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E-Commerce: The Present and the Future By David Ríos
Today’s Points • • • What is E-Commerce? E-Business? B 2 B and B 2 C Models Emerging Business Models M-Commerce Hands on: e. Book Reader, Japanese mobile phone Web 2. 0 Design Technologies Hands on: Ajax (Carmax and Netflix) Marketing: Customer Relationship Mgmt (CRM) Security and Encryption
What is E-Commerce? • Definition: – Commercial transactions taking place over the internet and the world wide web • Examples: Amazon. com, e. Bay – Commercial transactions take place in the real world but… • the exchange of value is initiated over the web, and/or • the web application serves as a viable means of attracting significant numbers of customers • Example: Car. Max. com
What is not E-Commerce? • Web sites that simply introduce the company • Systems that manage procurement • Systems that manage supply chain and logistics • Customer Relationship Management Systems • Although they support E-Commerce, these are best described as E-Business
Business-to-Consumer Models Business Model Examples Description Revenue Model Portal Yahoo Google Amazon Walmart. com Dell. com Offer content, searching, email/chat, services and products, distribution channels, direct-to-customer sales Advertising Subscription fees Transaction fees Affiliate referral fees Sale of goods Content Provider CNN. com ESPN. com Information, news, and other content. Transaction Broker Stock and travel transactions. Helps people get things done quicker. Service Provider Scottrade Travelocity Hotels. com Orbitz e. Bay Priceline Visa. Now. com Advertising Subscription fees Affiliate referral fees Transaction fees Community Provider Facebook My. Space Market Creator Create markets that bring buyers Transaction fees and sellers together Selling a service rather than a Sales of services product Social networking sites Advertising Subscription Affiliate referral fees
Business-To-Business Model Examples Description Revenue Model Network Marketplace E-distributor Grainger. com Partstore. com Single-firm online version of retail and wholesale store; supply, maintenance, repair goods. Sale of goods E-procurement Ariba Perfectcommerce Single firm creating digital markets Fees for market-making where sellers and buyers transact services; supply chain for indirect inputs. management, and fulfillment services. Exchange Farms. com Independently owned vertical digital marketplace for direct inputs. Fees and commissions on transactions. Industry Consortium Elemica Exostar Quadrem Industry-owned vertical digital market open to select suppliers. Fees and commissions on transactions.
Business-To-Business Model Examples Description Revenue Model Private Industrial Network Single Firm Wal-Mart Proctor & Gamble Company-owned network to coordinate supply chains with a limited set of partners Cost absorbed by network owner and recovered through production and distribution efficiencies. Industry-wide 1 SYNC Agentrics Industry-owned network to set standards, coordinate supply and logistics for the industry Contributions from industry member firms and recovered through production and distribution efficiencies; fees for transactions and services.
Which represents more money in annual sales? Business-To-Consumer or Business to Business? • In 2007, B 2 C E-Commerce totaled $225 billion dollars in sales • In 2007, B 2 B E-Commerce totaled $3. 6 trillion dollars in sales
Other Business Models Business Model Examples Description Revenue Model Consumer-to-consumer e. Bay Half. com Consumers connect with Transaction fees consumers to do business. Peer-to-peer Kazaa Cloudmark Enable consumers to share files via the web. M-Commerce e. Bay Anywhere Pay. Pal Mobile Checkout AOL Moviefone Extending business Sales of goods and applications using wireless services technology. Subscription fees Advertising Transaction fees B 2 B and B 2 C constitute about 75% of the E-Commerce Market
M-Commerce • A small market in the US but growing fast • M-Commerce limited to purchases on laptops, PDAs, and now e. Book readers • • A BIG market in Europe, Japan, South Korea Mobile phones contain credit cards Train companies use RFID chip smart cards Cell phones contain barcode scanners for ads
Mobile Phone Security • Mobile phone and security key. • Must be within 2 meters of each other to work. • If the phone is stolen but not the key, the phone cannot be used to buy anything.
