RAMAPURAM CAMPUS

SRM UNIVERSITY, Ramapuram Campus CS0331 e - commerce reference notes (unit - 1)

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SRM UNIVERSITY

RAMAPURAM CAMPUS

CS0331 E - Commerce

(REFERENCE NOTES)

UNIT - I - (INTRODUCTION)

History of E- Commerce

Overview of E- Commerce framework

E- Business models

Network Infrastructure

Role of Internet

E- commerce and World wide Web

What is e- commerce?

E-Commerce

--> buying and selling goods and products over internet.

--> the sharing of business information,

--> maintaining business relationships,

--> the conducting business transactions by means of telecommunications networks

-->Automates the conduct of business among enterprises, their customers,

suppliers and employees - anytime, anywhere.

Different Types of e - commerce :

B2B - Business 2 business

B2C - Business 2 Customer

C2B -Consumer-to-Business

C2C - Customer 2 customer

B2B (Business-to-Business)

Companies doing business with each other such as manufacturers selling to

distributors and wholesalers selling to retailers. Pricing is based on quantity

of order and is often negotiable.


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B2C (Business-to-Consumer) Businesses selling to the general public typically through catalogs utilizing

shopping cart software. By dollar volume, B2B takes the prize, however

B2C is really what the average Joe has in mind with regards to ecommerce

as a whole.

Having a hard time finding a book? Need to purchase a custom, high-end

computer system? How about a first class, all-inclusive trip to a tropical

island? With the advent ecommerce, all three things can be purchased

literally in minutes without human interaction. Oh how far we've come!

C2B (Consumer-to-Business) A consumer posts his project with a set budget online and within hours

companies review the consumer's requirements and bid on the project. The

consumer reviews the bids and selects the company that will complete the

project. Enlace empowers consumers around the world by providing the

meeting ground and platform for such transactions.

C2C (Consumer-to-Consumer) There are many sites offering free classifieds, auctions, and forums where

individuals can buy and sell thanks to online payment systems like PayPal

where people can send and receive money online with ease. eBay's auction

service is a great example of where person-to-person transactions take place

every day since 1995.

The Scope of Electronic Commerce

Electronic Commerce encompasses one or more of the following:

•EDI

•EDI on the Internet

•E-mail on the Internet

•Shopping on the World Wide Web

•Product sales and services on the Web

•Electronic banking or funds transfer

•Outsourced customer and employee care operations


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Differences between Electronic Commerce and traditional

commerce :

The major difference is the way information is exchanged and

processed:

•Traditional commerce: •face-to-face, telephone lines , or mail systems

•manual processing of traditional business transactions

•individual involved in all stages of business transactions

•E-Commerce: •using Internet or other network communication technology

•automated processing of business transactions

•individual involved in all stages of transactions

•pulls together all activities of business transactions, marketing and

advertising as well as service and customer support.


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Why E Commerce is Important?

With the development of the Internet, the ability to send information is now

incredibly fast.

Companies have realized this fact and have used the Internet as a tool to

expand their businesses.

E-commerce, or electronic commerce, is a way to conduct minor and major

business transactions online instead of going into a store.

It provides convenience for people who would rather be shipped an item

from a store instead of going to the actual store to purchase it.

For major manufacturing businesses, it helps them to purchase materials that

they will need to make goods or provide services at sometimes lower costs

and without the need of having to speak to someone directly.

Since the Internet is constantly active, there are no closing hours when

businesses or people cannot purchase from a company or person selling

goods on an auction site like Ebay.

Thus, increasing production by eliminating wait time of ordering production

materials or services and increasing profits by being able to continue selling

products 24 hours a day, 7 days a week.

Capabilities Required for e - commerce:

- Enable buyers to:

- inquire about products

- review product and service information

- place orders, authorize payment

- receive both goods and services on-line

- Enable sellers to:

- advertise products

- receive orders

- collect payments

- deliver goods electronically

- provide ongoing customer support


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- Enable financial organizations

- to server as intermediates that accept payment authorization

- make

- Enable sellers to notify logistics organization

The history of e-commerce

Even up until the 1990’s, online business wasn’t a reality for the

average person.

The development of e-commerce was one of those things that

happened slowly and then suddenly.

