INTRODUCTION TO

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INTRODUCTION TO E-COMMERCE IS524 Corporate
Information Systems by Chandra Amaravadi
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PRESENTATION OUTLINE

• Introduction basic concepts
• E-commerce architectures
• infrastructures
• Electronic Payments Security
• Business and revenue models

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INTRODUCTION BASIC CONCEPTS
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WHAT IS E-COMMERCE?

• Business conducted on the web
• Buyers and sellers interact electronically

Products/services
SELLER
BUYER
Internet
Payments
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TYPES OF ECOMMERCE

• Cust to business (C2B, B2C)
• products, books, software, music, appliances,
• services, banking finance, stock trades
• Business to Business (B2B)
• products, raw materials, commodities, content,
  services
• Customer to Customer (C2C)
• used books, computers, CDs, antiques, services
• Intra-org
• inventory ordering charge out, etc. e.g. MS
  Market
• helpdesk, etc.

What might be differences between B2C and B2B?
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PRIMARY MOTIVATOR FOR ONLINE PURCHASES
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TYPICAL ACQUISITION COST PER CUSTOMER
0 20 40
60 80 100
Consumer electronics / appliances
Groceries
Apparel
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NET SHOPPERS KEY DEMOGRAPHICS
Average Income 65,000 Average Age
42 Male/Female 44-56 of Population75
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MOST COMMONLY PURCHASED
Most common small-ticket items

• Apparel
• Toys/video games
• Books
• Software
• Music
• Health and Beauty
• Office supplies

Most common big-ticket items

• Plane tickets
• Computer hardware
• Hotel reservations
• Consumer electronics
• Car rental

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AN EXTENDED VIEW OF E-COMMERCE
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EXTENDED VIEW
Banks
Intermediaries
Banks
SECURITY
PAYMENT
SELLER
BUYER
Infrastructure
E-commerce system
Internet
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E-COMMERCE INFRASTRUCTURE The Internet
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THE INTERNET
The web client (i.e. browser) sends a request,
which is responded to by a web server (i.e. web
site) and routed by routers
DNS server
INTERNET
Router
Host/nodes
E-commerce system
ISP
Web client
Web client
Web client
E-commerce takes place by making use of the
internet infrastructure
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COMPONENTS OF THE ARCHITECTURE

• Web clients consist of computers that access web
  servers usually use browsers
• Host/node This could be the ISP host or it
  could be a host dedicated for internet services.
  Host has IP address.
• E-commerce system consists of the web client,
  web servers and the e-commerce software
• DNS server The ultimate reference for all web
  site addresses. DNS servers poll web sites in
  their area i.e. take attendance.
• Routers Components that forward data at network
  branches.
• Service providers (ISP) provide internet access.

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E-COMMERCE INFRASTRUCTURE E-Commerce System
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E-COMMERCE REFERENCE DIAGRAM
Banks
Intermediaries
Banks
SECURITY
PAYMENT
SELLER
BUYER
Infrastructure
E-commerce system
Internet
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E-COMMERCE SYSTEM PURPOSE
The functions of an e-commerce system are

• Attract and interface with visitors
• capture site traffic
• Store profiles
• Display products/services (in the case of sales
  model)
• Process payments (for sales model)
• payment/shipment confirmation
• Update databases

(these are discussed later)
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Attracting Visitors
90
80
70
60
50
Number of Users (in millions)
40
30
20
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Buyers
Browsers
RATIO OF BUYERS TO VISITORS Called conversion
ratio (5 for small companies)
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COMPONENTS OF AN E-COMMERCE SYSTEM
An E-Commerce System consists of

• Web clients (already discussed)
• Servers (see server architecture)
• E-commerce site (Web site )
• E-commerce application
• Interface
• Business logic
• Database backend

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WEB SERVER FUNCTIONS

• hosts web site and provides web pages
• provides authentication
• site traffic

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SERVER ARCHITECTURE
Web client
Web Server layer (handle incoming requests)
Application Server layer (E-commerce Server)
Backend layer
Mainframe
Database
ERP System
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E-COMMERCE SITE (WEB SITE)
The Physical Layout of a typical web site is as
follows
banner
left panel
side bar
content
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WEB SITE CONTENT
An E-commerce site or web site consists of Web
pages with content

• HTML
• XML (mostly data)
• code -- (part of E-commerce application)
• Client side -- Java script
• Server side -- Applets, Servlets (ASP/JSP)

