E-Commerce and Magazines Programs and Ideas that Work

E-Commerce and Magazines: Programs and Ideas that Work presented by: David Strom Port Washington NY USA david@strom. com, +1 (516) 944 -3407 Strom MPA Atlanta 9/00 1

What This Course is Not About u Mathematics of Public Key Cryptography u In-depth discussion of Visa® and Master. Card® operating regulations for e. Commerce u Legal advice for e. Commerce issues related to operating a web storefront u Writing your own storefront systems from scratch Strom MPA Atlanta 9/00 2

Why This Tutorial A successful magazine must incorporate and coordinate print and web editions u Any web site will eventually get involved in selling something online u Good storefront design and tactics will increase sales u Tough to evaluate various payment systems and products u Tough to stay on top of current e. Commerce technologies and still run your publication! u Strom MPA Atlanta 9/00 3

For Future Reference u Copy of this presentation (Powerpoint), links to sites and resources: www. strom. com/pubwork/ecommerce Strom MPA Atlanta 9/00 4

Course Topics u Good and bad web storefront design, defining successful and secure e. Commerce ventures u What are things a magazine person should know about e. Commerce and web publishing? u Overview of working Internet payment systems u Choosing service providers or suites u Installing and operating your own magazine web site Strom MPA Atlanta 9/00 5

Course Approach u Overview of major payment systems and storefront products u Give real-life examples and online demos u Help relate information to your own situation u Provide insight into different approaches, technologies u Discuss pros and cons of each u Multiple Q&A sessions Strom MPA Atlanta 9/00 6

Recommended Books u Magdalena Yesil's Creating the Virtual Store : Taking Your Web Site from Browsing to Buying (1997) u Dan and Emma Minoli's Web Commerce Technology Handbook (1998) u Phil Greenspun's Database Backed Web Sites Strom MPA Atlanta 9/00 7

Thanks u Marshall Rose u Stephanie Denny u … for their help in preparing this presentation Strom MPA Atlanta 9/00 8

My Background u I’ve been involved in the Internet for some time u Have used most of the products we demonstrate u Have consulted to a few of the vendors, but still have strong opinions u Founding editor-in-chief of Network Computing magazine u Built several hi-tech publishing web sites Strom MPA Atlanta 9/00 9

My Beliefs u My perspective is from the consumer’s viewpoint, as well as from the publisher’s u I believe that coordinating print and web is the next evolutionary step for magazines u Most e. Commerce has had accidental success to date u The web is a very different animal from print! Strom MPA Atlanta 9/00 10

Topic 1: Introduction to Internet Marketing u Advantages and disadvantages u Speed of adoption is immense! u Different kinds of approaches Strom MPA Atlanta 9/00 11

Internet Marketing u Look ¢ good to the public, be on the cutting edge u Supplement ¢ be real-time u Focus ¢ on global niches, be high-content u Avoid ¢ traditional channels, the trailing edge, the competition is already doing it Strom MPA Atlanta 9/00 12

Advantages u Direct, one-to-one marketing opportunity u Allows you to learn useful information and build subscriber relationships u Relatively inexpensive medium compared to advertising, direct mail or telemarketing u Capacity to be a major distribution channel u Results are measurable, sometimes Strom MPA Atlanta 9/00 13

Internet is Cheapest Cost Per Contact u Internet: $. 98 u Direct mail: $1. 68 u Telemarketing: $31. 16 u Tradeshows: $162. 00 Penton Research, www. penton. com, 11/97 Strom MPA Atlanta 9/00 14

Obstacles to Wide Deployment u Easy forms of payment u Trust in the system u Perceived benefits and profits u Technology and infrastructure still primitive Strom MPA Atlanta 9/00 15

What can go wrong on the Internet u Store is offline u Overall lax security with Con. Ed bills u Visitors steal your subscriber lists and other privacy glitches u Credit card fraud u Shopping cart hacks u Stealing your domain name Strom MPA Atlanta 9/00 16

General security practices u Make sure you protect your web site! u See “Ten ways” article from Winn Schwartau u Limit access, isolate servers, lock down scripts, so forth Strom MPA Atlanta 9/00 17

Accidental downloads u Ikea hack u Others such as Nissan, De. Beers, Butterball u Even Amazon’s affiliate email addresses were briefly exposed! Strom MPA Atlanta 9/00 18

Other notable privacy mistakes u Real Networks collecting user song playlists u Amazon. com displaying book buying habits of corporations u Infobeat sending email addresses to their advertisers u This can happen to you! Strom MPA Atlanta 9/00 19

What Went Wrong u All collected key information without their customer’s knowledge or approval u All were leading edge companies that should have known better u All quickly corrected their mistakes and informed the public Strom MPA Atlanta 9/00 20

Some Lessons Learned u Consumer ¢ control of privacy is essential most folks simply want the choice of opting out u The granularity of control must be fine, e. g. , over number and frequency; ¢ over categories of interests; and/or ¢ over (indirect) dissemination to third-parties ¢ u If you promise privacy protection, make sure you actually deliver it throughout your site! Strom MPA Atlanta 9/00 21