At its very basic level, the term refers simply to any commerce

that takes place electronically.

This includes ATM and credit card transactions as well as the

ability to do billing and invoicing through electronic methods.

The technology allowing this kind of commerce took hold in the

late 1970’s and grew steadily throughout the 1980’s.

It was during this time that people started to use credit cards on a

regular basis and that set the foundation for electronic commerce to

get a toehold in society.

Two things happened in the mid-1990’s to make this kind of e-

commerce a possibility.

First, computer security was strengthened enough to make

consumers and businesses feel comfortable with conducting these

types of transactions online.

Second, the average person began to gain familiarity with the web

and started using it for every day activities such as online

shopping.


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Combined with the fact that web design was improving and the

speed of the Internet was increasing, e-commerce had a platform

for development.

In 1995, Amazon.com was launched and we really started seeing

the type of e-commerce that we’re used to today.

The evolution of e-commerce

1984 Electronic Data Interchange (EDI) was standardized through ASC X12. This

guaranteed that companies would be able to complete transactions with one

another reliability.

1990 Tim Berners-Lee wrote the first web browser, World Wide Web (WWW),

using a NeXT computer.

1992 Compuserve offers online retail products to its customers. This gives people

the first chance to buy things off their computer.

1994 Netscape arrived and providing users a simple browser to surf the Internet

and a safe online transaction technology called Secure Sockets Layer.

1995 Two biggest names in e-commerce are launched which is Amozon.com and

eBay.com

1998

The Digital Subscriber line (DSL) provides faster, always-on Internet

service to subscriber across California. This prompts people to spent more

time, and money, online.

1999 Retail spending over the Internet reaches $20billion, according to

Business.com


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2000 The dot-com bust.

2003

Amazon had its first year with a full year of profit.

Benefits of electronic commerce

Business benefits:

- Reduced costs to buyers from increased competition on-line

- Reduced costs to suppliers by on-line auction

- Reduced errors, time, and overhead costs information processing

- Reduced inventories, and warehouse

- Increased access to real-time inventory information, speed-up

ordering & purchasing processing time

- Easier enter into new markets in an efficient way

- Easily create new markets and get new customers

- Automated business processing

- Cost-effective document transfer

- Reduced time to complete business transactions, speed-up the

delivery time

- Reduced business overhead and enhance business management.

Marketing benefits:

- Improved market analysis, product analysis and customer

analysis.

- Low-cost advertising

- Easy to create and maintain customer o client database

Customer benefits:

- Wide-scale information dissemination

- Wide selection of good products and goods at the low price

- Rapid inter-personal communications and information accesses

- Wider access to assistance and to advice from experts and peers.

- Save shopping time and money.


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UNIQUE FEATURES OF E-COMMERCE TECHNOLOGY :

1. Ubiquity Available just about everywhere, at all times. A unique feature of e-commerce

technology.

2. Global Reach

The total number of users or customers an e-commerce business can obtain.

3. Universal Standards Standards that are shared by all nations around the world.

4. Richness

The complexity and content of a message.

5. Interactivity Technology that allows for two way communication between merchant and

consumer.

6. Information Density

The total amount and quality of information available to all market participants.

7. Personalization/Customization

- Personalization : the targeting of marketing messages to specific individuals by

adjusting the message to a person's name, interest, and past purchases.

- Customization : changing the delivered product or service based on a user's

preferences or prior behavior.

8. Social technology:

User content generation and social networking technologies is most useful features

which accelerate the client activity to share the information and content with one

click. e-commerce technology has tie up the social media networking application

to provide the best source of content sharing technology and e-marketing systems.

You can share you content or data easily in just one click.


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Framework of e-commerce :

Framework tells about the detail of how e-commerce can take place. It defines

actually how e-commerce implemented, how online trading or business can be

done. It defines important components that should be present to do some

transaction.

major components of e- commerce framework

1. Network Infrastructure

• Network Infrastructure is called as “INFORMATION SUPERHIGHWAY” is the

path through which actual information flows and moves between sender and

receiver.

• Information Superhighway consists of telecommunication companies that provide

telephone lines.


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• Cable TV systems that provide coaxial cables and direct broadcast satellite

networks.

• Wireless companies that provide mobile radio and satellite networks.