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HYPERTEXT MARKUP LANGUAGE
HTML Hypertext Markup Language, language used
to format web content.
lthtmlgt lth1gt MIDWEST SOFTWARE CONSULTING INC.
lt/h1gt ltpgt We are the 1 consultants in the
midwest for databases and web technologies. Here
are some past projects lt/pgt ltolgt ltligt UKTI
database lt/ligt ltligt iExcel web site lt/ligt ltligt
Howard city web site lt/ligt lt/olgt lt/htmlgt
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XTENDED MARKUP LANGUAGE
XML Xtensible Markup Language. Uses
user-specified tags e.g. ltecomgt, ltTPgt, ltERPgt etc.
to mark up content
ltxselement name"note"gt ltxscomplexTypegt
ltxssequencegt ltxselement name"to"
type"xsstring"/gt ltxselement name"from"
type"xsstring"/gt ltxselement name"heading"
type"xsstring"/gt ltxselement name"body"
type"xsstring"/gt lt/xssequencegt lt/xscomplexT
ypegt lt/xselementgt
ltnotegt lttogtIS524lt/togt ltfromgtAmaravadilt/fromgt lthead
inggtReminderlt/headinggt ltbodygtDon't forget
assignments coming up!lt/bodygt lt/notegt
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ANOTHER EXAMPLE OF XML
ltbookstoregt ltbook category"CHILDREN"gt
lttitlegtHarry Potterlt/titlegt ltauthorgtJ K.
Rowlinglt/authorgt ltyeargt2005lt/yeargt
ltpricegt29.99lt/pricegt lt/bookgt ltbook
category"WEB"gt lttitlegtLearning XMLlt/titlegt
ltauthorgtErik T. Raylt/authorgt ltyeargt2003lt/yeargt
ltpricegt39.95lt/pricegt lt/bookgt lt/bookstoregt
Note XML Xtended Markup Language HTML
Hypertext Markup Language
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CLIENT SIDE JAVA SCRIPT
Javascript is an Object Oriented 4th GL that is
used to carry out actions on the client side like
form validation or popup windows. The compiler
is part of browser.
Java Script Example
lthtmlgt ltbodygt ltbutton onclick greetClass()"gt
Try it lt/buttongt ltscriptgt function
greetClass() alert("Hello 524!") lt/scriptgt
lt/bodygt lt/htmlgt
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SERVER SIDE -- APPLETS

• required to perform actions (authenticate, get
  prod info etc.) written in Java, PHP or ASP
• Generally involves calling functions scripts
  or pre-coded mini modules
• Functions embedded in HTML or stored in server
• Calls are placed in HTML

package org.me.hello   import
java.applet.Applet import
java.awt.Graphics   public class MyApplet
extends Applet _at_Override
public void paint(Graphics g)
g.drawString("Hello applet!", 50, 25)

