INTRODUCTION TO E-COMMERCE IS524 Corporate Information Systems by Chandra Amaravadi

1. INTRODUCTION TO E-COMMERCE IS524 Corporate Information Systems by Chandra Amaravadi

2. PRESENTATION OUTLINE • Introduction & basic concepts • E-commerce architectures & • infrastructures • Electronic Payments & Security • Strategies

3. INTRODUCTION & BASIC CONCEPTS

4. WHAT IS E-COMMERCE? • Business conducted on the web • Buyers and sellers interact electronically Products/services SELLER BUYER Internet Payments

5. TYPES OF ECOMMERCE • Cust to business (C2B, B2C) • products, books, software, music, appliances, • services, banking & finance, stock trades • Business to Business (B2B) • products, raw materials, commodities, content, services • Customer to Customer (C2C) • used books, computers, CDs, antiques, services • Intra-org • inventory ordering & charge out, etc. e.g. MS Market • helpdesk, etc. What might be differences between B2C and B2B?

6. PRIMARY MOTIVATOR FOR ONLINE PURCHASES* * http://www.englisharticles.info/2010/11/24/why-people-shop-online-%E2%80%93-the-big-three-reasons/

7. 56 56 84 53 TYPICAL ACQUISITION COST PER CUSTOMER $0 $20 $40 $60 $80 $100 Consumer electronics / appliances Groceries Apparel

8. NET SHOPPERS’ KEY DEMOGRAPHICS Average Income:$65,000 Average Age: 42 Male/Female:44-56 % of Population:75% 1 http://racked.com/archives/2010/04/26/are-you-a-typical-online-shopper-permutos-got-your-number.php

9. MOST COMMONLY PURCHASED Most common small-ticket items : • Apparel • Toys/video games • Books • Software • Music • Health and Beauty • Office supplies Most common big-ticket items : • Plane tickets • Computer hardware • Hotel reservations • Consumer electronics • Car rental

10. AN EXTENDED VIEW OF E-COMMERCE

11. EXTENDED VIEW Banks Intermediaries Banks SECURITY PAYMENT SELLER BUYER Infrastructure Internet E-commerce system

12. E-COMMERCE INFRASTRUCTURE The Internet

13. THE INTERNET The web client (i.e. browser) sends a request, which is responded to by a web server (i.e. web site) and routed by routers DNS server Router INTERNET Host/nodes E-commerce system ISP Web client Web client Web client E-commerce takes place by making use of the internet infrastructure

14. Web clients consist of computers that access web servers – usually use browsers Host/node – This could be the ISP host or it could be a host dedicated for internet services. Host has IP address. E-commerce system – consists of the web client, web servers and the e-commerce software DNS server – The ultimate reference for all web site addresses. DNS servers poll web sites in their area i.e. take ‘attendance’. Routers– Components that forward data at network branches. Service providers (ISP) provide internet access. COMPONENTS OF THE ARCHITECTURE

15. E-COMMERCE INFRASTRUCTURE E-Commerce System

16. E-COMMERCE REFERENCE DIAGRAM Banks Intermediaries Banks SECURITY PAYMENT SELLER BUYER Infrastructure Internet E-commerce system

17. E-COMMERCE SYSTEM PURPOSE The functions of an e-commerce system are: • Attract and interface with visitors • capture site traffic • Store profiles • Display products/services (in the case of ‘sales model’) • Process payments (for ‘sales model’) • Shipment/payment confirmation • Update databases (these are discussed later)

18. Attracting Visitors 90 80 70 60 50 Number of Users (in millions) 40 30 20 10 Buyers Browsers RATIO OF BUYERS TO VISITORS Called conversion ratio – (5% for small companies)

19. COMPONENTS OF AN E-COMMERCE SYSTEM An E-Commerce System consists of: • Web clients (already discussed) • Servers (see ‘server architecture’) • E-commerce site (Web site ) • E-commerce application • Interface • Business logic • Database backend

20. SERVER ARCHITECTURE Web client Web Server layer (handle incoming requests) Application Server layer (E-commerce Server) Backend layer Database Mainframe ERP System

21. SERVER INTERNAL ARCH (FYI) FTP HTTP AUTHORING TOOLS CLIENT ACCESS DNS SERVER SOFTWARE NETWORK OPERATING SYSTEM SERVER BOX INTERNET INTERFACE/FIREWALL

22. E-COMMERCE SITE (WEB SITE) The Physical Layout of a typical web site is as follows: banner left panel side bar content

23. WEB SITE CONTENT An E-commerce site or web site consists of Web pages with ‘content’: • HTML • XML (mostly data) • code -- (part of E-commerce application) • Client side -- Java script • Server side -- Applets, Servlets (ASP/JSP)

24. HYPERTEXT MARKUP LANGUAGE HTML – Hypertext Markup Language, language used to develop web pages. <html> <h1> MIDWEST SOFTWARE CONSULTING INC. </h1> <p> We are the #1 consultants in the midwest for databases and web technologies. Here are some past projects </p> <ol> <li> UKTI database </li> <li> iExcel web site </li> <li> Howard city web site </li> </ol> </html>