Preventing Credit Card Fraud u u u u Don't accept orders unless full address and phone number present Be wary of different "bill to" and "ship to" addresses Be careful with orders from free email services Be wary of orders that are larger than typical amount Pay extra attention to international orders When in doubt, call the customer to confirm the order Use software or services to fight fraud When you’ve found fraud, contact your merchant bank immediately Strom MPA Atlanta 9/00 22

Be Aware of Shopping Cart Hijacking u Example Strom MPA Atlanta 9/00 23

Stealing your domain name u Typo. net and America. Offline. com u Both sell ad space for things like: amazom. com ¢ www. eartlink. net ¢ u acivilaction. com vs civil-action. com u whitehouse. gov vs. whitehouse. com Strom MPA Atlanta 9/00 24

Dealing With Rogue Domains u bestbuys. com vs bestbuy. com u United Airlines vs untied. com u Use same colors, try to go after same audience u Lawyers are standing by to take your call… u Use various tools to track down offenders: companysleuth. com ¢ dejanews. com ¢ whois. userland. com ¢ bannerstake. com ¢ Strom MPA Atlanta 9/00 25

Topic 2: What Becomes Success? u Overview of e. Commerce market u Review physical storefront success factors u Propose some definitions u Define success for the web u Draw up e. Commerce principles Strom MPA Atlanta 9/00 26

Let’s Keep Our Perspective u Size of US movie industry -- $7 B! u Size of adult video rentals - $6 B! u Total US music sales -- $6 B! ¢ (Forrester says $288 M in 1998 online music+books) Strom MPA Atlanta 9/00 27

Ticketmaster u Started 11/96 u US$20 million/month via the web in sales u Ten percent of total sales via the web u Generating lots of new single ticket buyers, people who don’t like to order via the phone Strom MPA Atlanta 9/00 28

Then there is Disney. com u Web site Daily Blast signing up 15 k members/month u Sales via web are equal to 3 x-5 x of physical Disney store! Strom MPA Atlanta 9/00 29

Sad State of Today’s e. Commerce Marketplace u Poor quality tools u Hard-to-find stores u Limited payment methods u Credit card snooping perceptions u Older browser versions can’t view latest sites Strom MPA Atlanta 9/00 30

Case in Point: Buying a Bike Rack u Item not carried: outdated catalog u Telesales not familiar with web u No cross-sell or substitutions online u Needed three phone calls to complete purchase Strom MPA Atlanta 9/00 31

Compare Moviefone vs. BAM u BAM web site doesn’t carry event information in real time u BAM orders are fulfilled weeks later, and no indication on web site of sold-out events u MF: Real time ordering, easy navigation via web and phone u MF: no surcharge on tix, no waiting in long ticket lines! Strom MPA Atlanta 9/00 32

Let’s Learn From the “Real World” u Compare what works for physical stores u Try to extend to the web Strom MPA Atlanta 9/00 33

Critical Success Factors for Physical Storefronts u Location u Branding u Good service u Good product selection u Proper pricing and margins u Traffic Strom MPA Atlanta 9/00 34

First Problem: u None of these translate on the ‘net! Strom MPA Atlanta 9/00 35

Now Try to Agree on Definitions for Web Stores u What determines a good location? Position on a search page ¢ Nearness to popular destination ¢ Ad on a popular server ¢ u What determines branding? Memorable domain name ¢ Popular search category destination ¢ Strom MPA Atlanta 9/00 36

An Example of bad location: Montana Meats u Link u Can’t they afford their own domain name? u “/~” is BAD NEWS! Strom MPA Atlanta 9/00 37

Determining Traffic u Hard to do -- is it hits, page views, registered users? u [HITS = How Idiots Track Success] u Hard to measure -- do you count gifs? Use log files? u No general agreement on any metrics! Strom MPA Atlanta 9/00 38

Traditional Advertising Doesn’t Apply Anymore u Can’t measure anything u Every site has its own banner sizes u The Web is not TV Strom MPA Atlanta 9/00 39

One Working Definition of Success: u SURVIVAL! u If a site is still running after 12 months, and getting more traffic, it is a success. Strom MPA Atlanta 9/00 40

Does a site actually have to sell something? u Many actual e. Commerce sites don’t do the complete transaction u Require faxes or telephone calls! u Some merely have catalogs Strom MPA Atlanta 9/00 41

Principles of Good e. Commerce u Easy to find merchandize u Good service u Individual customization is key u Simple navigation u Make payments easy u Make buyer feel transaction is secure u Communicate effectively and frequently Strom MPA Atlanta 9/00 42

Danish e. Shopper Survey (2/99) u Why people shop on the web u Convenience and ease of use are the main reasons people buy u After you have deliberately looked for information about a product or service, how often do you buy it? Almost always, only 2%! u Only 5% of their visits to e. Commerce sites are to buy! Strom MPA Atlanta 9/00 43