• Computer networks include private networks and public data networks like the

Internet. All these modes of communication are interconnected. They are

connected with routers, switches, bridges, gateways etc . which are devices to

connect similar and different network. All the information flow on these lines and

through these devices and reach the desired destinations.

2. Multimedia Contents And Network Publishing

The Information Superhighway is the transportation foundation that enables

the transmission of content.

The most prevalent architecture that enables networking publishing is the

World Wide Web.

The web allows small businesses and individuals to develop content in the

form of Hypertext Markup Language (HTML) and publish it on a web

server.

Web provides a means to create product information (content) and a means

to publish it in a distribution center ( network server).

3. Messaging And Information Distribution Infrastructure

The information content transferred over the network consists of

text, numbers, pictures, audio and video. But the network does not

differentiate among content as everything is digital, that is, combinations of

zero’s and one’s.

Once contents has been created and stored on a server, messaging and

information distribution methods carry that content across the network.

Messaging vehicle is called middleware software. Messaging and

information distribution include translators that interpret and transforms data

formats.

4. Common Business Services Infrastructure This infrastructure includes the different methods for facilitating online

buying and selling processes.

In online commerce, the buyers sends an electronic payment as well as some

remittance information to the seller.

Settlement occurs when the payment and remittance information are

authenticated by the seller and accepted as valid.

In order to enable online payment for information and ensure its safe

delivery, the payment services infrastructure needs to develop encryption

(making contents indecipherable except for the intended recipient) and


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authentication (making sure that customers are who they say they are)

methods that ensure security of contents traveling on the network.

5. Public Policy And Technical Standards

Public Policy And Technical Standards are two support pillars for all e-

commerce applications and infrastructure. Public policy related to e-

commerce encompasses such issues as universal access, privacy and

information pricing.

Technical Standards dictate the specifics of information publishing tools,

user interfaces and transport.

Standards are essential to ensure compatibility across the entire network of

world.

These are the main components of framework of e-commerce.

By following all these trade can be done efficiently on the network.

There are many applications of e-commerce which work on this framework.

Applications of e-Commerce

The various applications of ecommerce are:-

• Online Shopping

• Home Banking

• Supply Chain Management

• Video On Demand

• Online Marketing and Advertising and many more.


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NETWORK INFRASTRUCTURE FOR e - COMMERCE :

INTRODUCTION :

Virtually all e-commerce sites rest on the same network structures, communication

protocols, and Web standards that originated over 30 years ago.

In this appendix, we briefly review the structures, protocols, and standards

underlying the millions of sites used to sell to, service, and communicate with

customers and business partners.

We also examine the infrastructure of some newer network applications, including

streaming media and peer-to-peer (P2P) networks.

A NETWORK OF NETWORKS

The Internet backbones are maintained and serviced by network service

providers (NSPs), which are the major telecommunications companies, such as

MCI and Sprint.

Each backbone handles hundreds of terabytes of information per month.

The sub networks are provided by local and regional Internet service providers

(ISPs).

ISPs exchange data with the NSPs at network access points (NAPs).

Pacific Bell NAP (San Francisco) and Ameritech NAP (Chicago) are examples of

such exchange points.

network service providers (NSPs)

Major telecommunications companies, such as MCI and Sprint, that maintain

and service the Internet’s high-speed backbones.

Internet service providers (ISPs)

Companies that provide Internet delivery sub networks at the local and regional

level.

network access point (NAP)

An intermediate network exchange point that connects ISPs to NSPs.

packets

Small segments of messages sent over the Internet; each packet contains both data

from and the addresses of the sending and receiving computers.


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routers

Special computers that determine the paths traversed by data packets across the

Internet.

bandwidth

The speed at which content can be delivered across a network; it is rated in bits per

second (bps).

INTERNET PROTOCOLS

Internet Corporation for Assigned Names and Numbers (ICANN)

Nonprofit organization that manages various technical and policy issues relating to

the Internet that require central coordination; it has no regulatory or statutory

power.

protocol

A set of rules that determine how two computers communicate with one another

over a network.


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◗ Interoperability. The system supports computers and software from different

vendors. For e-commerce,

this means that customers or businesses do not require specific systems to conduct

business.

◗ Layered. The Internet protocols work in layers, with each layer building on the

layers at lower levels.

