Professional Documents
Culture Documents
PRESENTATION REPORT
ON
TOPIC: - E-COMMERCE
`
SUBMITED TO:
PROF: PRAGATI GOYAL
SUBMITED BY
Nilesh Joteeram
Chikane
CONTENT
1. Introduction
4. Strategies
7. Risk Management
8. Payment System
11. E-Governance
E-Commerce:
Business has been looking for ways to increase their profits and market
share. The search for more efficient ways of doing business has been driving another
revolution in the conduct of business .This revolution is known as electronic
commerce which is any purchasing or selling through an electronic communications
medium. Business planners in institutions and organizations now see technology not
only as a supportive cofactor, but as a key strategic tool. They see electronic
commerce as a “wave of future”.
Information technology has revolutionized and digitalized economic activity,
and made it a truly global phenomenon .One of the most visible icons of the IT
Revolution is the internet – the world wise web. Which is a gigantic anarchic
network of computers world wide, which is essentially used for communicating,
interaction, interactive long distance computing and exchange of information giving
rise to a host of applications from military and government to business, education
and entertainment?
E-commerce exists because of internet. It has been born on the net and is
growing with the net. It involves carrying business on and through the net.
E-commerce is a product of the digital economy. It is a source of a paradigm shift,
in redefining technology, individual and global societies as well as national and
global economies.
Electronic commerce is a symbolic integration of communications, data
management, and security capabilities to allow business applications within
different organizations to automatically exchange information related to the sale if
goods and services. Communication services support the transfer of information
from the originator to the recipient. Data management services define the exchange
format of the information. Security mechanisms authenticate the source of
information, guarantee the integrity of the information received, prevent disclosure
of information to inappropriate users, and document that the information was
received by the intended recipient.
Prior to the development of e-commerce, the process of marketing and
selling goods was a mass-marketing and sales-force driven process. Customers were
viewed as passive targets of advertising “campaigns” .Selling was conducted in
well-insulated “channels” .Consumers were trapped by geographical and social
boundaries, unable to search widely for the best price and quality.
E-commerce has challenged much of this traditional business thinking.
E-Commerce Defined:
“The use of internet and the WEB to transact business. More formally, digitally
enabled commercial transactions between and among organizations and
individuals.”
“Electronic commerce is commerce via any electronic media, such as TV, fax, and
online networks. Internet-based commerce makes use of any Internet facility and
service. Web-based commerce focuses on the opportunity of the World Wide Web
apparatus, in particular, its ubiquity and its ease of use.”
Benefits/Features of E-Commerce:
Electronic commerce increases the speed, accuracy, and efficiency of business and
personal transactions. The benefits of E-commerce include the following:
• Ubiquity: E-commerce is ubiquitous, meaning that it is available just about
everywhere, at all times. It liberates the market from being restricted to a
physical space and makes it possible to shop from your desktop, at home, at
work, or even from your car using mobile commerce .From customer point
of view, ubiquity reduces transaction costs – the costs of participating in a
market. To transact it is no longer necessary to spend time and money
traveling to market. At a broader level, the ubiquity of e-commerce lowers
the cognitive energy required to transact in a marketplace. Cognitive energy
refers to the mental effort required to complete a task.
• Global Reach: E-commerce technology permits commercial transactions to
cross cultural and national boundaries far more conveniently and cost
effectively than is true in traditional commerce. As a result, the potential
market size for e-commerce merchants is roughly equal to the size of the
world’s online population. The total number of users or customers an e-
commerce business can obtain is a measure of its reach.
• Universal Standards: The technical standards for conducting e-commerce
are universal standards – they are shared by all nations around the world.
The universal technical standards of e-commerce greatly lower the market
entry costs - the cost merchants must pay just to bring their goods to market.
At the same time, for consumers, universal standards reduce search cost –
the effort required to find a suitable products.
• Richness: Information richness refers to the complexity and content of a
message.
• Interactivity: E-commerce technologies are interactive, meaning they allow
for two-way communication between merchant and consumer .It allows an
online merchant to engage a consumer in ways similar to a face-to face
experience , but on a much more massive , global scale.