First Principle of e. Commerce: u Make it easy to buy! Strom MPA Atlanta 9/00 44

Amazon. com u u u Services frequent readers with a variety of programs ¢ Editorial comments ¢ If you liked this book, you’ll like. . . ¢ Notification of new books by author, topic ¢ Simplified “ 1 -Click” ordering Uses simple pages and email Associates program for commission kickbacks Gift certificates via email And. . . lots of books, toys, electronics, etc. to choose from Strom MPA Atlanta 9/00 45

Use Affiliates Programs Wisely u They bring traffic to your doorstep u Nice revenue sharing model u Lots of them to choose from to model your own on: Associate. Programs. com ¢ Refer-it. com ¢ Strom MPA Atlanta 9/00 46

A Different Take on Affiliates: Click. Rewards u Pays you in airline miles for your patronage u Accrue miles on many sites u You redeem benefits on their site Strom MPA Atlanta 9/00 47

Amazon vs Borders u Borders link u Cookies vs logins u Who makes it easier to buy books? Strom MPA Atlanta 9/00 48

Update your directories! u This one is two years old Strom MPA Atlanta 9/00 49

Another Side of Service: Repeat Business u Make the shopper feel part of the family u Shopping as entertainment (online auctions) u “Do what I mean” search function (Amazon again looks at common misspellings made in the previous 24 hours for book searches) u Periodic targeted email updates and reminders Strom MPA Atlanta 9/00 50

Second principle: u Deliver solid service! Strom MPA Atlanta 9/00 51

My. MP 3. com u Customize Strom MPA Atlanta 9/00 your music tastes 52

Third principle: u Individual Strom MPA Atlanta 9/00 customization is key 53

Consumer Reports u Finding out what you get when you buy their new car pricing service u Just a few clicks from the home page! Strom MPA Atlanta 9/00 54

Fourth principle: u Make navigation simple Strom MPA Atlanta 9/00 55

How NOT to Design a Payment Screen u u Too confusing Still have to enter credit card numbers, just in an unfamiliar way Strom MPA Atlanta 9/00 56

Common mistakes with payments u Provide too few or too many order confirmation pages u Confusing methods and misplaced buttons on order page u Make it hard for customers to buy things u Don’t make your customers read error screens Strom MPA Atlanta 9/00 57

Here is a good example: Hearst’s publications u Let’s use Cosmo u Notice how the discount is highlighted u Simple navigation and online ordering Strom MPA Atlanta 9/00 58

Fifth principle: u Make payments easy! Strom MPA Atlanta 9/00 59

Making the Buyer Feel Secure: the Six Components of e. Commerce Trust u Seals of approval, logos of credit card co’s u Identifiable brand name u Ease of navigation u Order fulfillment easy to understand u Clear purpose and site presentation u Fast and simple technology (Cheskin Research) Strom MPA Atlanta 9/00 60

Perceptions of Credit Card Snooping Still Exist u But are largely popularized by media, not consumers! u Internet fraud stories are still common from both buyer and seller sides u Just starting to see authentication services (such as Cybersource) ramp up u Trust will take a long time Strom MPA Atlanta 9/00 61

Sixth principle: u Make the buyer feel secure! Strom MPA Atlanta 9/00 62

How Should You Use Email? u When to communicate? u What to communicate? u When is email helpful and when is it spam and annoying? Strom MPA Atlanta 9/00 63

Email Uses in e. Commerce u Sending order acknowledgement u Sending shipping notification u Purchase receipt u Telling customer when item is in stock or on sale u Responding to specific queries about service issues Strom MPA Atlanta 9/00 64

Email Receipts Should Contain the Following Items u Total price, including shipping u Your address and the store’s u Items ordered u Whether they are in stock or not u When they shipped u Bonus: order number and URL to view this info online, link to UPS/Fedex tracking system Strom MPA Atlanta 9/00 65

When to Send a Customer Email? u To acknowledge the order was placed u To say items shipped (or not ) and money changes hands Strom MPA Atlanta 9/00 66

Seventh principle: u Communicate Strom MPA Atlanta 9/00 effectively and frequently! 67

Communicate Effectively and Frequently u Get your response systems in place u Tie in your storefront with any existing customer relationship management tools and call centers u Send replies within an hour of initial order, within 24 hours of any query Strom MPA Atlanta 9/00 68

Topic 3: e. Commerce for Magazine Publishers and Editors u Using email effectively u Coordinating web and print content u Charging for content u Handling subscriptions online u Advertising choices u Marketing partnerships u Staffing considerations Strom MPA Atlanta 9/00 69

Using email effectively u Newsletters as subscription builders u Sending out notification of new issues or specials Strom MPA Atlanta 9/00 70

Bad newsletter example: Network World u Too many, too confusing u Opt-out message confusing as well: Should read Please check here if you WANT to receive these messages Strom MPA Atlanta 9/00 71

Good newsletter example: Tid. BITS u Easily searchable and complete archives u Coordinated email/web publishing schedule u Sponsors clearly delineated in both email and web pubs u Multiple languages Strom MPA Atlanta 9/00 72

Coordinating web and print content u Mistakes I’ve made in the past u The web is not a book u Contests and interactive gee-gaws u Hire the right ME u Issues to consider Strom MPA Atlanta 9/00 73