This layered architecture is shown in Exhibit A.2.

◗ Simple. Each of the layers in the architecture provides only a few functions or

operations. This

means that application programmers are hidden from the complexities of the

underlying

hardware.

◗ End-to-end. Interpretation of the data happens at the application layer (i.e., the

sending and receiving

side), not at the network layers. It is much like the post office. The job of the post

office is to

deliver mail; only the sender and receiver are concerned about the envelope’s

contents.


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Transmission Control Protocol/Internet Protocol (TCP/IP)

Two combined protocols that together solve the problem of global internetworking

by ensuring that two computers can communicate with each other reliably; each

TCP communication must be acknowledged as received or the sending computer

will retransmit the message.

IP version 4 (IPv4)

The current version of Internet Protocol, under which Internet addresses are 32 bits

long and written as four sets of numbers separated by periods.

dotted-quad addressing

The format in which Internet addresses are written as four sets of numbers

separated by periods.

domain name

The name used to reference particular computers on the Internet; the name is

divided into segments separated by periods.

NEXT-GENERATION INTERNET: INTERNET 2

Internet2

The next generation of the Internet; it will create a network for the national

research community, enable revolutionary Internet applications, and ensure

the rapid transfer of new network services and applications to the broader

Internet community.

The primary goals of Internet2 are to:

◗ Create a leading-edge network capability for the national research community

◗ Enable revolutionary Internet applications

◗ Ensure the rapid transfer of new network services and applications to the broader

Internet community.

WEB-BASED CLIENT/SERVER APPLICATIONS

Uniform Resource Locator (URL)

The addressing scheme used to locate documents on the Web.

Hypertext Transport Protocol (HTTP)

A lightweight communication protocol that enables Web browsers and Web

servers to converse with one another; of its seven commands, GET and POST

make up the majority of requests issued by browsers.


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MULTIMEDIA DELIVERY

streaming

The delivery of content in real time; consists of two types, on demand (HTTP

streaming) and live (true streaming).

codecs

The compression algorithms that are used to encode audio and video streams; short

for compression and decompression.

Real-Time Protocol (RTP)

Streaming protocol that adds header information to the UDP packets, thus enabling

the synchronized timing, sequencing, and decoding of the packets at the

destination.

User Datagram Protocol (UDP)

Transport protocol used in place of TCP by streaming servers.

Real-Time Streaming Protocol (RTSP)

Streaming protocol that adds controls for stopping, pausing, rewinding,

and fast-forwarding the media stream; it also provides security and

enables usage measurement and rights management.

peer-to-peer (P2P)

Applications that use direct communications between computers (peers)

to share resources, rather than relying on a centralized server as the

conduit between client devices.

P2P distributed computation

Computer architecture that uses P2P resource sharing to combine idle computer

resources over a network, forming a virtual computer across which large

computational jobs can be distributed.


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E - Commerce and WWW (World Wide Web) :


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Reactive Web Era

- Open, One-Way -

E-Commerce Activities :

Browsing ; Information searching ; Broadcasting ; Cataloguing ;

Advertising ; Publishing ;Aggregating

HOST Scope - Structure Environment

First party, Second party,

Neutral - Generalized

Webpage, Portal,

classified Company

CORE

FUNCTIONS

Transaction Incubation Functions: Listing, Posting,

Browsing, Grouping, etc.

CORE

TECHNOLOGY Communication Presentation &

Representation

Language Storage &

Retrieval

HTTP, CGI HTML C, C++,

Perl

D-base IV,

Access,

Oracle,

SQL

Interactive Web Era

- secured, two-way -

E-commerce Activities:

Shopping, Personalizing, Brokering, Customization, Bidding,

Auctioning , Buying, Selling, Paying, Gaming, etc.


Third party, Personalized,

Specialized, Fellowship,

Horizontal

Exchange, Marketplace,

Merchant, Distributor,

Broker, Mall

CORE

FUNCTIONS

Transaction Negotiation & Formation Functions: Tracking,

Profiling, Matching, Ranking, Offering,

Fulfilling, etc.

