Workshop in Electronic Commerce Presented by: Dr. Kelly Burke – UH Hilo School of Business Dr. Eric Jeschke – UH Hilo Computer Science Department Funded

Workshop in Electronic CommerceWorkshop in Electronic Commerce

Presented by:

Dr. Kelly Burke – UH Hilo School of Business

Dr. Eric Jeschke – UH Hilo Computer Science Department

Funded by:

Department of Business, Economic Development, and Tourism

University of Hawaii Hilo School of Business

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University of Hawaii at Hilo

Workshop in Electronic Workshop in Electronic CommerceCommerce

Objectives

Business Problem

EC Models

Facts and Forces

EC Levels

The WWW

Planning

Getting Started

Site Design

Security

Marketing

Payment

Infrastructure

Site Performance

Wrap Up

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Workshop ObjectivesWorkshop Objectives

You are planning to establish an eBusiness in the future

Whether you intend to: Plan and develop the site yourself Have an employee plan and develop the site Plan the site and have an ISP/Host develop it Have an ISP/Host plan and develop the site

You need to understand what Electronic Commerce is, how it works, how to plan and manage it.

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What is EC? What forms can EC take? How can EC help? How do I get started? How do I build a simple web page? What is involved in building a full web site?

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What are my options for doing E-Commerce? What software and hardware do I need? What makes a good web site? How do I market my site? What concerns should I have for security? How can I settle transaction payment? What future issues should I be aware of?

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Defining Electronic CommerceDefining Electronic Commerce

Use of electronic communications facilities to conduct any part of a business (internal or external) transaction.

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Business ProblemBusiness Problem

The world is attracted to the possibility of doing EC

Media frenzy (business publications) Appears easy (seems like every one has a

computer) Appears glamorous (look at the tech IPOs) Everyone is doing it / we can’t afford to miss out!!

Opportunity is SEDUCTIVE

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Business ProblemBusiness Problem

Gartner group advises online companies to beware Within 2 years, 95 % of online dot.coms will fail e.g., boo.com e-Toys layoffs

Misuse or misreading of opportunity can be costly e.g., Nor-Cal EMS experience – long term “ill will”

Lesson: opportunity without understanding and prioritization of objectives = problem

Implementation and Integration with business processes ARE King

e.g., Northwest and United Airlines fare wars

Models and Applications Models and Applications for E-Commercefor E-Commerce

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Models of Electronic CommerceModels of Electronic Commerce

Inter-organizational (B2B) EDI, supply-chain interaction, etc.

Intra-organizational (B2E or BinB) E-portals, Lotus notes, etc.

Business-to-consumer (B2C) Direct marketing, e-malls, etc.

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Models of Electronic CommerceModels of Electronic Commerce

Consumer-to-consumer, peer-to-peer (C2C, P2P)

Auctions, electronic flea markets, etc.

E-marketplaces Exchanges

Non-business On-line communities (Geocities), news groups

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Taxonomy of Applied Business Taxonomy of Applied Business ModelsModels

Brokerage (http://globalsources.com/)

Advertising (http://www.altavista.com/)

Infomediary (http://www.job-search-engine.com/)

Merchant (http://www.etoys.com/)

Manufacturer (http://www.hp.com/)

Affiliate (http://s1.amazon.com/)

Community (http://geocities.yahoo.com/)

Subscription (http://prodigy.com/)

Utility (http://prodigy.com/)

http://globalsources.com/

http://www.altavista.com/

http://www.job-search-engine.com/

http://www.etoys.com/

http://www.hp.com/

http://s1.amazon.com/exec/varzea/ts/help/whats-a-zshop/ref=z_h_tq_1/107-5867776-1659717

http://geocities.yahoo.com/

http://prodigy.com/

http://prodigy.com/

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E-Business InitiativesE-Business Initiatives

E-Commerce— selling more goods via the Web E-care for customers— providing all kinds of customer

support on-line E-care for business partners— dedicated services

providing faster, better information for these important groups E-care for employees— improving their effectiveness by

making the right information and services available to them

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E-procurement— working closely with customers and suppliers to improve the tendering process and to better administer the huge number of transactions involved