Mistakes on ICS (www. intranet-build. com) u Had different graphic artists for print and web, ended up doing graphics twice u Had web team inexperienced in publishing industry u Lack of overall coordination, no one really in charge u Print deadlines drove web content, rather than the other way around Strom MPA Atlanta 9/00 74

ICS design flaws u Print was 4 serial editions, web static u Articles mainly reference works and too long for the web u Lame email newsletter to drive repeat traffic u Too many ad spots cluttered the page Strom MPA Atlanta 9/00 75

Some wit and wisdom from Norm u “We still haven't found a way to put a magazine on the Web. ” Norman Pearlstine, editor in chief, Time magazine. u CNNSI has taken off, yet “I'm not convinced that charging subscriptions wouldn't result in the site falling apart. ” Strom MPA Atlanta 9/00 76

The web is not a book u People don’t like to read from a screen u People are more impatient over 28. 8 modems u Navigating online is still harder than turning pages Strom MPA Atlanta 9/00 77

Don’t get too attracted to technology u Frames suck u The fewer graphics the better u The more complex your pages, the more limited your audience u The more dynamic your site, the less can be indexed by a search engine Strom MPA Atlanta 9/00 78

Interactive is a dirty word u Visitors aren’t interested in video games u They take too much time and technology to do right u Develop simple contests that play off registrations Strom MPA Atlanta 9/00 79

Understand your audience u What pages are popular? u What inbound links produce visitors? u How long are they at your site and where do they go? u What browsers do they use and where do they come from? Strom MPA Atlanta 9/00 80

Complement your print publication u Don’t worry about “giving away the store” u Match content delivery with newsstand availability u Have search button right up front and on top u Put lots of navigation aids everywhere Strom MPA Atlanta 9/00 81

Issues u u Does your audience first see something on the web or in print? ¢ how do you display URLs and cross-reference? Should the web edition be a reference work or stand on its own? ¢ reading from the screen is slower than from the printed page! How easy is it to update your own content? ¢ keep archives of the past, even if out of date? Are web and print editions enemies or bedfellows? Strom MPA Atlanta 9/00 82

Content management tools u Vignette, Broadvision, Allaire Spectra, Run. Time, Fatwire u All are complex software tools that enable you to stage, edit, approve, and manage your web content u Need many skills to develop and operate properly u Six-figures fees common u First understand overall e. Commerce picture before purchasing Strom MPA Atlanta 9/00 83

Charging for content u Subscribers vs. visitors? u Free vs. paid portions of the site u Require registrations on portions of the site u How not to do it: Infoworld, which had two separate servers (free and paid) Strom MPA Atlanta 9/00 84

Think carefully about advertising u What you promise may not be what you deliver u Who really clicks on ad banners anyway? u Sell sponsorships like Forbes ($275, 000 each) Strom MPA Atlanta 9/00 85

Handling subscriptions online u Can you sub provider work with online additions/changes? u Do you have the infrastructure to do this well? u Do you already have an Internet payment mechanism in place? Strom MPA Atlanta 9/00 86

Advertising presentation choices u Zdnet – sliding advertising window u Geocities’ annoying logo at the bottom of screen u The. Street. com online ad kit Strom MPA Atlanta 9/00 87

Marketing partnerships u How to separate edit from sales cleanly u What are you selling and how do you sell it online? u Who’s idea is this, anyway? u Hearst is queen here Strom MPA Atlanta 9/00 88

Staffing considerations – the new help wanted ads u Wanted: Webmaster u Required skills: High proficiency in various web based programming, development tools, CGI, cookies, DNS, e. Commerce, FTP, HTML 2. 0 through 3. 02, IIS Server admin, Javascript, Java, MS SQL, Netscape server admin, NT Server admin, perl, Unix admin, web security Strom MPA Atlanta 9/00 89

You Need to be a Superhero: u Part web designer u Internet technologist u SQL database admin u Payment system maven Strom MPA Atlanta 9/00 90

Hire the right web ME u Who can make the trains run u Who knows enough HTML to be dangerous u Who comes from publishing u Who can coordinate with print counterparts Strom MPA Atlanta 9/00 91

Things You’ll Need to Discover u Are your sales and marketing staff web-savvy? u Is your accounting system adaptable to web purchases? u How do you reconcile web accounts with your existing financial systems? u Does your business owner understand Internet culture? u Can anyone find you on the Internet? Strom MPA Atlanta 9/00 92

Software requirements can get odious u Content management server u Ad banner server (incl. with Website Pro, MS Commerce) u Audio/video content servers (Real Server, Enliven ads, etc. ) u Clickstream analysis software u Ad networks (Double. Click) u Affiliate networks Strom MPA Atlanta 9/00 93

The Most Under-rated Skill: u PATIENCE! Strom MPA Atlanta 9/00 94

Topic 4: How to get paid over the Internet u Different devices Credit Cards ¢ Electronic Wallets ¢ 1 -Click and other technologies ¢ u Setting up a merchant account u Privacy and security issues Strom MPA Atlanta 9/00 95

