Twentieth Lecture for ITEC 1010 3.0 A

1
Welcome

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

2
Agenda

• Discussion of more aspects of E-commerce

3
Globe and Mail ROB

• Discussion of more aspects of E-commerce

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
Benefits of EC

• 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

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
• Buyers 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
  sellers site
• The seller passes the encrypted information to
  the third party
• The third party contacts sellers financial
  institution
• Sellers Financial institution contacts buyers
  financial institution and receives approval or
  denial, replies to the third party
• The third party passes on approval to the seller