MyApplet is a class with paint as the function
Code is embedded
ltapplet code"org.me.hello.MyApplet"
archive"HelloApplet.jar"gtlt/appletgt
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E-Commerce Application
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AN E-COMMERCE APPLICATION
GetClientInfo()
VerifyInfo()
DisplayAvailablePkgs()
SelectPkg()
PriceThePkg()
Interface
GetPayment()
ProcessPayment()
Business
ConnectDatabase()
Back End
UpdateDatabase()
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THE U.S. CELLULAR SYSTEM
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THE U.S. CELLULAR SYSTEM..
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THE U.S. CELLULAR SYSTEM 3
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CODE SAMPLES (FYI)
getClientInfo () ltsoapenvEnvelope
xmlnssoapenv"http//schemas.xmlsoap.org/soap/env
elope/" xmlnstyp"http//xml..com/types"
xmlnsser"http//xml..com/shopping/services"
xmlnstyp1"http//xml..com/shopping/types"gt
ltsoapenvHeadergt lttyprequestHeadergt
lttyptimestampgt?lt/typtimestampgt
lttypsourceSystemIdgt?lt/typsourceSystemIdgt
lt!--Optional--gt lttypsourceSystemUserI
dgt?lt/typsourceSystemUserIdgt
lttypsourceServerIdgt?lt/typsourceServerIdgt
lttyptrackingIdgt?lt/typtrackingIdgt
lt/typrequestHeadergt lt/soapenvHeadergt
ltsoapenvBodygt ltserpresentEligibleOffersgt
ltserrequestgt
lt!--Optional--gt lttyp1linesOfBusiness
gt lttyp1lineOfBusinessgt?lt/typ1lineOfB
usinessgt lt/typ1linesOfBusinessgt
lttyp1customerStatusgt?lt/typ1customerStatus
gt lttyp1customerTypegt?lt/typ1customerT
ypegt lttyp1newMarketIdgt?lt/typ1newMark
etIdgt lttyp1channelNamegt?lt/typ1channe
lNamegt lt!--Optional--gt
lttyp1locationIdgt?lt/typ1locationIdgt
lt!--Optional--gt lttyp1billingIdentifi
ersgt lttyp1activeIdsgt
lt!--Zero or more repetitions--gt
lttyp1stringgt?lt/typ1stringgt
lt/typ1activeIdsgt
lttyp1currentChargesgt?lt/typ1currentChargesgt
lt/serrequestgt lt/serpresentEligibleOffe
rsgt lt/soapenvBodygt lt/soapenvEnvelopegt
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CODE SAMPLES (FYI)..
VerifyInfo() ltsoapenvEnvelope
xmlnssoapenv"http//schemas.xmlsoap.org/soap/env
elope/"gt ltsoapHeader xmlnssoap"http//schem
as.xmlsoap.org/soap/envelope/"gt
ltrequestHeader xmlns"http//xml..com/types"gt
lttimestampgt2013-07-30T165537.406-04
00lt/timestampgt ltsourceSystemIdgtESP-POS
RETAILlt/sourceSystemIdgt
ltsourceSystemUserIdgtposretailuserlt/sourceSystemUse
rIdgt ltsourceServerIdgtRETAILSERVICElt/so
urceServerIdgt lttrackingIdgt401317257lt/t
rackingIdgt lt/requestHeadergt
lt/soapHeadergt ltsoapBody xmlnssoap"http//s
chemas.xmlsoap.org/soap/envelope/"gt
ltns2searchCustomerProfile xmlns"http//xml..
com/saleschannelmanagement/types"
xmlnsns2"http//xml..com/saleschannelmanagem
ent/services" xmlnsns3"http//xml..com/types
" xmlnsns4"http//xml..com/payment/types"gt
ltns2searchCustomerProfileRequestgt
ltUserInfo xsinil"true"
xmlnsxsi"http//www.w3.org/2001/XMLSchema-instan
ce"/gt ltcustomerSearchgt
ltaddressgt
ltcountry xsinil"true" xmlnsxsi"http//www.w3.o
rg/2001/XMLSchema-instance"/gt
ltcity xsinil"true" xmlnsxsi"http//www.w3.
org/2001/XMLSchema-instance"/gt
ltunitType xsinil"true" xmlnsxsi"http//ww
w.w3.org/2001/XMLSchema-instance"/gt
ltzipCodegtlt/zipCodegt
ltstate xsinil"true"
xmlnsxsi"http//www.w3.org/2001/XMLSchema-instan
ce"/gt ltunitNumbergtlt/u
nitNumbergt ltzip4Code
xsinil"true" xmlnsxsi"http//www.w3.org/2001/X
MLSchema-instance"/gt
ltstreetAddress1gtlt/streetAddress1gt
ltstreetAddress2 xsinil"true"
xmlnsxsi"http//www.w3.org/2001/XMLSchema-instan
ce"/gt ltpresentationElement
xsinil"true" xmlnsxsi"http//www.w3.org/2001/
XMLSchema-instance"/gt
lt/addressgt lttelephoneNumber
xsinil"true" xmlnsxsi"http//www.w3.org/2001/X
MLSchema-instance"/gt
ltsessionIdgtlt/sessionIdgt
lt/customerSearchgt
lt/ns2searchCustomerProfileRequestgt
lt/ns2searchCustomerProfilegt
lt/soapBodygt lt/soapenvEnvelopegt
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CODE SAMPLES (FYI)..
getCustomerinfo Response ltenvEnvelope
xmlnsenv"http//schemas.xmlsoap.org/soap/envelop
e/" xmlnsxsi"http//www.w3.org/2001/XMLSchema-in
stance"gt ltenvHeader/gt ltenvBodygt
ltmsearchCustomerProfileResponse
xmlnsm"http//xml..com/saleschannelmanagemen
t/services"gt ltmsearchCustomerProfileR
eturngt lttypcustomerProfiles
xmlnstyp"http//xml..com/saleschannelmanagem
ent/types"gt
lttypcustomerProfilegt
lttypfirstName xsinil"true"/gt
lttyplastName xsinil"true"/gt
lttyptelephoneNumber xsinil"true"/gt
lttypmarketName
xsinil"true"/gt
lttypidgtlt/typidgt
lttypaddressgt
lttypcountry xsinil"true"/gt
lttypcitygtlt/typcitygt
lttypunitTypegtAPTlt/typunitTypegt
lttypzipCodegt19962lt/typzi
pCodegt
lttypstategtDElt/typstategt
lttypunitNumbergtlt/typunitNumbergt
lttypzip4Codegt1434lt/typzip4Co
degt
lttypstreetAddress1gtlt/typstreetAddress1gt
lttypstreetAddress2
xsinil"true"/gt
lttyppresentationElement xsinil"true"/gt
lt/typaddressgt
lttypisExistingCustomer xsinil"true"/gt
lt/typcustomerProfilegt
lt/typcustomerProfilesgt
lttypmessages xsinil"true" xmlnstyp"http//xml
..com/saleschannelmanagement/types"/gt
lt/msearchCustomerProfileReturngt
lt/msearchCustomerProfileResponsegt
lt/envBodygt lt/envEnvelopegt
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SECURITY PAYMENTS
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SECURITY PROBLEMS
Web Site vandalism
Denial of service attack
Unauthorized access or misuse
Financial Fraud
0 10 20 30
40 50 60 70
Percent of web sites
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SECURITY AND PAYMENT