Payment Basics Issuer Consumer Access Point Acquirer BANK Merchant Access Point • deposit & withdrawal • transaction status inquiry • authentication • problem resolution Consumer Strom MPA Atlanta 9/00 • purchase & refund • transaction status inquiry • authentication • problem resolution Merchant 96

Hierarchy u Payment ¢ Clearing house between acquirers and issuers u Acquirer ¢ System (clearing house) (third-party processor) Authorizes, processes and settles for merchant bank u Merchant ¢ Bank Accepts merchant deposit u Merchant ¢ Accepts authorized cardholder transaction Strom MPA Atlanta 9/00 97

Difference Payment Pieces u System: provides processing and settlement of transactions u Gateway: software/services to support e. Commerce merchants, acquirers u Device: initiates transaction from credit/debit card Strom MPA Atlanta 9/00 98

Attributes of Superior Payment Systems u Universal, world-wide acceptance u Recognized value u Reliability of transactions u Ease of use to customer u Capacity for quick settlement and collection Strom MPA Atlanta 9/00 99

Requirements u Mass appeal u Easy payment by the customer u Have acceptable risk to bank and merchant u Accommodate changes, cancellations and returns Strom MPA Atlanta 9/00 100

Let’s Consider the Customer u Changes the order u Doesn’t fill out all fields even when asked u Mistype credit card and other data u Cancels order entirely or never finishes order process Strom MPA Atlanta 9/00 101

Objectives in Offering Payment Choices u Customers like choices, but remember: they are here to buy stuff! u Make it safe for everyone involved: customer, merchant, and banks u Consider how easy it is for your customer to use, not just how easy it is for you to manage u Payments in a virtual world should imitate those in the real world Strom MPA Atlanta 9/00 102

Properties of payment technologies u How much software does the buyer need to install? Does it come with the desktop operating system? ¢ Does it come with the browser or other software? ¢ u What third-party clearinghouse is used? Provide trusted relationships ¢ Reduce risk, complexity in processing ¢ Strom MPA Atlanta 9/00 103

The Way Things are on the Web Today u Some payments are authorized off-line, through traditional POS terminals ¢ E-mail message to customer later (hopefully), confirming order and shipping information u Many merchant servers connect with payment authorization systems ¢ Authorization is real-time during the web session, and the sale is completed with secure server and browser software Strom MPA Atlanta 9/00 104

The Way Things are on the Web Today: Secure and Un-Secure u Secure transactions via secure browsers and servers with SSL u Un-secure transactions with lack of proper encryption (account numbers sent “in the clear”) via e-mail messages u Un-secure transactions due to “export” versions of browser and/or server software Strom MPA Atlanta 9/00 105

The Way Things are on the Web Today u Secure transactions do not guarantee the validity of the customer account information A high percentage of credit charge-backs for MO/TO transactions are for “merchandise not received” ¢ Address verification services can help protect you, and in some cases are required ¢ Strom MPA Atlanta 9/00 106

Different Ways to Capture Customer u Online u Post-authorization u Batch Strom MPA Atlanta 9/00 107

Online Capture u Happens simultaneously with authorization of transaction u Fastest method of capture for online merchants who can guarantee same-day shipment of goods Strom MPA Atlanta 9/00 108

Post-Authorization Capture u Capture is a separate step from authorization of transaction; post-auth message instructs bank to capture transaction u Example of use is for delayed shipping of merchandise Strom MPA Atlanta 9/00 109

Batch Capture u Transactions are captured in a batch mode after authorization (like post-auth capture) u Multiple authorizations are submitted at one time for capture u The batch is transmitted through gateway (Cyber. Cash) to the bank for funds transfer and merchant account reconciliation Strom MPA Atlanta 9/00 110

First, Remember the Old Payment Providers? u Digicash u Cybercash (first generation) u First Virtual u Mondex u Globe. ID Strom MPA Atlanta 9/00 111

Why Didn’t They Work? u Too complex to implement u Too much cumbersome infrastructure u Not too many stores took their kind of money u Too many other technical challenges u Solved the wrong problem first (credit card snooping) Strom MPA Atlanta 9/00 112

So What Payment Instrument to Use? u SSL Credit cards u e. Wallets/SET u Cybercash and other payment gateways u 1 -Click service providers u Monthly bill delivery add-ons u Peer-to-peer payments u One-time credit cards Strom MPA Atlanta 9/00 113

Credit cards, debit cards u JCB, Visa, Master. Card, Discover, American Express u Buyer gets card from issuing bank u Merchant is sponsored by acquiring bank u Merchant knows buyer and authorizes payment Strom MPA Atlanta 9/00 114

How Credit Cards Work u Transactions authorized against customer’s line of credit at issuer (promise to pay) u At point of settlement, cardholder’s account is charged and merchant’s account is credited u Transactions subject to chargeback to merchant under certain conditions Lack of proper authorization ¢ Lack of proper identification / address verification ¢ Strom MPA Atlanta 9/00 115

S-HTTP/SSL Features u Supply 16+4 in encrypted form u Require merchant to have a cert signed by a trusted third-party u Requirement of client-side cert is a trade-off: yes: buyer must “register” before making purchase (S-HTTP, SSLv 3); or, ¢ no: no assurance as to buyer’s identity (SSL) ¢ u Merchant Strom MPA Atlanta 9/00 site becomes a credit card repository 116