• Information Density: the internet and the Web vastly increase information
density –the total amount and quality of information available to all market
participants, consumers, and merchants alike. E-commerce technologies
reduce information collection, storage, processing, and communication
costs .At the sale time; these technologies increase greatly, the accuracy and
timeliness of information-making information more useful and important
than ever. As a result information becomes more plentiful, cheaper and of
higher quality.
• Personalization/Customization: E-commerce technologies permit
personalization – merchants can target their marketing messages to specific
individuals by adjusting the message to a person’s name, interests, and past
purchases. The technology also permits customization –changing the
delivered product or service based on a user’s preference or prior behavior.
Given the interactive nature of e-commerce technology, a great deal of
information about the consumer can be gathered in the marketplace at the
moment of purchase. With the increase in information density, a great deal
of information about the consumer’s past purchases and behavior can be
stored and used by online merchants. The result is increase in the level of
personalization and customization.
Types of E-Commerce:
There are different types of e-commerce and many different ways to characterize
these types.
The five major types of e-commerce are:
1. B2C
2. B2B
3. C2C
4. P2P
5. M-Commerce
B2C: (Business-to-Consumer)
The most commonly discussed type of e-commerce is Business-to-Consumer (B2C)
e-commerce, in which online business attempt to reach individual consumers is done
.It has grown exponentially since 1995, and is the type of e-commerce that most
consumers are likely to encounter . Within the B2C category there are many
different types of business models: portals, online retailers, content providers,
transaction brokers, market creators , service providers , and community providers.
B2B: (Business-to-Business)
In this type of e-commerce, one business focuses on selling to other business .It is
the largest form of e-commerce. The ultimate size of B2B e-commerce could be
huge . At first, B2B e-commerce primarily involved inter-business exchanges, but a
number of other B2B business models have developed, including e-distribution,
B2B service providers, matchmakers, and info-mediaries that are widening the use
of e-commerce.
C2C: Consumer-to-Consumer
C2C e-commerce provides a way for consumers to sell to each other, with the help
of an online market maker such as the auction site .In C2C e-commerce, the
consumer prepares the product for market, places the product for auction or sale,
and relies on the market maker to provide catalog, search engine, and transaction
clearing capabilities so that products can be easily displayed, discovered, and paid
for.
P2P: (Peer-to-Peer)
Peer-to-Peer technology enables Internet users to share files and computer resources
directly without having to go through a central Web server. In peer-to-peer’s purest
form, no intermediary is required. Entrepreneurs and venture capitalists have
attempted to adapt various aspects of peer-to-peer (P2P) e-commerce.
E.g. Napster.com established to aid internet users in finding and sharing music files
(mp3 files). It is partially peer-to-peer because it relies on a central database to show
which users are sharing music files.
M-commerce:
Mobile commerce or m-commerce refers to the use of wireless digital devices to
enable transactions on the Web. These devices utilize wireless networks to connect
cell phones and handheld devices to the Web. Once connected, mobile consumers
can conduct many types of transactions, including stock trades, banking, travel
reservations, and more.
B2G: Business to Government
E-Commerce Business Models:
A business model is a set of planned activities (sometimes referred to as business
process) designed to result in a profit in a marketplace. The business model is at the
center of the business plan.
A business plan is a document that describes a firm’s business model.
An e-commerce business model aims to use and leverage the unique qualities of the
internet and the World Wide Web.
3. Market Opportunity:
The term market opportunity refers to the company’s intended marketplace and the
overall potential financial opportunities available to the firm in that marketplace.
The market opportunity is usually divided into smaller market niches. The realistic
market opportunity is defined by the revenue potential in each of the market niches.
4. Competitive Environment:
The firm’s competitive environment refers to the other companies operating in the
same marketplace selling similar products. The competitive environment for a
company is influenced by several factors: how many competitors are active, how
large their operations are, what the market share of each competitor is, how
profitable these firms are, and how they price their products.