E-marketing communications— using the Internet to better communicate marketing stance

E-Business InitiativesE-Business Initiatives

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Electronic Commerce:Electronic Commerce:Planning FrameworkPlanning Framework

Management Strategy, planning, resources, monitoring

Infrastructure Business services, information transfer, content,

networks, interfaces

Environmental constituents People, policies, technical standards, stakeholder

organizations

Business applications Catalogs, banking, procurement, auctions

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Planning Your EC Path:Planning Your EC Path:Levels* of E-Commerce DevelopmentLevels* of E-Commerce Development

Minimal online presence On-line catalog On-line transactions Automated value chain Market site Super market site

*Adapted from www.dotcomadvisor.com – 2000

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Motivation General pressure to “get on the net” Promote business entity

Information Financial HR

Technology issues Simple, In-sourced

Level I E-Commerce Development:Minimal


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Level I E-Commerce Development:Minimal

Purchasing - Production - Sales

HumanResources

Finance


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Motivation Pressure from customers and competitors

Information Product Service

Technology issues Searching, maintenance (e.g., changing product information) Customer personalization On-line activity tracking

Level II E-Commerce Development:On-line Catalog


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Level II E-Commerce Development:On-line Catalog

Purchasing - Production - Sales

HumanResources

Finance

Marketing


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Motivation Exploit Internet as new channel of distribution

Information Catalog / order

Technology issues Interactivity Integration of core businesses functions (e.g., sales and

accounting) Business issues

Order fulfillment capacity Building site traffic

Level III E-Commerce Development:On-line Transactions


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Level III E-Commerce Development:On-line Transactions

Purchasing Production

HumanResources

Finance

MarketingSales


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Motivation Customers and suppliers “want” more info Reduce cycle times and costs

Information Manufacturing, purchasing, shipping

Technology issues Systems integration Outsourcing

Business issues Sharing operational information with external entities

Level IV E-Commerce Development:Automated Value Chain


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Level IV E-Commerce Development:Automated Value Chain


HumanResources

Finance

MarketingSales


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Motivation Product comparisons, e.g., http://www.amazon.com

Information Competitor’s products/services Third-party product/service comparisons

Technology issues Handling traffic loads Monitoring/mining traffic

Business issues Corporate identity Objectivity of product comparisons

Level V E-Commerce Development:Market Site


http://www.amazon.com/

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Level V E-Commerce Development:Market Site


HumanResources

Finance

MarketingSalesReverse

Marketing

Competitors

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Motivation Become the “preferred” one-stop shop (i.e., marketplace), e.g.,

http://www.sabre.com/

Information Complimentary products/services

Technology issues Integrating associates systems/information

Business issues Managing customer AND supplier suggestions and requirements

Level VI E-Commerce Development: Super Market Site


http://www.sabre.com/

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Level VI E-Commerce Development: Super Market Site


HumanResources

Finance

MarketingSalesReverse

Marketing

Complimentors

Competitors

Facts and ForcesFacts and Forcesin E-Commercein E-Commerce

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Benefits of E-CommerceBenefits of E-Commerce

Increase sales Distributed market exposure Target narrow segments Create virtual communities which become targets

Reduce costs Sales inquiries Price quotes Product availability

Enhance product value Benefits work both ways – selling or buying

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Disadvantages of E-CommerceDisadvantages of E-Commerce

High ticket and perishables don’t work Costs / benefits can be hard to quantify Difficult to integrate with existing databases Fast pace of technology change Potential legal issues

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Big Business Survey ResultsBig Business Survey Results

Have a systematic, strategic approach to internet-based initiatives with top-level executive involvement (69% )

Have full time units dedicated to e-business development (47%)

Extent of e-business functionality isn’t beyond basic “brochure ware” (25%)

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Big Business Survey ResultsBig Business Survey Results

E-business accounts for less than 5% of revenues (79%)