What About e. Wallets and SET? u IBM Consumer Wallet (both SET and ECML, $50, 000!) u Globe. SET (SET now, server-side non-SET later) u Transactor/Citibank Wallet (Jscript bookmark, gone) u e. Wallet. com (only SSL, now part of Entrypoint) u Microsoft Wallet (in Win 98, IE 4. 01) (both SSL and SET, evolved into Passport) u Brodia/ECML Strom MPA Atlanta 9/00 117

What’s in an e. Wallet? u Credit card accounts u Debit card accounts u Checking accounts Strom MPA Atlanta 9/00 118

All of These Have in Common u Access to your accounts u Credit card and other account numbers are stored by the service provider in a database, or on your hard disk u These numbers are not transmitted to the merchant u Consumer must initiate account set-up in advance of making any purchases Strom MPA Atlanta 9/00 119

How Electronic Wallets Work Today u Consumer must initiate request for electronic “wallet” software u Credit card or other account numbers are given to provider one time before any purchases are made u Closed system: only available to participating merchants and cardholders who have signed up in advance Strom MPA Atlanta 9/00 120

How Electronic Wallets Will Work in the Future u With SET protocol, will contain digital IDs with encrypted account information u Since digital IDs will be tied to specific accounts, wallets will keep track of all that information u At that point, wallets will be widely distributed and universally accepted Strom MPA Atlanta 9/00 121

Interoperability is the Key u Wallets will become widely used when the following events occur: Mass distribution of wallets to consumers is easily made ¢ Will be accepted by all merchants, regardless of wallet brand or payment brand ¢ Strom MPA Atlanta 9/00 122

e. Wallet Demonstration u Entrypoint Strom MPA Atlanta 9/00 123

Some Problems with e. Wallets u Not transferable to other wallets u Tied to a single PC u Not available for use at many web storefronts u Just solve a small part of the overall payment process Strom MPA Atlanta 9/00 124

Trends u e. Wallets will eventually go away u SET becomes a server-side issue u SSL still dominates e. Commerce transactions for many years Strom MPA Atlanta 9/00 125

1 -Click Service Providers u 1 Clickcharge. com, q. Pass. com, Insta. Buy. com u Mainly for digital content delivery u Per day pass (WSJ) u Charge 8 - 12% per transaction u Universal membership u Don’t leave site while completing purchase Strom MPA Atlanta 9/00 126

1 -Click Advantages u Ease of use u No credit card transmission over the Internet Strom MPA Atlanta 9/00 127

1 -Click Disadvantages u Need to reach critical mass of users almost at launch u Still rely on username/password combination which can be cumbersome u Small companies without a lot of depth Strom MPA Atlanta 9/00 128

Setting up Merchant Account u Providers to consider u How to compare services u Choices in setting up account, fees Strom MPA Atlanta 9/00 129

All Merchant Providers Are Not the Same u Compare services Which cards do they authorize? ¢ Do they provide electronic check services? ¢ Do they provide check guarantee services? ¢ u Compare prices Start-up fees ¢ Monthly discount fees ¢ Other service fees (per transaction) ¢ Statement generation fees ¢ Strom MPA Atlanta 9/00 130

Range of Credit Card Fees Your Bank CSP Discount Rate: 1. 5% - 5. 0% Application Fee: $100 - $300 Discount Rate: 1. 5% - 5. 0% Per Transaction: . 20 -. 30 Monthly Fee: $10 - $25 (service / statement fee) Chargeback Fee: Up to $25 Chargeback Reserves: Up to 10% of sales, for up to six months Strom MPA Atlanta 9/00 131

New developments: one-time credit cards u “Private payments” introduced this month by Am. Ex u The number is used only once u Requires software download Strom MPA Atlanta 9/00 132

Peer-to-peer payment providers u Pay. Pal/X. com u Billpoint )Wells Fargo/e. Bay) u Ecount (claims 1 MM users!) Strom MPA Atlanta 9/00 133

Alternative providers (to phone, ISP, or other monthly bills) u i. Pin u Trivnet u e. Charge Strom MPA Atlanta 9/00 134

Topic 5: Choosing the Right e. Commerce Path Strom MPA Atlanta 9/00 135

Rent, Buy or Build? u Delusions: “I could do that myself” u Not invented here u Justification example: corporate procurement u Forrester research survey showed 30% spent over $500, 000 Strom MPA Atlanta 9/00 136

Rent, Buy, or Build u Rent: outsource to a CSP u Buy suite of software u Build it yourself Strom MPA Atlanta 9/00 137

Types of Outsourcing u Web server hosting u Payment processing u Storefront creation u Email and customer management u Shopping carts u Catalog and inventory fulfillment u Ad banner, one-click networks Strom MPA Atlanta 9/00 138

Find an CSP u More ISPs are offering e. Commerce solutions u Have to use their software standards and payment schemes u Could be pricey u Just catching on in USA Strom MPA Atlanta 9/00 139