5. Competitive Advantage:
Firms achieve a competitive advantage when they can produce a superior product a
superior product and/or bring the product to market at lower than most, or all, of
their competitors. Firms also compete on scope .Some firms can develop global
markets while other firms can only develop a national or regional market .Firms that
can provide superior products at lowest cost on global basis are truly advantaged.
6. Market strategy:
Market strategy is the plan the company put together that details exactly how the
company intend to enter the market and attract new customers.
7. Organizational Development:
Describes how the company will organize the work that needs to be accomplished.
8. Management Team:
Employees of the company responsible for making the business model work.
TCP/IP:
TCP refers to the Transmission Control Protocol. IP refers to the Internet Protocol.
A protocol is a set of rules for formatting, ordering, compressing, and error checking
messages. It may also specify the speed of transmission and means by which devices
on the network will indicate they have stopped sending and/or receiving messages.
Protocols can be implemented in either hardware or software .TCP/IP is
implemented in Web software called server software .It is the agreed upon protocol
for transmitting data packets over the Web. TCP establishes connections among
sending and receiving Web computers, handles the assembly of packets at the point
of transmission, and their reassembly at the receiving end.
IP addresses: TCP handles the packet zing and routing of Internet messages. IP
provides the Internet’s addressing scheme .Every computer connected to the Internet
must be assigned an address – otherwise it cannot send or receive TCP packets
.When a user sign’s onto the Internet using a dial-up telephone modem, the
computer is assigned a temporary address by the Internet service provider.
Internet addresses known as IP addresses, are 32-bit numbers that appear as a series
of four separate numbers marked off by periods such as 201.61.186.227. Each of the
four numbers can range from 0-255. This “dotted quad” addressing scheme contains
up to 4 billion addresses of the computer ( 2 to the 32nd power).The leftmost
number typically indicates the network address of the computer , while remaining
numbers help to identify the specific computer within the group that is sending (or
receiving) messages.
Domain Names and URLs: Most people cannot remember 32-bit numbers .IP
addresses can be represented by a natural language convention called domain
names. The domain name system (DNS) allows expressions to stand for numeric IP
addresses.
Uniform Resource Locators (URLs ) are addresses used by Web browsers to
identify the location of content on the web, also use domain names as a part of the
URL.A typical URL contains the protocol to be used when accessing the address,
followed by its location. The protocol used is HTTP (Hypertext Transfer
Protocol).A URL can have more than one paths.
Client/Server computing:
It is a model of computing in which very powerful personal computers called
Clients are connected together in a network together with one or more server
computers. These clients are sufficiently powerful to accomplish complex tasks such
as displaying rich graphics, storing large files, and processing graphics and sound
files, all on a local desktop or hand held device. Servers are networked computers
dedicated to common functions that their client machines on the network need. Such
as storing files, software applications, utility programs such as Web connections,
and printers.
Malicious Code
It includes a variety of threats such as viruses, worms, Trojan horses, and “bad
applets”. A virus is a computer program that has the ability to replicate or make
copies of it, and spread to other files. In addition to the ability to replicate, most
computer viruses deliver a “payload” (destroying files, reformatting the computers
hard drive or causing programs to rum improperly.
A Trojan horse does something other than expected. The Trojan horse is not itself a
virus because it does not replicate, but is often a way for viruses or other malicious
code to be introduced into a computer system.
Bad applets also referred to as malicious mobile code, are expected to become an
increasing problem as java and Active X controls become more commonplace.
Malicious code is a threat to the system’s integrity and continued operation, often
changing how a system functions or altering documents created on the system. In
many cases the user is unaware of the attack until it affects the system and the data
on the system.
Integrity refers to the ability to ensure that information being displayed on a Web
site , or transmitted or received over the internet , has not been altered in any way by
an unauthorized party.e.g. An unauthorized person intercepts and changes the
contents of an online communication, such as by redirecting a blank wire transfer
into a different account, the integrity of the message has been compromised because
the communication no longer represents what the original sender intended.
