Electronic Commerce

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Electronic Commerce The Technology Education
Series
January 12, 2001 Created by Jon
Atkinson Peter Birdsall Lisa Mancke Designed
by Haydee Hernandez
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What Is E-Commerce?
E-commerce is a transaction involving a computer
as the seller and/or the buyer.
Motivated by
New Markets
Better User Experience
Lower Overall Costs

• Reduced labor involvement
• Reduced human errors in order entry and
  management
• Automated customer service

• Every interaction is a transaction, so it can be
  personalized
• Use site analysis to understand your customers'
  needs better

• Greater accessibility. Sell around the clock and
  around the globe

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What is the anatomy of an e-business?
Content Management
User Interfaces
Back Office Support Systems
Content Repository
Authoring
3rd Party Content Delivery
Publishing
Workflow
Rev. Cntrl.
Order Processing
System Integr. Framework
Application Infrastructure
IVR
Fullfillment
Content Assembly
Business Objects
Message Based Integr
Web Browser
Customer Service
Load Balancing
Transaction Management
Commerce Functions
Transaction Based Integr.
WAP Device
Financials
Failover
Event Collection
Personalization Engine
ETI Tools
Interactive TV
Inventory Control
PDAs
Decision Support
CRM Infrastructure
Sales Force Automation
Customer Modeling
Data Analysis
Personalization Rules
Data Warehousing
Unified Customer Database
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How much does an e-commerce solution impact an
e-business?
Content Management
User Interfaces
Back Office Support Systems
Content Repository
Authoring
3rd Party Content Delivery
Publishing
Workflow
Rev. Cntrl.
Order Processing
System Integr. Framework
Application Infrastructure
IVR
Fullfillment
Content Assembly
Business Objects
Message Based Integr
Web Browser
Customer Service
Load Balancing
Transaction Management
Commerce Functions
Transaction Based Integr.
WAP Device
Financials
Failover
Event Collection
Personalization Engine
ETI Tools
Interactive TV
Inventory Control
PDAs
Decision Support
CRM Infrastructure
Sales Force Automation
Customer Modeling
Data Analysis
Personalization Rules
Data Warehousing
Unified Customer Database
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What happens behind the scenes of an E-commerce
transaction?
Almost all e-commerce transactions are the same,
but the tools can vary.
Internet
Internet
Buyer
Seller
Payment Service Provider
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What happens behind the scenes of an E-commerce
transaction?
Internet
Internet
Buyer
Seller
Payment Service Provider
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Two forms of e-commerce B2C and B2B
Internet
Buyer
Seller
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How is the process implemented in B2C?
Determine transaction parameters with product
catalogs and shopping carts

• Product Catalogs
• Countless product catalogs exist Microsoft, IBM,
  Open Market, and many smaller players
• ASP options exist iCat, Yahoo!
• Razorfish tends to build product catalogs from
  scratch, so as to not limit the user experience

• Shopping Carts
• These combine multiple line items into a single
  purchase
• Amazon.com has extended this idea with 1-Click
  ordering
• Some sites offer a wish list of potential
  purchases or a collection of favorite items into
  a kit that reminds the user to reorder at set
  intervals

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The BikeShop Product Catalog
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How is the process implemented in B2C?
Establish a secure connection using Secure
Sockets Layer (SSL)
Internet
Internet
SSL
Buyer
Seller
Payment Service Provider
1) The seller sends its certificate to the
buyers browser.
2) The buyer authenticates the seller using the
certificate and generates a session key.
3) The buyer encrypts the session key using the
sellers public key.
4) The seller decrypts the session key using its
private key.
5) SSL established. The seller and buyer send
secure data like credit card information using
the session key.
AMEX
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How is the process implemented in B2C?
Authorize transaction through a Payment Service
Provider
Internet
Internet