Smart Cards • Suica card • JR Railway in Japan • Is a contactless smart card (debit) • Contains an RFID (Radio frequency ID) chip
QR (Quick Response) Bar Code • Invented in Japan in 1994 • Stores addresses or URLs • Often included in ads • Are everywhere in Japan • Can be read with a cell phone • http: //www. iuhw. ac. jp/ m/
E-Book Readers Amazon Kindle • http: //www. amazon. com/ Barnes & Noble “Nook” • http: //www. barnesandnobl e. com/nook/features/? cds 2 Pid=30195
Web 2. 0 Design Elements and Technologies § E-Commerce sites stages § Technology-centered (1995 -2000) § Product-centered (2000 -2005) § Customer-centered (2006 -Today) § Today’s e-commerce site § More interactive § Uses audio, video, animation § Richer GUI with more features
Classic Web Application
AJAX enabled web application
Web 2. 0 Ajax Websites Carmax. com: A no-haggle auto retailer that sells quality used cars in over 100 stores nationwide Netflix. com: An online DVD rental service with home delivery and no late fees
Marketing • How and why do customers shop online? q. Brick-and-Mortar Shopping/Browsing and Traditional Ads influence Online Shopping q. Online Shopping/Browsing and Internet Ads influence Brick-and-mortar Shopping q Most people use search engines to find online retailers or go directly to a known site q. Banner ads, Facebook ads (community sites), affiliate marketing q. CRMs (a total view of the customer)
Customer Relationship Management System (CRM) • Track all contact with the customer • Enable up-selling and cross selling • Create more sales opportunities • Enable all employees to provide unparalleled service.
Security • Cybercrime is becoming a big problem. • The Internet and Web are increasingly vulnerable to large-scale attacks (February 2007 – Verisign). • The Internet has been business driven and grown faster than security measures and practices have. • The Internet was not originally designed to be a global marketplace.
Why is the Web such a Tempting Target? • Products, services, cash and information are in abundance • It’s less risky b/c you can do it anonymously • The Web lacks basic security features found in older networks (broadcast TV, telephone)
The Top 5 Cyber Crimes are… • #5 – Phishing • #4 – Laptop/Mobile device theft • #3 – Nigerian Letter Fraud • #2 – Virus • #1 – Insider Abuse
Key Dimensions of E-Commerce Security Dimension Explanation Integrity The ability to ensure that information displayed on the web or information transmitted/received over the internet is authentic. Nonrepudiation The ability to ensure that e-commerce participants don’t deny their online actions (a buyer denies the purchase after receipt of goods). Authenticity The ability to identify the identity of the customer. Confidentiality The ability to ensure that messages and data are available only to authorized personnel. Privacy The ability to ensure that the information is used in the manner for which it was intended. Availability The ability to ensure the e-commerce site continues to function as intended.
Potential Threats • • Viruses, worms, bots, Trojan horses Spyware Phishing Denial of Service (Do. S) Distributed Denial of Service (DDo. S) Hackers Spoofers (redirect your site)
Two Main Lines of Defense • Technology Solutions – Encryption, Digital Signatures, Digital Envelopes – Secure Socket Layers (SSL) – encrypted session – Firewalls, Proxy Servers • Policy Solutions – Perform a risk assessment (rank your assets & risks) – Develop security policies – Develop an implementation plan – Create a security organization/team – Perform a security audit.
Encryption • Reorganizes the content of a message so it can’t be understood • Uses a cipher or a key – Cipher: Substituting one symbol for another or transposing letters (easy to break) – Key: Mathematical formula that creates a string that must be decoded using the same key or another (harder to break)
Types of Encryption Strategies • Symmetric Key: Uses the same key to encrypt and decrypt • Public Key Encryption: Uses a public and private key to encrypt (128 to 512 bits). • Digital Signature: uses hash digests and double encryption • Digital envelope: Encrypts a document with a symmetric key and a public key to encrypt the symmetric key • Digital Certificate: Issued by a third party that identifies you, contains your public key, a serial number, and an expiration date (to solve identity issues).
Public Key Encryption
Pros and Cons • Good security protects your customers • Attracts Customers • Keeps costs and bad publicity down • The more security, the more expensive • The more security, the more inconvenient
Future of E-Commerce (my predictions) • • • Greater Security Internet Content Providers (sell channels) Product interaction online (cars, homes) Interactive entertainment (Fahrenheit 451) Ubiquitous E-Marketing (Minority Report) Sale of B 2 C and C 2 C Services (i. e. , Long Distance Education) will become global
Getting a job in e-Commerce • Know one language or platform inside and out • Have a portfolio of at least one impressive project • Be focused on what you can give them • A technology degree isn’t of much value without knowledge and skills to back it up • Story: The MIS guy who didn’t get hired