Non repudiation refers to the ability to ensure that e-commerce participants do not
deny (I.e. repudiate) their online actions.
Authenticity refers to the ability to identify the identity of a person or entity with
whom you are dealing on the internet. How does the customer know that the Web
site operator is who it claims to be? How can the merchant be assured that the
customer is really who he/she say he/she is? Someone who claims to be someone
they are not is “spoofing” or misinterpreting themselves.
Confidentiality refers to the ability to ensure that messages and data are available
only to those who are to view them. Confidentiality is something confused with
privacy, which refers to the ability to control the use of information a customer
provides about himself or herself to an e-commerce merchant.
Availability refers to the ability to ensure that an e-commerce site continues to
function as intended.
E-Commerce security is designed to protect these six dimensions. When any one of
them is compromised, it is a security issue.
Risk management
Risk: “The possibility of loss or injury.”
E-commerce risk involves understanding potential problems that might occur in the
business and affect on success.
Risk management is an activity undertaken to lessen the impact on potentially
adverse events on business. Risk management is an investment .There is costs
associated with it. The investment in risk management depends upon the nature of
the business.
Risk Assessment:
The first step is to inventory the information and knowledge assets of E-commerce
site and company. What information is at risk? Is it customer information,
proprietary designs, business activities, secret processes, or other internal
information, such as price schedules, executive compensation, or payroll?
For each type of information try to estimate the losses for the firm.
Based on the quantified list of risks, one can start to develop a security policy I.e a
set of statements prioritizing the information risks, identifying acceptable risk
targets, and identifying the mechanisms for achieving these targets.
Technology Solutions protecting internet communications
Because e-commerce transactions must flow over the public internet, and therefore
involved thousands of routers and servers through which the transaction packets
flow, security experts believe the greatest security threats occur at the level of
internet communications. This is very different from a private network where a
dedicated communication line is established between the two parties. A number of
tools are available to protect security of internet communications, the most basic of
which is message encryption.
ENCRYPTION
Encryption is the process of transforming plain text data in to cipher text that can
not read by anyone outsider of the sender and the receiver. The purpose of
encryption is (a) to secured stored information and (b) to secure information
transmission . Encryptions can provide four of the six key dimensions of
E- Commerce security.
• Message integrity – provides assurance that the message has not been altered
• Non repudiation – prevents the user from denying he or she sent the
message.
• Authentication – provides verification of the identity of the person (or
machine) sending the message.
Confidentiality – gives assurance that the message was not read by others. This
transformation of plain text to cipher text is accomplished by using a key or cipher.
A key (or cipher) is any method of transforming plain text to cipher text. Encryption
can be practiced since the earliest form of writing and commercial transaction.
Ancient Egyptian and Phoenician commercial records were encrypted using
substitution and transposition ciphers. In a substitution cipher, every occurrence of
given letter is replaced systematically by another letter. For instance, if we used the
cipher ”letter plus two”- meaning replace every letter in a word with a new letter
two places forward – then the word “hello” in plain text would transformed into the
following cipher text :”jgnnq”. In a transposition cipher, the ordering of the letters
of each word is changed in some systematic way.
Symmetric Key Encryption: In order to decipher this message, the receiver would
have to know the secret cipher that was used to encrypt the plain text. This is called
symmetric key encryption or secret key encryption. In symmetric key encryption,
both the sender and the receiver use the same key to encrypt and decrypt the
message. How do the sender and the receiver have the same key? They have to send
tit over some communication media or exchange the key in person .The possibilities
for substitution and transposition ciphers are endless, but they all suffer from
common flaws. First, in the digital age, computers are so powerful and fast as these
ancient means of encryption can be broken quickly. Second, symmetric key
encryptions require that both parties share the same key. In order to share the same
key, they should send the over a presumable insecure medium where it could be
stolen and used to decipher messages. If the secret key lost or stolen, entire
encryption system fails.