Able to process payments online (25%) Creation of a convenient buying experience for

customers on the Web is “extremely important” (80%)

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On-line Transaction Completion On-line Transaction Completion

18%

82%

Complete transaction

Do not complete transaction

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Reasons for Abandoning Reasons for Abandoning On-line PurchasesOn-line Purchases

46

42

40

24

16

16

52

0 20 40 60

Too much information required

Did not want to enter credit card details

Web site malfunction

Could not find product

Could not specify product

Had to make phone call

Did not like returns policy

Percent

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Other Common Site ProblemsOther Common Site Problems

Navigation problem Finding information

cdw.com

Site too slow

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Forces Driving Online C2C Forces Driving Online C2C ShoppingShopping

Convenience (75%) Cost (38%) Context – opportunity to buy at right time

and right place (e.g., from work when I am thinking about that book)

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The Typical Online CustomerThe Typical Online Customer

Age: 30-49 Gender: Male Family status: Married with children Household annual income: $60,000 Amount spent online per year: $460

Source: Harris Interactive, Nielson Netratings

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The Typical Online CustomerThe Typical Online Customer

Completed online transactions: 10 Online sessions per week: 6 Unique sites visited per week: 6 Average surfing session: 31 minutes Time per site per week: 32 minutes Time online per week: 3 hours, 8 minutes

Source: Harris Interactive, Nielson Netratings

The WWW and How it Works The WWW and How it Works for E-Commercefor E-Commerce

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The “Big Picture” In ECThe “Big Picture” In EC

WWW architecture How the web works Internet protocol URLs / domain names Internet communication

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Client(Browser)

Web Server

Commerce Server

ProductDatabase

Shopping Cart

Secure Transaction

Server

Dynamic

Static

PagesPagesPages

Pages

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How the Web Works: How the Web Works: Uniform Resource LocatorsUniform Resource Locators

Browsers differ in the way they are programmed But if WWW is to be useful to many – we need standard

way to identify a resource Example:

http://www.hawaii.edu:2074/~kburke/494/ch_3.ppt

URLs specify: protocol (e.g. http) host name (e.g., www.hawaii.edu) connection port on host (e.g. 2074) path on host to resource (494/ch_3.ppt)

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How the Web Works: How the Web Works: The Internet ProtocolThe Internet Protocol

TCP / IP protocol for communicating IP addressing Network Information Center allocates blocks

Class Address Network part Host part

A 18.155.32.5 18 155.32.5

B 128.171.12.237 128.171 12.237

C 192.66.12.56 192.66.12 56

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How the Web Works:How the Web Works:Domain NamesDomain Names

IP addresses are unfriendly Assign a human readable name to IP addresses Placed in a distributed, hierarchical, lookup

system (DNS) Domains and Hosts - pahuleka.uhh.hawaii.edu

Host || Domain || Host_name Org_name_1 Org_name_2 Org_type

pahuleka uhh hawaii edu

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How the Web Works:How the Web Works:Protocols and InfrastructureProtocols and Infrastructure

Messages versus Packets i.e., connection vs. connectionless

HTTP

TCP

IP

HTTP

TCP

IPPacket Packet Packet

Packet 3 Packet 2 Packet 1

Message (example: Page)

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Client(Browser)

Web Server

Commerce Server(Storefront)

ProductDatabase

Shopping Cart

Secure Transaction

Server

Dynamic

Static

PagesPagesPages

Pages

Back to Hosting

Planning forPlanning forE-CommerceE-Commerce

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Planning Your EC PathPlanning Your EC Path

Identify your organizational objectives Want to increase effectiveness of salesperson’s time

Identify ways EC can help achieve the objectives

Permit customers to order online / salesperson can spend time showing new products

Determine what resources are required Need: website, database, computer to process

orders, trained user to process orders Sample planning checklist

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Planning Your EC PathPlanning Your EC Path

Plan the implementation Select implementation strategies - e.g.,

http://strategis.ic.gc.ca/SSG/ir01580e.html#implementation

Outsource web site creation / maintenance, plan content, train users

Determine how you will monitor EC results / performance

Require periodic site reports from ISP, measure increase in new product sales

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Planning Your EC Path:Planning Your EC Path:Levels of E-Commerce DevelopmentLevels of E-Commerce Development

Minimal online presence On-line catalog On-line transactions Automated value chain Market site Super market site

Getting StartedGetting Startedin E-Commercein E-Commerce

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Getting StartedGetting Started

Identify appropriate business model Make or buy?