Evaluating e. Commerce ISPs u Do they offer storefront design? u Have in-house programmers? u Hosting of your own web server machine? u How many payment systems do they support? u What kinds of accounting reports do they offer? u What prices and packages offered? Strom MPA Atlanta 9/00 140

The Catch-22 of CSPs: u To be successful, a provider has to promote his products via the Internet and have detailed descriptions on their own web sites! u But try to find this information isn’t easy. Strom MPA Atlanta 9/00 141

Some CSP Examples u u u u u www. psi. net/web/ecommerce. shtml www. Best. com/bizcomm. html www. Brainlink. com/html/saleslink. htm www. Earthlink. net IBM: mypage. ihost. com www. Netcom. com business. Mindspring. com/prod-svc/smbiz/ www. Mindrush. com/ www. outer. net/ONCommerce (Outer. Net) Strom MPA Atlanta 9/00 142

Price Comparison assumptions u 10 Mb disk storage u Single email account u Inter. NIC $75 fee included for domain name Strom MPA Atlanta 9/00 143

Price Comparison for CSP hosting Strom MPA Atlanta 9/00 144

Earthlink pricing explained Program Monthly fee Setup fee Starter Site 20 25 Total Access Acct. 20 (waived) SSL cert. 10 20 Domain fee 75 Ecommerce 40 175 TOTAL 100 210 Strom MPA Atlanta 9/00 145

CSP Approaches u Geo. Shop/Yahoo u Via. Web/Yahoo u i. Cat/Intel u Encanto u Others entering a very crowded field Strom MPA Atlanta 9/00 146

Geo. Shop/Yahoo u Builds on Geo. Cities “communities” but for merchants (www. geocities. com/join/geoshops) u $25/month for just commercial listings u $180/month (or more!) for actual transactions ¢ working with Internet Commerce Services Corp. who uses Open Market Transact servers (www. icoms. com/pp. htm) Strom MPA Atlanta 9/00 147

Shop. Site demo u Can now handle two concurrent currencies Strom MPA Atlanta 9/00 148

The Suite Approach u Leading contenders u What is part of the suite and what isn’t u Prices and platforms Strom MPA Atlanta 9/00 149

Popular e. Commerce Suites Strom MPA Atlanta 9/00 150

Popular e. Commerce Suites (con’t) Strom MPA Atlanta 9/00 151

Four Typical Elements u Catalog u Storefront designer u Ordering/inventory system u Shopping cart/check out system Strom MPA Atlanta 9/00 152

The Cold Hard Reality of Suites u Suites are nothing more than collection of products u Lack integration among various elements u Difficult to setup, customize, and use u Require you to live “inside” their structure u Limited payment options u Sounds like early MS Office Strom MPA Atlanta 9/00 153

Payment Systems Included in Each Suite u Microsoft: Verifone, Buy Now u IBM (Net. Commerce): Verifone, SET/e. Till u Open. Market: Verifone u Web. Site Pro: IC Verify, PC Authorize, Cyber. Cash, others u Intershop: Cyber. Cash, ICVerify, others Strom MPA Atlanta 9/00 154

Sample Stores Included in Each Suite u Microsoft: 4 stores u IBM: e. Mall, simple and advanced sample stores u Open. Market: none u Web. Site Pro: 1 bookstore u Intershop: 3 stores Strom MPA Atlanta 9/00 155

Database Support Strom MPA Atlanta 9/00 156

Dealing With ODBC u Have to understand how to set up data sources u Intimate knowledge of your data structure u Re-install ODBC drivers at least once! u Best to start with built-in database Strom MPA Atlanta 9/00 157

Store Wizards Included in Each Suite u Net. Commerce (the best) u Web. Site Pro (but doesn’t do much) u Intershop (various wizards) u MS Commerce (although you’ll really need to know COM!) Strom MPA Atlanta 9/00 158

Tips u Don’t install anything before making sure you have everything! u Downloads for free, but they expire u Can you export existing files to these systems? Strom MPA Atlanta 9/00 159

Web. Site Professional website. ora. com u Version 2, shipping since 9/97 u US$799! u NT (or 95) u Supports seven different payment processors: SSL, Cyber. Cash u One sample store (bookstore) Strom MPA Atlanta 9/00 160

Sample storefront Strom MPA Atlanta 9/00 161

Web. Site Configuration Sheet Strom MPA Atlanta 9/00 162

Store Properties u Only can operate a single payment system u Run on a series of Access databases u Built-in tax table, but for N. Americans! u Well documented data structures in typical O’Reilly fashion Strom MPA Atlanta 9/00 163

Recommendations u Lowest priced suite by far! u i. HTML is robust, but will take some learning u Nice store setup and organization of catalog u Good low-end solution u Other alternatives: Shop. Zone (www. btsw. com), Alpha Merchant (www. alphasoftware. com) Strom MPA Atlanta 9/00 164

Intershop u demo (admin/admin for store) u Includes Sybase SQL 11 u US$5000, includes 3 mos. support Strom MPA Atlanta 9/00 165

Seven Different Managers u Catalog u Products u Store u Purchases u Inventory u Customers u Admin Strom MPA Atlanta 9/00 166

