E-Commerce

1. E-Commerce 3/8/2001 송준화 김수면

2. E-commerce Emerging model of new selling and merchandising tools in which buyers are able to participate in all phases of a purchase decision, while stepping through those processes electronically rather than in a physical store or by phone Network Computing Laboratory

3. Merits • Lower price & bigger margin • Improved economic efficiency • Internet-scale market place • Only fingertip at anytime anywhere • … Network Computing Laboratory

4. Models • How to classify? • Type of business • E-tailer, B2B, e-mail, hub • Type of products • Physical goods, services, digital products • Revenue-generating models • Sales, subscription, advertisement • And much more… Network Computing Laboratory

5. A Classification e-commerce model Utility Brokerage Advertising Subscription Infomediary Community Merchant Affliate Manufacturer Network Computing Laboratory

6. Brokerage • Market makers • bring buyers and sellers together • facilitate transactions • B2B, B2C, C2C • sub-categories • market exchange - MetalSite • buyer aggregator - Accompany • metamediary - HotDispatch • auction broker - eBay • reverse auction - Priceline • search agent - MySimon Network Computing Laboratory

7. Advertising • Extension of the traditional media broadcasting model • provides content and services • mixed with advertising in the form of banner ads • sub-category • generalized portal – Yahoo! • personalized portal – My.Yahoo! • attention/incentive marketing - CyberGold • free model - FreeMerchant • bargain discounter – Buy.com Network Computing Laboratory

8. Infomediary • Data about consumer and their habits are extremely valuable • that information is carefully analyzed • used to target marketing campaigns • offer users some free in exchange • sub-category • recommender system - ePinions • registeration model – NYTimes.com Network Computing Laboratory

9. Merchant • Classic Wholesalers and retailers • sales may be based on list prices • or through auction • sub-category • virtual merchant – Amazon • catalog merchant - Levenger Network Computing Laboratory

10. ETC • Manufacturer • Intel, Apple • Affiliate • BeFree • Community • Guru • Subscription • Slate • Utility • SoftLock Network Computing Laboratory

11. Jan.Rank Dec.Rank Web Site ProjectedBuyers(000) OverallReach(%) UniqueUsers(000) Buy Rate(%) 1 1 amazon.com 2,330 23.6 22,934 10.2 2 2 barnesandnoble.com 638 7.2 6,998 9.1 3 9 ticketmaster.com 636 5.6 5,473 11.6 4 7 half.com 567 8.7 8,396 6.8 5 4 jcpenney.com 545 4.1 3,967 13.7 6 10 drugstore.com 322 2.5 2,473 13.0 7 5 walmart 286 5.7 5,491 5.2 8 3 cdnow.com 263 7.2 6,959 3.8 9 -- shopintuit.com 245 1.4 1,358 18.1 10 6 sears.com 215 3.2 3,070 7.0 Trends Top E-Tailers of January 2001 February 19, 2001 PC Data Online Network Computing Laboratory

12. Services • Customer’s perspective • locate and purchase a desired good or service • only virtual store • Merchant’s perspective • generate higher revenues than the merchant would achieve without the system • All of the same process of off-line & additonal functions of an e-commerce must be in place Network Computing Laboratory

13. 3-step to complete online selling • Step One • Develop a content site (i.e., as opposed to a database-driven catalog) and handle transactions off-line. • Advantages • Simple Web sites can be developed easily and quickly at low cost • Disadvantages • This limits Internet function to promotion; no revenue opportunity is involved Network Computing Laboratory

14. 3-step to complete online selling • Step Two • Develop an on-line catalog and handle transactions off-line. • Advantages • No need for sophisticated technology is involved; the catalog can manage large product assortment. • Disadvantages • Catalog building adds expense, without the possibility of reducing expense through on-line transactions. Network Computing Laboratory

15. 3-step to complete online selling • Step Three • Develop an on-line catalog and handle transactions on-line. • Advantages • This can manage large product assortment and complete sales at lower cost. • Disadvantages • Catalog building is expensive, and on-line transaction management requires sophisticated technology. Network Computing Laboratory

16. IT resources • Software architecture • Hardware architecture • Protocols and network topology • Payment services • Performance management and capability-planning procedure • Security procedures and mechanisms Network Computing Laboratory

17. Software architecure • Various software servers • HTTP servers • Application servers • Database servers • Middleware • Operating systems Network Computing Laboratory

18. Hardware architecture • Various H/W • Computer systems • I/O sub systems • Crypto accelerators • Firewalls • Routers • Load balancers Network Computing Laboratory

19. ETC • Protocols & network topology • A site’s connectivity to an ISP • Set of protocols used • TCP/IP, HTTP, SSL, S-HTTP • Payment services • Various type of payment • SET,Digital checks,e-cash • Peformance management • “eight-second rule” • Security procedures and mechanism • Mutual authentication • Protection of the customers’ information Network Computing Laboratory

20. E-Commerce Hosting Services • Provide e-commerce capability for customers • Customer .vs. Clients • Management of network and servers • Hosting infrastructure • Scalability • Quality of services Network Computing Laboratory

21. EHS (continued) • EHS’ Task • Creation of standard environment for storefronts & add sites • Secure transaction environment • Order processing: extraction and communication • Authorization of credit & clear payments • Site activity reports • Billing system • Customer’s task • Responsible for contents • Creation and hosting of web sites, catalog info, self integration requirements, etc Network Computing Laboratory

22. EHS: task categories • Site setup and configuration: • planning, system architecture, installation, etc • Customer enablement and support • Store setup, catalog maintenance, store maintenance, order management, shopper management, reporting • Site administration and operation • Systems management, site maintenance, billing, reporting, and customer service support • Back-end tasks • Payment processing, tax calculation, and order routing Network Computing Laboratory

23. EHS (continued) Web Servers and now Transaction Servers Network Computing Laboratory

24. EHS (continued) • Customers tend to develop their Web presence in stages • Simple Web presence    Revenue generation Network Computing Laboratory

25. EHS: a system perspective • Single web site: no on-line transactions, probably with email. • Single storefront • Mall • Multihome • On-site content + transaction server: on-site non-DB storefront and transaction server • Off-site content + transaction server: off-site non-DB storefront Network Computing Laboratory

26. Components of EHS • Web site construction tool • Web site hosting and publishing • Transaction server • Handle credit- and debit-card transactions • API’s for receive, approve, deposit, refund, etc • Authorization requests, recording, settlement of transaction info with merchant, credit card company, & clients • Security products and services • SET: secure electronic transactions by VISA & Mastercard • Payment systems • Records of transactions for reconciliation and reporting, etc Network Computing Laboratory

27. EHS (continued) • Commerce Enabler • Cash register function • Outsourced solution for security • Backend payment infrastructure • Commerce Service Provider • Provide end-to-end commerce services • Content creation, hosting, payment processing, integration, performance, customization, etc, etc. Network Computing Laboratory