Do it in house or use a web site service provider? Connecting to the internet

DSL, ISDN, Fractional T1 Register a domain name

Domain names are easier than IP addresses Search on Network Solutions' WhoIs directoryhttp://www.networksolutions.com/cgi-bin/whois/whois

http://www.networksolutions.com/cgi-bin/whois/whois

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Obtaining a Domain NameObtaining a Domain Name

Domain names are handled by DNS registrars

There are many web-based services for looking up names and/or registering them

Most of the popular names are taken, many by “squatters”

Registration of a name requires an annual fee and agreements with third parties for name service referral

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Domain Names.Domain Names.

Once you’ve registered a name, you have first right of renewal, unless…

Disputes are arbitrated by ICANN; most established trademark names and brands are recognized

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Components of the Firm’s Business Model Customer value Scope of products/services Price of value delivered Revenue sources Connected activities Implementation Capabilities Sustainability of advantage

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“Do-it-yourself” website services http://www.bigstep.com/ http://store.yahoo.com/

Hosting Understanding what “hosting” means and your

alternatives? Architecture?

Target market? Market research

http://www.bigstep.com/

http://store.yahoo.com/

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Web site considerations The services wanted How much your company can

contribute to the site, from manpower to electronic content

Time to design your site Time to create and program

your site Extra fees for software

development Fees for off-the-shelf

applications tools The size of the site

Training requirements Installation and server

maintenance Programming On corporate site hosting vs.

off-site Secure Server for financial

transactions Your bandwidth needs Your server capacity needs Location of your server at the

Web company or ISP company location

What is Involved in What is Involved in Establishing a Web Site?Establishing a Web Site?

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Identify what you have resources and time to do Identify what will be done “outside” the firm Identify which external parties will be involved

e.g., designer, ISP, web host? commerce provider?

Identify how you will assess their performance Decision metrics – e.g., are they reliable? On-going performance metrics – e.g., is their “uptime” what

they claim?

Getting Started: Web HostingGetting Started: Web Hosting

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Getting Started: Getting Started: The Marketing ProcessThe Marketing Process

Design, Procure, Make

Price, Sell, Promote

Distribute, Service

Make Product Sell ProductTraditional Process

Segmentation, Selection,

Value Positioning

Develop Product, Price, Source,

Distribute, Service Promote

Choose Value Provide Value Communicate ValueValue Creation

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Getting Started: Market ResearchGetting Started: Market Research

Define problem / research objectives

Develop research plan

Collect information

Analyze information

Present findings

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Getting Started: Getting Started: Market Research ResourcesMarket Research Resources

AMA www.ama.org

CommerceNet www.commerce.net

National Trade Data Bank http://www.stat-usa.gov/tradtest.nsf

CIA World Factbook www.odic.gov/cia/publications

On-line user survey data from Georgia Tech http://www.gvu.gatech.edu/user_surveys/

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Getting Started: ResourcesGetting Started: Resources

Hawaii State website: http://www.cochawaii.com/ Dept. of commerce : http://www.state.hi.us/dcca/ Registering your business:

http://www.businessregistrations.com/home.html Chamber of commerce: http://www.cochawaii.com/

Small businesses SBA: http://www.sba.gov/ SBA PRO-Net (procurement network):

• http://www.pro-net.sba.gov/

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Getting Started: Resources Getting Started: Resources

Various (legal, articles, research, policies, etc.) http://www.gtlaw.com.au/ecomm/

Federal government policy http://www.ecommerce.gov/

Description of eFed (federal govt. interagency procurement system)

http://www.sewp.nasa.gov/edi/hanson9711.html

http://www.ecommerce.gov/

Web Site Design Issues Web Site Design Issues in E-Commercein E-Commerce

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Web Site DesignWeb Site Design

Navigation Intuitive, predictable, consistent Longer pages - fewer links Site map - especially smaller sites (VISIBLE - TOP?)