Characteristics u Everything managed via browser, which can get tedious u But you already have a database behind it Strom MPA Atlanta 9/00 167

Payment Options galore Strom MPA Atlanta 9/00 168

Recommendations u Most flexible payment options of any suite u Better at processing orders than site creation u Not good for large catalogs Strom MPA Atlanta 9/00 169

IBM Net. Commerce u IBM’s Go Web Server u DB 2 database u Shopping cart system u Credit card verifier Strom MPA Atlanta 9/00 170

Several ways to setup your store u Use nine-step wizard with populated catalog u Use wizard with empty catalog u Start from scratch u Import existing databases Strom MPA Atlanta 9/00 171

Recommendations u Great if you already use DB 2 for inventories u Most security-conscious suite u More depth than i. Cat u Start with all IBM defaults to save time Strom MPA Atlanta 9/00 172

Net. Commerce Specifics u NT, fast Pentium with 256 M of RAM u AIX, 390, OS/400, Solaris u US$5000 Start, $20, 000 Pro Strom MPA Atlanta 9/00 173

Latest features u “Intelligent Catalog” u Java-based wizards to setup and manage store u Recognizes shopping preferences and upsells u Improved SET payment server, ad tracking partnerships u “Smooth Start” packaged consulting services Strom MPA Atlanta 9/00 174

Open. Market u High end solution u Worldnet offers hosting of OM servers u Still needs customization! Strom MPA Atlanta 9/00 175

Recommendations u If you can afford it. . u Really the price covers lots of consulting time u High transactions and throughput needs u Use with Icoms. com front end service ($1000 + $100/month) Strom MPA Atlanta 9/00 176

Isn’t somebody missing from the suite party? u Netscape u Oracle Strom MPA Atlanta 9/00 177

Topic 6: Installing and Operating Your Own Storefront u What you need to know u What you need to buy Strom MPA Atlanta 9/00 178

One DIY solution u IIS u Perl. Shop shopping cart u Clear. Commerce CSP u First American Payment Systems u Verisign certificates u Fees: $800 setup, $500/yr, $50/month u What took longest to work: perl scripts to make credit card payments! Strom MPA Atlanta 9/00 179

Components Needed to Operate a Web Storefront u Database of items to sell and current inventories u Secure web server u Searchable catalog server u Connections to backend payments and financial servers u Shopping cart system u Checkout/payment system u Don’t forget about security! Strom MPA Atlanta 9/00 180

Which Database Server? u Pick before anything else u Core of your store revolves around the database: inventory system ¢ accounting system ¢ catalog system ¢ Strom MPA Atlanta 9/00 181

Database Server Recommendations u Use existing client/server db if possible u SQL Server: best with MS tools u Oracle: if you know p. SQL already u Informix: all other situations Strom MPA Atlanta 9/00 182

Database/web Tools u Develop your own forms u Query your database u Develop your own catalog Strom MPA Atlanta 9/00 183

Why is a Catalog Important? u Your customers view of your store u Current with your own inventory and offerings u Don’t want to sell what you don’t have u See catalog resources page Strom MPA Atlanta 9/00 184

Tool Recommendations u Cold Fusion, www. allaire. com u Sapphire/Web, www. bluestone. com Strom MPA Atlanta 9/00 185

Which Web Server? u Hundreds to choose from u Must support SSL and/or SHTTP u Platform isn’t important, really u Choose: NT/IIS ¢ Solaris/Netscape Enterprise ¢ Linux/Apache ¢ Strom MPA Atlanta 9/00 186

What can a Shopping cart do? u Simplify ordering process u Track multiple purchases for a single visitor u Display items purchased u Calculate total prices, tax, shipping charges u Track item attributes (colors, styles, sizes) Strom MPA Atlanta 9/00 187

Different Shopping cart Methods u Account-based u Cookie-based; u Encoded see www. cookiecentral. com URLs Strom MPA Atlanta 9/00 188

Payment Choices u Use gateway (Cyber. Cash) or service provider? u Do you need support for multiple currencies? u Do you have to host your store elsewhere? u Do you understand the fee structure? Strom MPA Atlanta 9/00 189

Steps Towards Coding Your Own Payment Service u Present user with a CGI form with shopping items info u Connect this to the service provider site u Provider displays his form to collect credit card info u After approval, you record info to your site u See Web. Techniques article by Lincoln Stein, 8/98 Strom MPA Atlanta 9/00 190

Again, Service Providers Differ u Compare services Which cards do they authorize? ¢ Do they provide electronic check services? ¢ Do they provide check guarantee services? ¢ u Compare prices Start-up fees ¢ Monthly discount fees ¢ Other service fees (per transaction) ¢ Statement generation fees ¢ Strom MPA Atlanta 9/00 191

Prices of Typical Products Strom MPA Atlanta 9/00 192

Putting Together Your Own Solution u SQL Server database u Cyber. Cash payment system u Web. Catalog 3. 0 (supports CCash) u IIS web server u Total price:

Thanks! u Review, Q&A u David Strom u +1 516 944 3407 u david@strom. com Strom MPA Atlanta 9/00 194