Third, in commercial use where we are not all parts of the same team or army, you
would need a separate key for each of the parties with whom you transacted, that is,
one key for the bank, another for a department store, and another for the
government. In large population of users, this could result in as many as n (n - 1)
keys. In population of millions of Internet users, thousands of millions of keys
would be needed to accommodate all e-commerce customers (established at about
35 million purchasers in the United States). Potentially, (35 millions) 2 different
keys could be needed. Clearly this situation would be too unwieldy to work in
practice.
Modern encryption system are digital. The ciphers or keys used to transform plain
text in to cipher text are digital strings. Computers store text or other data as binary
strings composed of 0s and 1s. For instance, the binary representations of the capital
letters “A” in ASCII computer code is accomplished with eight binary digits
(bits):01000001. One in which digital strings can be transformed into cipher text is
by multiplying each letter by another binary number, say, an eight- bit key number
01010101. If we multiplied every digit character in our text messages by this eight-
bit key, sent the encrypted message to a friend along with the secret eight-bit key,
the friend could decode the message easily.
The strength of modern security protection is measured in terms of the length of the
binary key used to encrypt the data. In the above example, the eight-bit key is easily
deciphered because there are only 28 or 256 possibilities. If the intruder knows you
are using eight-bit key, then he or she could decode the message in a few seconds
using a modern desktop PC just using the brute force method of checking each of
the 256 possible keys. For this reason, modern digital encryption systems use keys
with 56,128,256, or 512 binary digits. With encryption of 512 digits, there are
2512possiblities to check out. It is estimated that all the computers in the world
would need to work for ten years before stumbling upon the answer.
The most widely used systematic key encryption on the internet today is the Data
Encryption Standard (DES) developed by the National Security Agency (NSA) and
IBM in the 1950s. DES uses 56-bit encryption key. To cope with much faster
computers, Triple DES – essentially encrypting the message three times each with a
separate key, has improved it recently. There are many other symmetric key
systems; DES requires a different set of keys for each set of transactions.
PAYMENT SYSTEM:
TYPES OF PAYMENT SYSTEM
There are five main types of payment systems:
1. Cash
2. Checking transfer
3. Credit cards
4. Stored value and
5. Accumulating balance.
Cash
Cash, which is legal tender, defined by a national authority to represent value, is the
most common form of payment in terms of number of transactions.
The key feature of cash is that it is instantly convertible into other forms of
value without the intermediation of any other institution. For instance, free airline
miles are not cash because they are not instantly convertible into other forms of
value- they require intermediation of by a third party (the airline) in order to be
exchanged for value (an airline ticket) . Private organizations sometimes create a
form of private cash called scrip that can be instantly redeemed by participating
organizations for goods or cash. Example includes Green Stamps and other forms of
consumer loyalty currency.
Checking Transfer
Checking Transfers which are transferred directly via a signed draft or check from a
consumer’s checking account to a merchant or other individual are the second most
common form of payments in terms of number of transactions and the most
common in terms of total amount spent.
Checks can be used for both small and large transactions, although typically they are
not used for micro payments. Checks have some float (it can take up to ten days for
out-of-state checks to clear) and the unspent balances can earn interest. Checks are
not anonymous and required third party institutions to work. Checks also introduce
security risks for merchants. They can be forged more easily than cash; hence
authentication is required. For merchants, checks also present some additional risk
compared to cash because they can be cancelled before they clear the account or
they may bounce if there is not enough money in the account.
Money orders, cashier checks, and traveler’s checks are ensured checks that address
some of the limitations of personal checks described above. Ensured checks reduced
the security risk of a personal check by requiring an up-front payment to a trusted
third party – A bank or money transferred company such as American express,
Wells Fargo, or Western Union. These trusted third parties then issue a guaranteed
payment draft called money order that is as good as cash, although less anonymous.
Merchants are guaranteed the funds in an any transaction with an ensured check.
Trusted third parties make money by charging consumers a fee and receiving
interest on the money consumers deposited with them. Ensured checks provide
merchants with lower risk, but they add cost for the consumer. In return, consumers
have a payment instrument that is accepted almost everywhere and in some cases is
insured against loss.
