Chapter 8 E-Commerce Systems Using the Internet to Conduct Business

1. Chapter 8E-Commerce SystemsUsing the Internet to Conduct Business

2. Electronic Commerce: Electronic transmission of buyer/seller transactions & other related info between two trading partners (individuals or businesses)

3. The E-Commerce Concept is a HUGE paradigm shift in the grand scheme of things It is still fairly new and still evolving • Changing the shape of competition • Changing the speed of action • Changing customer expectations • Talk about streamlining processes! • Interactions with customers • Tracking inventory • Processing payments • Creating relationships with customers & suppliers

4. E-Commerce encompasses the entire process of: developing marketing selling delivering servicing paying for products and services

5. 9 types of e-commerce processes • Access control and security • Profiling and personalizing • Search management • Content management • Catalog management • Payment • Workflow management • Event notification • Collaboration and trading

6. How did the Internet originate? Goal:Allow scientists at different locations to share information and work together on military and scientific projects ARPANET Networking project by Pentagon’s Advanced Research Projects Agency (ARPA) Became functional in September 1969 Goal:Tofunction even if part of the network were disabled or destroyed

7. Why did interest in the Internet grow?Technology EnablersSee Figure 4.1 in chapter 8

8. Computer access more available • High speed Internet more readily available • Digital divide is shrinking • Computer security capability is increasing • Use of credit cards more accepted by general public Why did interest in the Internet grow? As usual, market rises to meet consumer demand

9. Great dot.com collapse of 2000/2001Showed us that you still need a business plan, even on the Internet…

10. Where are we right now?Approximately $259 billion in e-commerce sales in 2007for web-based retail, companies based in the U.S.That’s an 18% increase over 2006

11. Top five web-based retailersin 2007 • Amazon • Staples • Office Depot • Dell • Hewlett Packard

12. Basic categories of e-commerce applications • B2C – Business to Consumer Retail • B2B – Business to Business IOS – Interorganizational Systems SABRE • C2C – Consumer to Consumer Amazon E-bay Craig’s List

13. Things to consider in e-commerce • Security and protecting customer privacy • How to market effectively using this medium • How to customize the e-commerce experience • How to make sure people find things (searching) • Collecting taxes… • Watching other laws (e.g., export laws…) http://business.gov/guides/e-commerce/

14. Access control and security Who gets into your site? What can they access? How do you monitor access? How do you protect customer information?

15. How are you going to accept money from your customers and insure their credit cards aren’t compromised?

16. Electronic payment processing Shopping cart software EFT – Electronic Funds Transfer Figure 8.8 Example of an electronic payment system

17. Electronic Payment & Security Systems Client Browser Merchant’s Web Server Payment Server • Verify merchant • Receive order • Receive payment • Confirm order • Verify customer • Review payment • Authorize or deny payment Credit cards VISA MasterCard Bank accounts Debit Cards Online Banking Online buying CyberCash 1 ClickCharge E-Bill Payment CheckFree BillerXpert Electronic Cash Cybergold Qpass

18. SSL Short for Secure Sockets Layer, a protocol developed by Netscape for transmitting private documents via the Internet. Data is encrypted while it is transferred. Many Web sites use the protocol to obtain confidential user information, such as credit card numbers. (Example Amazon) By convention, URLs that require an SSL connection start with https: instead of http:.

19. Securing Electronic Payments • Network sniffers • Software that recognizes and intercepts credit card number formats • Security measures to combat • Encrypt (code and scramble) data between customer and merchant • Encrypt credit card authorizations • Take sensitive information off-line

20. Let someone else deal with it all for you…(The “PayPal” solution)

21. All About the PCI Data Security Standard

22. Current big trend – electronic bill payment • Consolidation web site • Usually provided by an entity like a bank • Biller direct • Go to the businesses web site to pay your bill • Direct e-mail delivery • Bills arrives in customer’s e-mail • Niche markets developing along these themes

23. What should you consider as a consumer purchasing online? Where is your information stored? Is your credit card protected from online theft? Using a debit card online – good idea? What if you don’t like what you bought?

24. What about protecting the privacy of your customer’s information?

25. Why is protecting privacy tricky?Because we want to personalize our customer’s online experience – and to do that, we need to collect some information

26. Profiling and Personalizing • Gather data on you and your website behavior & choices • Build electronic profiles of your characteristics and preferences • Profiles are used to recognize you & provide you with a personalized view of the contents of the site with product recommendations & personalized advertising • One-to-one marketing strategy

27. Profiling and Personalizing One-to-one marketing The traditional purpose of browser cookies is to identify users and possibly prepare customized Web pages for them.

28. Profiling and Personalizing When you enter a Web site using cookies, you may be asked to fill out a form providing such information as your name and interests. This information is packaged into a cookie and sent to your Web browser which stores it for later use.

