

the information4) Authentication

The sender and receiver can confirm each other’s identity and the origin/destination of the information

Private KeyPublic Key

Traditional cryptography usually involves the creation and sharing of a secret key for the encryption and decryption of messages

Bob

Bob sends his secret key to Alice

Alice encrypts message with Bob’s key

Alice

Scrambled text

Internet

BOB

Alice

Scrambled text travels via Internet to Bob

Bob

Bob encrypts Alice’s Message

with his key

Internet

Let us assume Bob's secret key is a code translation as follows: A Z, BY, CX, DW, EV, FU, GT, …. …. XC, YB, ZAIf Alice sends a word message 'ACE' to Bob, she will apply the above code translation to the message. The converted new message will be 'ZXV’ The message 'ZXV' will be travelling on the Internet. If someone intercepts this message all he/she will get is the message 'ZXV'. When Bob gets this message 'ZXV' he will apply the same code translation to it and the original message 'ACE' will appear again.In reality, the code translation is far more complicated than this.

Example

There are several problems in using this method.

First, Bob must find a way to give Alice his secret key. If the key is intercepted, all of Bob's messages are decoded.

Second, Bob needs to trust Alice. Once Alice gets Bob's secret key, she may read Bob's other private messages or even pretend that she is Bob.

Problem

A public key infrastructure consists of:

- A certificate authority (CA) that issues and verifies digital certificates.

- A certificate includes the public key or information about the public key

- A registration authority (RA) that acts as the verifier for the certificate authority before a digital certificate is issued to a requestor

- One or more directories where the certificates (with their public keys) are held

- A certificate management system

How does the Public Key Cryptography work?

In public key cryptography, a public and a private key are created simultaneously using the same algorithm issued by a certificate authority (CA). The private key is given only to the requesting party and the public key is made publicly available in a directory that all parties can access. The private key is never shared with anyone or sent across the Internet. You use the private key to decrypt text that has been encrypted with your public key by someone else. Thus, if I send you a message, I can find out your public key (but not your private key) from a central administrator and encrypt a message to you using your public key. When you receive it, you decrypt it with your private key. In addition to encrypting messages (which ensures privacy), you can authenticate yourself to me (so I know that it is really you who sent the message) by using your private key to encrypt a digital certificate. When I receive it, I can use your public key to decrypt it.

BobBob has 2 keys

public

Private

Alice

Alice gets Bob’s public key from the public directory

Encrypted text

Internet

Bob

To Bob

She applies the key to her document

Bob

Internet

Bob decrypts Alice’s scrambled text with his own private key

Scrambled text travels via Internet to Bob

There are several advantages in using Public Key

Everyone can send messages to Bob using the Public Key and nobody can decrypt itBob does not need to worry Alice can intercept messages sent to Bob, nor can she imitate him.

Bob can sign message because Bob is the only person with his private key. If he encrypts a message with his private key, it is equivalent to using a Digital Signature.

Digital Signature

Bob has a private key. If he sends

a message with this key, it is equivalent to have him signed

Word of mouth is very powerful on the Net; tell all of your friends about your page.

Put your URL in the signature file of your email and the header of all business correspondence

Submit your site to as many search engines as possible. Try finding Web-sites with similar themes and make deals to create reciprocal links.

Create an advertising banner and purchase space from a popular Web-site to display it.

Avoid spammingInvestigate the Web sites that are possible rivals and formulate a strategy for competing against them. If you anticipate a lot of growth in the amount of orders coming through your site, figure out how you are going to cope with the increased load before you get swamped. Remember that you can ask for further advice from the company that you decide to employ.

Answer only the minimum questions when filling out forms.Never give out your Hong Kong ID Card number.Always pay with a credit card.Get the bad guys on the latest Internet report.Consider shopping with companies that you already know.Be careful, if someone asks you to reveal your passwords or any information to install your online service. Make sure you feel comfortable with a company before doing business with it. Pay attention to the address of the merchant's site (URL). This will ensure that you are dealing with the correct company. If it sounds too good to be true, it probably is. Always know the company/party that you are dealing with.

Print a copy of your order and confirmation number for your records.Use a secure browser. It will encrypt or scramble purchase information. Therefore, the information will not be intercepted.Determine what the shipping times will be to ensure your purchases will arrive in time.Look for the company's physical location, including the address and phone number.Some Internet sites ask you to create an account with a password. To protect yourself, never use the same password you use for other accounts or sites.Determine the company's refund and return policies.

E-business

E-business means building business around digital technology and using Internet as the main communication medium. E-commerce means trading via the Internet. One should never confuse e-business with e-commerce.

In order to have a good start in your e-business, your business planning should follow the following suggestions as closely as possible:

1. DO NOT completely redesign your business in order to become an e-business.

The key to success is to use mix management. The traditional business and e-business models should co-exist and be tailored to fit the targeting market.

2. DO NOT suspend any good project management rules simply because this is e-business.

People always overestimate the potential benefits and underestimate the time needed to realise the profit from e-business.

3. DO NOT believe the myth that e-business can do everything for you.

It must be recognised that technology is only meant to serve the business need. If it was misapplied it could drain up your company resources. You must ensure that each e-business initiative has a sound business goal. You should select technologies according to their fitness for the intended job. You should not select the technologies simply because they are new in the market.

4. DO NOT develop e-business plan simply work against your existing competitors. This would run into substantial risk of being overtaken.

You should develop a comprehensive e-business survival plan that anticipates the actions of your top competitors and embraces the radical changes necessary to beat them.

5. DO NOT focus solely on today's customers, otherwise you will miss the opportunity to explore your future potential customers tomorrow.

Business plans need to be aligned to address the threat of cyber-competition and explore new sources of revenue

Future of E-commerce

The growth in the number of transactions carried out between organisations, or organisations and individuals, by means of an electronic network is projected to grow by 400 per cent over the next two years. In fact, the marketplace is expected to expand 92% each year for the foreseeable future. In 2000, e-business transactions are predicted to exceed US$3 trillion. It will reach 500 million users by 2003. Both customers and merchants worry about security. Merchants hope to cut the online fraud into minimum while the customers are concerned about their privacy. Customers have no control over how their personal information will be used.

The need for Web standards will reduce system complexity and increase security. At present, the US web sites support 128 bits encryption and their users have browsers capable of exploiting this higher level of security. The rest of the world is restricted to support for 40 bits encryption, with some having none at all. Security only addresses individual country issues and does not increase security world wide.

Networks are expensive to develop and maintain. They are inflexible and incompatible. They are developed to satisfy the specific needs of particular organisations and not the broader needs of a global marketplace. We are looking for greater convenience such as one one-click solution. Buyers and sellers can communicate using standard web technologies. Banks, credit card issuers and card processors should be able to use standard private networks. However, there is no current industry standard for buyers and sellers to pass instructions directly over the Internet to their financial service providers.

The future of e-commerce should integrate banks, credit card issuers, buyers and sellers in a way that is automated, secure and inexpensive, but dynamic, using standard Internet protocols and operating system in real time.

http://www.bn.com

http://www.dell.com

http://www.cybermall1.hutchcity.com