CORE


Representation

Language Storage &

Retrieval

Cookies, SSL Javascript, SSI,

Flash

(plug-ins),

VRML

Java, PHP ODBC,

SQLPlus,

SQLServer


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Integrative Web Era

- integrated, any-to-any -

E-commerce Activities and E-business Processes:

E-Collaboration, E-SCM, E-Procurement, E-CRM, E-Reengineering


Vertical, Cooperative,

Collaborative, Fourth-party

Platform, Enterprise,

Community, Industry,

Hub

CORE

FUNCTIONS

Transaction Management Functions: Data Interfacing,

Platforming, Process-editing, Consolidating,

Integrating, Optimizing, etc.

CORE


Representation

Language Storage &

Retrieval

WAP, PKI XHTML, XML ASP, JSP,

JavaBeans,

EJB,

ColdFusion

JDBC,

SQLJ

We first characterize the elements of e-commerce websites using

a syntactic representation.

With respect to the four eras, we then examine collectively the historical

development of the principal elements - host, core functions, and core

technology.

Observations and insights on their interplay are provided.

The pace of e-commerce evolution has been phenomenal.

During the decade of 1990, ecommerce website has evolved from a

simple browsable site of static information to that of cross-website

integration of dynamic business processes.

It has realized connectivity, interactivity, interoperability, and

integrability. Along the way, the problems of protocol standardization,

tracking, security, and data interfacing have to be solved. Websites can

now conduct both commerce activities and business processes.


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E-COMMERCE BUSINESS MODELS :

INTRODUCTION

A business model is a set of planned activities (sometimes referred to as

business processes) designed to result in a profit in a marketplace.

A business plan is a document that describes a firm’s business model. A

business plan always takes into account the competitive environment.

An e-commerce business model aims to use and leverage the unique

qualities of the Internet and the World Wide Web .

KEY ELEMENTS OF BUSINESS MODEL

value proposition

defines how a company’s product or service fulfills the needs of

customers.

revenue model

describes how the firm will earn revenue, produce profits, and produce a

superior return on invested capital


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advertising revenue model

a company provides a forum for advertisements and receives fees from

advertisers

subscription revenue model

a company offers its users content or services and charges a subscription fee for

access to some or all of its offerings.

transaction fee revenue model

a company receives a fee for enabling or executing a transaction

sales revenue model

a company derives revenue by selling goods, information, or services

affiliate revenue model

a company steers business to an affiliate and receives a referral fee or percentage of

the revenue from any resulting sales

market opportunity

refers to the company’s intended market space and the overall potential financial

opportunities available to the firm in that market space

market space

the area of actual or potential commercial value in which a company intends to

operate

market strategy

the plan you put together that details exactly how you intend to enter a new market

and attract new customers organizational

management team

employees of the company responsible for making the business model work

organizational development

plan describes how the company will organize the work that needs to be

accomplished.

perfect market

a market in which there are no competitive advantages or asymmetries because all

firms have equal access to all the factors of production

leverage

when a company uses its competitive advantages to achieve more advantage in

surrounding markets

market strategy

the plan you put together that details exactly how you intend to enter a new market

and attract new customers organizational development.


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ROLE OF INTERNET IN E - COMMERCE :

Internet plays a very prominent and important role because it acts as guidance for

different strategies involved in money marketing. In fact, behind the growth of the

internet business, the success of these businesses is also largely dependent on the

internet to a large extent. Right from the increase in the sales to the decrease in the

costs and expansion of the size of the market are predetermined by the internet.

This is the reason for the growing popularity of the online businesses in today’s

date. Both buying and selling can be carried out through the internet.

The internet has been a necessity in almost all fields.Its contribution in e-

business and e-commerce opens an opportunity to a faster,accurate and efficient

customer service with a less consumed time and cost.With Internet,technologies

offer a direct communication link for customer and supplier,thus eliminate

intermediary people which the main cause of high cost and delay.

Internet has impacted the business or commerce industry so much that there have

been a lot of people who became rich just because of e-commerce. A good

example of this is the social networking site "Face book". The owner of

Facebook.com has become rich by providing an avenue for people to chat, share

pictures and videos, and reconnect with long lost friends and families.

It is true that internet has advanced over the years and it has also changed the way

we live. Before, if we want to purchase something, we need to go to the nearest

shop to be able to get what we want but today, we can get almost anything that we

want with just a click of a mouse or just a press of a button.

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