Welcome

1. Welcome Twentieth Lecture for ITEC 1010 3.0 A Professor G.E. Denzel

2. Discussion of more aspects of E-commerce Agenda

3. Discussion of more aspects of E-commerce Globe and Mail ROB

4. E-Commerce / E-Business • First of all, review Lecture 12 (based on Chapter 8), for coverage of many of the issues for Chapter 12.

5. Types of E-Commerce • Business-to-business EC (B2B) • Collaborative commerce (c-commerce) • Business-to-consumer EC (B2C) • Consumer-to-businesses (C2B) • Consumer-to-consumer (C2C) • Intrabusiness (intraorganizational) commerce • Government-to-citizens (G2C) and others • Mobile commerce (m-commerce)

6. E-commerce classification • Business-to-consumer EC • companies sell directly to consumers over the Internet • Business-to-business EC • two (or more) businesses make transactions electronically • Intrabusiness EC • transactions take place within an organization

7. Evolution of EC • Began in the early 1970s • Electronic Funds Transfer (EFT) • Electronic Data Interchange (EDI) • At the beginning of 90s • Internet and WWW • Scope: home banking, shopping in electronic stores buying stocks, finding a job, conducting an auction, collaborating electronically with business partners around the globe, and providing customer service

8. For organizations: Expands market place Supports operations with business partners Decreases the time when products travel between organizations Minimizes distribution channels Reduces paper-work For customers: Decreases prices Gives more choices on the market Shopping around the clock Supports mass customization Benefits of EC

9. Limitations of EC • Technical limitations • Lack of universally accepted standards: • Insufficient telecommunications bandwidth • Non-technical limitations • Lack of confidence to the electronic transactions • Lack of national and international regulations • Lack of infrastructure supporting EC applications

10. Business-to-Consumer EC • Most visible part of EC • Internet-based EC • Based on corporate Web-server • Non-internet EC applications • Delivers products and service in various forms

11. Electronic Shopping Model • Shopping and browsing • Items and Merchant selection • Ordering and Negotiation • Payment selection • Payment authorization and transport • Confirmation • Delivery products or services • Reimbursement based on authorization

12. Electronic Retailing • Solo Storefronts • Electronic Malls (Cybermalls) • A collection of individual shops under one Internet address • Success depends on the popularity of the entire collection of stores as well as on its own efforts • Malls generate streams of prospective customers who otherwise might never have stopped at the store

13. Figure 12.6 Electronic commerce consumer behavior model. [Source: Turban et al., Electronic Commerce: A Managerial Perspective. Prentice Hall, 2000.]

14. Advertising Online • Advertisement • information disseminate in order to attract buyers • Internet Advertisement • can be updated any time • can reach very large numbers of potential buyers • is cheap • can be based on multimedia • can be interactive and targeted to specific interest groups and/or individuals

15. Advertising Methods • Banners - Electronic Billboards • Keyword banners • Random banners • E-mail • Chat rooms • Newsgroups • Internet communities sites • Electronic catalogs

16. Attracting Visitors to a Site • Making the top list of a search engine: • Provide information to search engines databases • Use proper description in the HEAD part of HTML documents • Online events: • Contests • Free samples • Discounts

17. Business-to-Business Applications • Based on: • Extranets • VANs • Information shared: • Products -specifications, prices, sales history • Customers - sales history and forecasts • Suppliers - product line and lead times, sales terms and conditions • Transportation - carriers, lead times, costs • Inventory - inventory levels, carrying costs, locations

18. Seller-Oriented Marketspace Organizations attempt to sell their products (services) to other organizations electronically • Similar to BTC model: • Seller Web-site contains a catalog • Buyers can place orders

19. Buyer-Oriented Marketspace EC technology is used to reduce the cost of goods and the administrative cost • Buyer’s Web-site contains: • Request For Quotation (RFQ) • Accepts proposed bids, • Clarifications are made via e-mail

20. Intermediary-Managed Marketspace link between buyers and sellers • Exchanges: • Multiple buyers and multiple sellers • A bid-ask system • Auctions: • Buyers submit their bids • Items are sold to the higher bidder

21. Limitations of Traditional Payment Systems Traditional methods: cash, checks, money orders, credit cards • Limitations: • Requires face-to-face contacts • It takes much longer to provide necessary information

22. Online Payment Systems Characteristics • Transaction types: • Micropayments and largepayments • Operational characteristics: • Online transactions • Offline transactions • Established business relationships • Impulse buyers • Responsibilities

23. Electronic Payment Forms • Electronic checks • Electronic credit cards • Electronic cash • Smart cards • Electronic Funds Transfer

24. Smart Cards Contain embedded microchips or secondary storage: • Microprocessor with memory chip • 8-bit CPU, 512b RAM, 32Kb ROM • Memory chip: up to 4Kb • Optical memory cards – up to 4 Mb • Examples: • Doors, parking lots, medical id cards

25. Security Requirements • Authentication • Integrity • Non-repudiation • Privacy • Safety

26. Encryption • Plaintext • the message in the original format • Ciphertext • The message in the unreadable form • Encryption algorithms • Mathematical formula • Key • A certain combination of symbols

27. Key Systems • Symmetric systems – private key systems: • A single key is used to encrypt and decrypt • Long keys support security • Asymmetric systems – public key systems: • 2 keys – private and public • If text is encrypted by one key, it can be decrypted only by another

28. Public Key Encryption Public Key of Recipient Private Key of Recipient Message Text Message Text Ciphered Text Decryption Encryption Public Key of Sender Signature Private Key of Sender Signature Sender Receiver

29. Digital Signatures • Personal information encrypted by a public key of a receiver • Is used for: • Authentication of a sender • Confirmation that message content had not been change • Can be time stamped

30. Digital Certificate • Confirms that the holder of private and public keys is the right person • Issued by a third party – Certificate Authority • Private and public keys are to be submitted along with personal information • Has expiration date

31. Secure Socket Layer (SSL) • Placed between transport layer (TCP) and application • SSL for Internet is Transport Layer Security • Implemented: • As a part of a set of protocols • Embedded into software packages (especially browsers)

32. SSL Operation A combination of encrypted algorithms and authentication method is a cipher suite • SSL selects the strongest available cipher suite • Web-based application: • HTTPS • All outgoing messages can be encrypted • See SSLnotes under Course Notes

33. Secure Electronic Transactions SET is designed by Visa and Master Card • A customer has an account with a financial institution that supports SET • The customer possesses a certificate with private and public keys • Merchant has certificated for digital signatures and key exchange

34. Encrypted payment process • Encrypted credit card information is sent to the seller’s site • The seller passes the encrypted information to the third party • The third party contacts seller’s financial institution • Seller’s Financial institution contacts buyer’s financial institution and receives approval or denial, replies to the third party • The third party passes on approval to the seller