Credit card
A credit card represents an account that extends credit to consumer, permits
consumers to purchase items while deferring payment, and allows consumers to
make payment to multiple vendors at one time. Credit card association such as Visa
and MasterCard are nonprofit associations that set standards for the issuing banks –
such as Citibank- that actually issue the credit cards and process transactions. Other
third parties (called processing centers or clearinghouses) usually handle verification
of accounts and balances. Credit card issuing banks act as financial intermediaries,
minimizing the risk to the transacting parties.
Stored Value
Accounts created by depositing funds in to an account and from which funds are
paid out or withdrawn as needed are stored-value payment systems. Stored value
payment systems are similar in respects to checking transfers – which also stored
funds – but do not involve writing a check. Example includes debit card, gift
certificates, prepaid cards and smart cards. Debit cards look like credit cards, but
rather than providing access to a line of credit, they instead immediately debit a
checking or other demand deposit account. For many consumers, the use of debit
card eliminates the need to write a paper check. Be cause debit cards are dependent
on funds being available in consumer’s bank account, however, large purchases are
still generally paid for by credit card.
Accumulating balance
Accounts that accumulate expenditure to which consumers make periodic payments
are Accumulating balance payment systems. Traditional examples include utility,
phone, and credit card bills s, all of which accumulate balances, usually over a
specified period (typically a month), and are paid in full at the end of the period.
Primary Research:
Surveys and questionnaires are the most popular and frequently used market
research tools. Using a survey instrument, which is a list of questions, researchers
can approach groups of people to ask their views on virtually any imaginable topic.
Online surveys can be typically being administered more quickly and less
expensively than traditional mail or telephone surveys. Companies can hire an
outside market research firm to conduct the survey or create and administer their
own.
Online surveys also make it possible to track respondents and follow up with those
who haven’t yet completed survey, which help to improve response rates, the
percentage of people who complete a survey. A low response rate can damage the
validity, or believability, of a survey’s results.
Feedback forms, which ask users to provide input regarding a site’s
operations in a set format, are another type of inline survey. Requesting regular
input from site visitors may provide more qualitative data, which is more difficult to
analyze, but the resulting information can assist in improving and enhancing site
performance.
Personal interviews are another primary research tool. The interview is generally
guided by a set of questions very similar to survey instrument. Although it is more
difficult to incorporate personal interviews within Web sites, it is possible to
conduct research online via live chat or e-mail, with trained researcher interacting
with the study participant’s .Personal interviews offer an opportunity to gather more
in-depth information on a topic. In some cases, personal interviews are used as
second phase of a research project, following initial information gathering by
survey.
Secondary Research:
It involves gathering information using WEB sites as the information
source.
The Key to being efficient and effective as a researcher is identifying the WEB sites
most likely to provide answers to the questions posed in the research .By
establishing and agreeing on the key question to be answered through market
research , as well as why that information will be useful , researchers can zero in on
their information needs. Understanding how the information will impact other
decisions also helps to further refine information collection.
Online Marketing
Technologies that support Online Marketing:
• Web transaction logs: Records that document user activity at the Web site.
• Transaction logs : Coupled with data from the registration forms and
shopping cart database, these represent a treasure trove of marketing
information for both individual sites and the online industry as a whole.
• Cookies : A small text files that Web sites place on visitors
/client computers every time they visit, and during the visit, as specific pages
visited. Cookies provide Web marketers with a very quick means of
identifying the customer and understanding his or her prior behavior at the
site.
Funding issues:
Cost is a critical factor to be considered irrespective of private or public
sector organizations .Since huge investment is required to introduce computers at
different working levels both in government and business organizations one can
think of leasing this activity to reduce cost involves in buying the computers.
Language issues:
In India adoption of vernacular language poses a major challenge in the
electronic environment .This will facilitate access to resources available in local
languages.
Content:
Content is the focus on E-Governance. The challenge is to develop web
content into an integrated online experience that enhances the value of printed and
online products .Content convergence is an important issue as it has a major
relationship with
• Compute industry
• Information industry
• Communication networking