SSL
Buyer
Seller
Payment Service Provider
AMEX
The credit card number and amount are sent to a
Payment Service Provider (PSP), who maintains
connections to acquiring banks and offer
value-added services to the merchant e.g. tax
calculation, warehouse integration.
The PSP approves or declines the credit card
transaction.
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How is the process implemented in B2C?
Behind the scenes of a Payment Service Provider
Internet World
Traditional World
Issuing Bank
the company that issues the credit card to the
customer
Credit Card Network
the communications network that connects banks
Payment Service Provider
Acquiring Banks
manage credit card transactions for merchants
Merchant Bank
where the merchant account is located
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How is the process implemented in B2C?
Security at the Payment Service Provider level
Internet World SSL, DES, RSA, or similar over the
Internet
Traditional World Private networks
Issuing Bank
Credit Card Network
Payment Service Provider
Acquiring Banks
Merchant Bank
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How is the process implemented in B2C?
Who retains the credit card number?
Retained by the Payment Service Provider
Pros
Cons
The credit card number is only retained for the
life of an orderCustomers must re-enter their
credit card number with every purchase
Straightforward implementationLess security risk
Retained by the seller
Pros
Cons
The credit card number is retained for the life
of the customerCustomers do not have to
re-enter their credit card number, and the site
could support automatically recurring orders
Requires substantial effort to secure the credit
card information
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How is the process implemented in B2C?
Execute the transaction, if authorized by the PSP
Internet
Internet

SSL
Buyer
Seller
Payment Service Provider
The seller informs the buyer whether their credit
card has been approved or declined.
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How is the process implemented in B2C?
Settle Payment
Issuing Bank
Credit Card Network
Payment Service Provider
Acquiring Banks
The Issuing Bank charges the buyers account and
places the appropriate amount of money in the
merchants bank account.
Merchant Bank
The entire e-commerce process is a series of
actions within a database transaction. If any one
of these actions fails, the entire transaction is
rolled back.
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How is the process implemented in B2B?
Select the package deal which works for the client
Transaction Parameters
Secure Connection
B2C
Product Catalog Shopping Cart
SSL
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Sample EDI and XML documents

• EDI
• ISA00 00 133105451234
  16123456789 9207031604U003019876543211Tgt
  
• GSPO12332192700312031112T004010
• ST8500001
• BEG00SAXX-123419980301AE123
• PERBDED SMITHTE800-123-4567
• TAX53247765SPCA9
• FOBPPORDALLAS TX
• ITD01351030E
• N1BTFRIENDLY AIRLINES9123456789-0101
• N2 ACCOUNTING DIVISION
• N312 DUCKETS ST.
• N4POOR TOWN CA98007US
• N1STABC AEROSPACE9123456789-0101
• N2 AIRCRAFT DIVISION
• N31000 JET BLVD.
• N4FIGHTER TOWN CA98898US
• PO1131EA17.45CTMGnmB-1234
• PIDFHAMMER-CLAW

• XML
• lt?xml version"1.0"?gt
• ltinterchangeDocumentgt
• ltsegment code"ISA"gt
• ltnamegtInterchange Control Header lt/namegt
• ltelement code"I01"gt
• ltnamegtAuthorization Information
  Qualifierlt/namegt
• ltvalue code"00"gtNo Authorization
  Information Present (No Meaningful Information in
  I02)lt/valuegt
• lt/elementgt
• ltelement code"I02"gt
• ltnamegtAuthorization Informationlt/namegt
• lt/elementgt
• ltelement code"I04"gt
• ltnamegtSecurity Informationlt/namegt
• lt/elementgt
• ltelement code"I05"gt
• ltnamegtInterchange ID Qualifierlt/namegt
• ltvalue code"13"gtUCS Code (The UCS Code
  is a Code Used for UCS Transmissions it includes
  thelt/valuegt
• lt/elementgt

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How is the process implemented in B2B?
Cost and Reliability are the primary determinants
of which package deal to select
B2B Old Days
Electronic Data Exchange (EDI)
Value-Added Network (VAN)
Cost Potentially enormous costs
Cost High setup and recurring costs Reliability
Traditional outsourcing benefits (reliability,
support, faster time to market, value-add)
B2B Future
Extensible Markup Language (XML)
Virtual Private Network (VPN)
Cost Much cheaper to implement, and more
flexible than EDI
Cost Cheaper than VANs Reliability Relatively
new technology
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How is the process implemented in B2B?
Payment is made through Purchase Orders or ACHs
Purchase Orders (PO) and Automated Clearing House
(ACH) transactions are more common than credit
card transactions.
Purchase Orders require the trading partners to
set up the relationship beforehand. Settlement
goes through traditional channels.
ACH carries fixed transaction fees, which become
very cost efficient with larger transaction
amounts. However, refused charges and settlement
can take 48 hours, so terms need to be set up
beforehand.
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Questions?