• Need secure environment
• Physical security via
• Firewalls (not discussed)
• E-cash/E-accts
• Transaction security via
• Encryption methods (SSL, SET)
• Authentication schemes (certificates)

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TRANSACTION SECURITY
When an e-commerce transaction is in progress, it
must be invisible to all except the parties of
the transaction

• SSL (Secure Sockets Layer)
• https (Enables SSL)
• SET (Secure Electronic Transaction)

Transfer 1000
Transfer 1000
0111 0110111000110
Encryption
Decryption
Public key 105
Private keys 15, 7
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DIGITAL CERTIFICATES
A digital certificate is an attachment to an
email message or a program embedded in a web
page that verifies the identity of a party in a
transaction.

• E-mail
• E-commerce
• EFT (funds transfer)

Certificate authority
Buyer
Seller
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STRUCTURE OF A DIGITAL CERTIFICATE
Owner name, organization, address
Owners public key
Validity date
Serial number
Issuing authority (IA)
IAs digital signature
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ELECTRONIC PAYMENTS
Payments are made when a transaction for a
product/service is taking place. Payments can be
in the form of

• credit/debit cards
• smart card
• electronic check cashing
• electronic accounts

What issues arise in processing payments during
web based commerce?
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DIGITAL CASH OR ELECTRONIC PAYMENTS
Digital cash is electronic cash. It used to
mimic conventional cash, but now the trend is
towards electronic payments.

• Early technology problematic (1st Gen)
• imitated conventional cash
• needed machine
• no standards, no anonymity
• Cybercash, Digicash, Scrips, Beenz and Flooz
• Move towards electronic accounts, 3rd Party
  payment (2nd G)
• e.g. Token, Paypal, Verisign, RBS worldpay
• protects privacy can be used anywhere

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ELECTRONIC PAYMENT SYSTEMS (FYI)
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E-Commerce Business Models
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E-COMMERCE BUSINESS MODELS
A business model refers to a particular method of
operation.

• E-tailer
• Transaction Broker
• Market Creator
• Content Provider
• Community Provider
• Portal
• Service Provider

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E-COMMERCE BUSINESS MODELS..
CATEGORY DESCRIPTION EXAMPLES
E-tailer Sells physical products directly to either other businesses or consumers Amazon Wal-mart.com
Transaction broker Processes online sales transactions for users, charging a fee for each transaction in order to save those users both time and money E-trade.com Expedia
Market place Sets up a digital environment where buyers and sellers can meet to browse and exchange products allowing for the setting of the prices on these products. They make profit off transaction fees e-Bay Priceline.com
Content provider Generates revenue by providing digital content over the web. This revenue is gained either from selling access to this content or through providing advertising space. WSJ.com GettyImages.com Itunes.com
Community provider Enables the sharing of information between people with similar interests Facebook.com
Portal Serves as an initial point of entry to the web providing additional services as well. Yahoo Google
Service Provider Provides web 2.0 services such as photo sharing and online backup to users Photobucket.com Dropbox
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E-COMMERCE REVENUE MODELS
A revenue model refers to a particular method of
deriving income.

• Advertising Revenue Model
• Sales Revenue Model
• Subscription Revenue Model
• Free/Freemium Revenue Model
• Transaction Fee Revenue Model
• Affiliate Revenue Model

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E-COMMERCE REVENUE MODELS
Model Description
Advertising Revenue Model Revenue is generated by gathering a large audience and then subjecting that audience to a large volume of advertisements
Sales Revenue Model Revenue is derived from selling goods, information, or services to customers.
Subscription Revenue Model Revenue is generated from the charging of a subscription fee in exchange for access to the provided content.
Free/Freemium Revenue Model Revenue is generated from a premium that is charged for access to additional services above and beyond the basic services which are provided for free.
Transaction Fee Revenue Model Revenue is generated from charging a transaction fee for each transaction that a company generates.
Affiliate Revenue Model Revenue is generated from by web sites that send visitors to other web sites in exchange for a referral fee.
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DISCUSSION QUESTIONS

• What are some reasons other than value
  convenience for customers to shop online?
• What is the purpose of the e-commerce layer in
  the e-commerce architecture?
• What is the conversion ratio?
• What might be reasons for low conversion ratios?
• How can it be improved?
• What is the difference between HTML and XML?
• What issues might an e-commerce company in a
  less developed country face?
• Deviantart.com is a company that brings
  together various types of artists.
• What business model is this?
• Dictionary.com provides free dictionary
  information to internet users, but
• for subscribers it provides premium content.
  What revenue model is this?
• Are e-commerce transactions friction-free?

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THE END