25. XTENDED MARKUP LANGUAGE XML – Xtensible Markup Language. Uses user-specified tags e.g. <ecom>, <TP>, <ERP> etc. Needs DTD. <xs:element name="note"> <xs:complexType> <xs:sequence> <xs:element name="to" type="xs:string"/> <xs:element name="from" type="xs:string"/> <xs:element name="heading" type="xs:string"/> <xs:element name="body" type="xs:string"/> </xs:sequence> </xs:complexType> </xs:element> <note> <to>IS524</to> <from>Amaravadi</from> <heading>Reminder</heading> <body>Don't forget assignments coming up!</body> </note> DTD -- Data type definition (schema for interpreting XML)

26. ANOTHER EXAMPLE OF XML <bookstore> <book category="CHILDREN"> <title>Harry Potter</title> <author>J K. Rowling</author> <year>2005</year> <price>29.99</price> </book> <book category="WEB"> <title>Learning XML</title> <author>Erik T. Ray</author> <year>2003</year> <price>39.95</price> </book> </bookstore> Note: XML – Xtended Markup Language; HTML – Hypertext Markup Language

27. CLIENT SIDE – JAVA SCRIPT Javascript is an Object Oriented 4th GL that is used to carry out actions on the client side like form validation or popup windows. The compiler is part of browser. Java Script Example <html> <body> <script type = “text/javascript”> document.write(“Hello World!”) </body> </html>

28. SERVER SIDE -- APPLETS • required to perform actions (authenticate, get prod info etc.) – written in Java, PHP or ASP • Generally involves calling ‘functions’ ‘scripts’ or pre-coded mini modules • Functions embedded in HTML or stored in server • Calls are placed in HTML package org.me.hello; import java.applet.Applet; import java.awt.Graphics; public class MyApplet extends Applet { @Override public void paint(Graphics g) { g.drawString("Hello applet!", 50, 25); } } MyApplet is a class with ‘paint’ as the function Code is embedded <applet code="org.me.hello.MyApplet" archive="HelloApplet.jar"></applet>

29. E-Commerce Application

30. AN E-COMMERCE APPLICATION GetClientInfo() VerifyInfo() DisplayAvailablePkgs() SelectPkg() PriceThePkg() Interface GetPayment() ProcessPayment() Business ConnectDatabase() UpdateDatabase() Back End

31. THE U.S. CELLULAR SYSTEM

32. THE U.S. CELLULAR SYSTEM..

33. THE U.S. CELLULAR SYSTEM 3

34. CODE SAMPLES (FYI) getClientInfo () <soapenv:Envelopexmlns:soapenv="http://schemas.xmlsoap.org/soap/envelope/" xmlns:typ="http://xml.****.com/types" xmlns:ser="http://xml.****.com/shopping/services" xmlns:typ1="http://xml.****.com/shopping/types"> <soapenv:Header> <typ:requestHeader> <typ:timestamp>?</typ:timestamp> <typ:sourceSystemId>?</typ:sourceSystemId> <!--Optional:--> <typ:sourceSystemUserId>?</typ:sourceSystemUserId> <typ:sourceServerId>?</typ:sourceServerId> <typ:trackingId>?</typ:trackingId> </typ:requestHeader> </soapenv:Header> <soapenv:Body> <ser:presentEligibleOffers> <ser:request> <!--Optional:--> <typ1:linesOfBusiness> <typ1:lineOfBusiness>?</typ1:lineOfBusiness> </typ1:linesOfBusiness> <typ1:customerStatus>?</typ1:customerStatus> <typ1:customerType>?</typ1:customerType> <typ1:newMarketId>?</typ1:newMarketId> <typ1:channelName>?</typ1:channelName> <!--Optional:--> <typ1:locationId>?</typ1:locationId> <!--Optional:--> <typ1:billingIdentifiers> <typ1:activeIds> <!--Zero or more repetitions:--> <typ1:string>?</typ1:string> </typ1:activeIds> <typ1:currentCharges>?</typ1:currentCharges> </ser:request> </ser:presentEligibleOffers> </soapenv:Body> </soapenv:Envelope>