29. Profiling and Personalizing The next time you go to the same Web site, your browser will send the cookie to the Web server. The server can use this information to present you with custom Web pages. So, for example, instead of seeing just a generic welcome page you might see a welcome page with your name on it. Example Travelocity.com page 261

30. .ebay.com TRUE / FALSE 1205709245 lucky9 268043 .ebay.com TRUE / FALSE 1079392444 nonsession.internet.com TRUE / FALSE 1293840243 RMID 416418993e7508c0 .tophosts.com TRUE / FALSE 1293839969 RMID 416418993e7509d0 .doubleclick.net TRUE / FALSE 1142465968 id 80000021e2b7e96 .zdnet.com TRUE / FALSE 1262321968 cgversion 5 .zdnet.com TRUE / FALSE 1262321968 browser 416418993E750B59 dgl.microsoft.com FALSE / FALSE 1080076008 tLCIDCC en dgl.microsoft.com FALSE / FALSE 1079989610 bCookie 1 dgl.microsoft.com FALSE / FALSE 1080028758 dLastVisit 3%2F23%2F2003+1%3A07%3A34+PM dgl.microsoft.com FALSE / FALSE 1079942358 eula Accepted

31. Want to learn more?http://www.cookiecentral.com/

32. Search Management Search processes that helps customers find the specific product or service they want to evaluate or buy

33. New trend… “Good” searching www.goodsearch.com

34. New trend… Geospatially-enabled Web search engines Incorporating geographic information as part of the search so that your results reflect your location

35. New trend… Search Engine Marketing (SEM) Internet marketing that attempts to increase your sites visibility by making the site appear higher in the results of a search engine query

36. Search Engine Marketing (SEM) In 2006, $9.4 billion was spent in the US on SEM That was a 62% increase from the SEM expenditures in 2005 and a 750% increase over the totals in 2002 Leading to some ethical questions – why?

38. Content and Search Management • Content Management – software that helps e-commerce companies develop, generate, deliver, update, and archive text data and multimedia information at e-commerce websites • Catalog Management – software that helps generate and manage catalog content • May support customer self-service and mass-customization of products, e.g., Dell Computer configuration management

39. Event Notification • Most e-commerce applications are event-driven • Respond to events such as customer’s first website access, payment, delivery • Event notification software monitors e-commerce processes • Records all relevant events including problem situations • Notifies all involved stakeholders

40. Gramm-Leach-Bliley Financial Modernization Act of 1999 Protects consumers financial information It’s the reason you have to sign a release before someone can pull your credit report Applies to companies considered to be “financial institutions” – companies like mortgage companies, banks, other types of money lenders. These firms have to explain (in writing) what their information sharing practices are. The firms have to provide you with notice and have to have some options to opt out of some types of information sharing.

41. HIPAA http://www.hhs.gov/ocr/hipaa/ Health insurance portability and accountability act of 1996 SEC. 261. PURPOSE. It is the purpose of this subtitle to improve the Medicare program under title XVIII of the Social Security Act, the medicaid program under title XIX of such Act, and the efficiency and effectiveness of the health care system, by encouraging the development of a health information system through the establishment of standards and requirements for the electronic transmission of certain health information.

42. COPPA Children’s Online Privacy Protection Act of 1998 Web sites directed at children must alert that they are collecting personal information and must have parent or guardian’s consent.

43. Clicks and Bricks How does your e-commerce strategy fit in with your other business strategies?

44. Examples – Home marketing companies (Mary Kay, Avon, Weekenders) Retail outlets (Barnes and Noble, REI, Wal-mart, ToysRUs) Catalog companies (Chadwicks, Lands End)

45. Let’s look at a couple of “local” business web siteslospoblanosorganics.com/www.supersuppersabquptown.com/index.phphttp://www.rrfb.org/

46. Event Notification Examples – Let’s you know when a product you are interested in becomes available Let’s you know when you have been outbid in an auction Let’s you know when your order has been shipped

47. Collaboration and Trading • Processes that support the vital collaboration arrangements and trading services • Needed by customers, suppliers, and other stakeholders • Online communities of interest • E-mail, chat, and discussion groups • Enhance customer service and build customer loyalty

48. B2E • E-commerce transaction between a business and an employee • Typical example would include web sites designed for human resource related items (e.g., management of benefits, application for other positions within the company)

49. Workflow Management • Software that helps employees electronically collaborate to accomplish structured work tasks within knowledge-based business processes • Ensure proper transactions, decisions, and work activities are performed and the correct data and documents are delivered to the right employee, customer, or supplier

50. Workflow Management Microsoft MS Market example Page 240 Microsoft is using workflow management to handle orders for employee office supplies and research materials (e.g., books) This particular example would also be an example of business to employee e-commerce (B2E)