35. CODE SAMPLES (FYI).. VerifyInfo() <soapenv:Envelope xmlns:soapenv="http://schemas.xmlsoap.org/soap/envelope/"> <soap:Header xmlns:soap="http://schemas.xmlsoap.org/soap/envelope/"> <requestHeader xmlns="http://xml.****.com/types"> <timestamp>2013-07-30T16:55:37.406-04:00</timestamp> <sourceSystemId>ESP-POSRETAIL</sourceSystemId> <sourceSystemUserId>posretailuser</sourceSystemUserId> <sourceServerId>RETAILSERVICE</sourceServerId> <trackingId>401317257</trackingId> </requestHeader> </soap:Header> <soap:Body xmlns:soap="http://schemas.xmlsoap.org/soap/envelope/"> <ns2:searchCustomerProfile xmlns="http://xml.****.com/saleschannelmanagement/types" xmlns:ns2="http://xml.****.com/saleschannelmanagement/services" xmlns:ns3="http://xml.****.com/types" xmlns:ns4="http://xml.****.com/payment/types"> <ns2:searchCustomerProfileRequest> <UserInfo xsi:nil="true" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"/> <customerSearch> <address> <country xsi:nil="true" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"/> <city xsi:nil="true" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"/> <unitType xsi:nil="true" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"/> <zipCode>******</zipCode> <state xsi:nil="true" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"/> <unitNumber>*****</unitNumber> <zip4Code xsi:nil="true" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"/> <streetAddress1>***********</streetAddress1> <streetAddress2 xsi:nil="true" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"/> <presentationElement xsi:nil="true" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"/> </address> <telephoneNumber xsi:nil="true" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"/> <sessionId>********************</sessionId> </customerSearch> </ns2:searchCustomerProfileRequest> </ns2:searchCustomerProfile> </soap:Body> </soapenv:Envelope>

36. CODE SAMPLES (FYI).. getCustomerinfo Response : <env:Envelope xmlns:env="http://schemas.xmlsoap.org/soap/envelope/" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance"> <env:Header/> <env:Body> <m:searchCustomerProfileResponse xmlns:m="http://xml.****.com/saleschannelmanagement/services"> <m:searchCustomerProfileReturn> <typ:customerProfiles xmlns:typ="http://xml.****.com/saleschannelmanagement/types"> <typ:customerProfile> <typ:firstName xsi:nil="true"/> <typ:lastName xsi:nil="true"/> <typ:telephoneNumber xsi:nil="true"/> <typ:marketName xsi:nil="true"/> <typ:id>*******</typ:id> <typ:address> <typ:country xsi:nil="true"/> <typ:city>*****</typ:city> <typ:unitType>APT</typ:unitType> <typ:zipCode>19962</typ:zipCode> <typ:state>DE</typ:state> <typ:unitNumber>****</typ:unitNumber> <typ:zip4Code>1434</typ:zip4Code> <typ:streetAddress1>****</typ:streetAddress1> <typ:streetAddress2 xsi:nil="true"/> <typ:presentationElement xsi:nil="true"/> </typ:address> <typ:isExistingCustomer xsi:nil="true"/> </typ:customerProfile> </typ:customerProfiles> <typ:messages xsi:nil="true" xmlns:typ="http://xml.****.com/saleschannelmanagement/types"/> </m:searchCustomerProfileReturn> </m:searchCustomerProfileResponse> </env:Body> </env:Envelope>

37. SECURITY & PAYMENTS

38. SECURITY PROBLEMS Web Site vandalism Denial of service attack Unauthorized access or misuse Financial Fraud 0 10 20 30 40 50 60 70 Percent of web sites

39. SECURITY AND PAYMENT • Need secure environment • Physical security via • Firewalls (not discussed) • E-cash/E-accts • Transaction security via • Encryption methods (SSL, SET) • Authentication schemes (certificates)

40. TRANSACTION SECURITY When an e-commerce transaction is in progress, it must be invisible to all except the parties of the transaction: • SSL (Secure Sockets Layer) • S-HTTP (Enables SSL) • SET (Secure Electronic Transaction) Transfer $1000 0111 0110111000110 Transfer $1000 Encryption Decryption Public key 105 Private keys 15, 7

41. DIGITAL CERTIFICATES A digital certificate is an attachment to an email message or a program embedded in a web page that verifies the identity of a party in a transaction. • E-mail • E-commerce • EFT (funds transfer) Certificate authority Buyer Seller

42. STRUCTURE OF A DIGITAL CERTIFICATE*

43. ELECTRONIC PAYMENTS Payments are made when a transaction for a product/service is taking place. Payments can be in the form of: • credit/debit cards • smart card • electronic check cashing • electronic accounts What issues arise in processing payments during web based commerce?

44. DIGITAL CASH OR ELECTRONIC PAYMENTS Digital cash is electronic cash. It used to mimic conventional cash, but now the trend is towards electronic payments. • Early technology problematic (1st Gen) • imitated conventional cash • needed machine • no standards, no anonymity • Cybercash, Digicash, Scrips, Beenz and Flooz • Move towards electronic accounts, 3rd Party payment (2nd G) • e.g. Token, Paypal, Verisign, RBS worldpay • protects privacy & can be used anywhere

45. ELECTRONIC PAYMENT SYSTEMS (FYI)

46. E-Commerce Business Models

47. E-COMMERCE BUSINESS MODELS A business model refers to a particular method of operation. • E-tailer • Transaction Broker • Market Creator • Content Provider • Community Provider • Portal • Service Provider

48. E-COMMERCE BUSINESS MODELS..

49. E-COMMERCE REVENUE MODELS A revenue model refers to a particular method of deriving income. • Advertising Revenue Model • Sales Revenue Model • Subscription Revenue Model • Free/Freemium Revenue Model • Transaction Fee Revenue Model • Affiliate Revenue Model

50. E-COMMERCE REVENUE MODELS…