• Category names/descriptions MUST be meaningful Searchability - perhaps for large sites BUT 50% more likely to find

information if no search - why?• Searching can be imprecise and frustrating

Easy to “quit” Links and “tabs” on top

• http://www.businessweek.com

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Must distinguish between graphics design and web site design

Graphics design: your business image Web site design: what’s on your site Don’t get these confused!

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Graphic DesignGraphic Design

Don’t be tempted to skimp on developing your online image-your web site is your online storefront!

Best to hire out the design of the graphics and layout, even if you are editing the pages yourself

Some graphics design companies do web design, some do not yet; it may not matter.

Vector graphics allow you to scale images for your use throughout the business: on and offline

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Planning - layout, mapping Purpose of site on home page What’s new section Content should fit the customer Style guide

For consistent content design -especially over time

Feedback mechanism(s) Mailto, forms, request routing, auto responses

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Designing it YourselfDesigning it Yourself

KISS philosophy rules: make the design easy to navigate!

Avoid clutter Avoid lots of graphics Avoid cutesy clip art Avoid lots of fonts Avoid long pages Provide site navigation tools

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Loading time!!! Pictures of some products but not others Interactivity

Forms, object manipulation, applet running Error handling - inform user about Being able to find out more about a particular

item by a link in the cart Instructions - ordering, interacting, feedback

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Backgrounds - readability and colors Too much white space perceived as

“complex” Be aware of screen resolution and position

ISPs and design gurus use Unix workstations with monster monitors

Typical users have 15” monitors Design for a “lowest common denominator”

monitor

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Place items in frame to: Keep them on-screen and To make display more effective

• best banners on Netscape got 4% click-throughs• Placed in frames generated 30% click-throughs

e.g., Use of tables can simulate frames

e.g., http://www.businessweek.com Examples of bad design

e.g., http://www.webpagesthatsuck.com

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Web Content DesignWeb Content Design

Content takes many shapes Will change dramatically More robust, comprehensive, and usable medium

Challenges in developing a successful online storefront

Choosing the right software solution for your site 3 options

• build your own software• purchase a commercial software product• rent from a Web host

Security IssuesSecurity Issuesin E-Commercein E-Commerce

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Security IssuesSecurity Issues

To maintain a successful online business, you MUST

Secure your E-Commerce transactions Secure your servers and data Formulate, post and follow a customer

privacy policy

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Securing TransactionsSecuring Transactions

Need to secure communications between client (customer at a web browser) and server (your web site and beyond)

What kinds of data need securing? Credit card data (card number, expiration date, etc.) Personal data (phone #, address, etc.) Order data Etc.

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Secure Communications MeanSecure Communications Mean

Authentication: want to make sure that each side is actually dealing with the right host and not some impostor or "man-in-the-middle"

Integrity: want to make sure that data is not altered during transit in any way

Privacy: want to ensure that data is not snooped by a third party in transit

Problem: how to achieve this on the insecure Internet?

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EncryptionEncryption

A secret "key" is used to encrypt ("scramble") and decrypt ("unscramble") any data passed between browser and server.

The encryption technique and key are chosen so that it would be computationally infeasible to decipher the data without the key (i.e. break the code).

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If the key is kept secret, the "right" encrypted data can only be generated by the browser or the server. Encrypted data is meaningless to snoopers and cannot be altered without detection.

This provides authentication, integrity and privacy.

EncryptionEncryption

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Sender

Original Message

Scrambled Message

Scrambled Message

Public Keyreceiver

Original Message

Receiver

Private Keyreceiver

Internet

Public Key CryptographyPublic Key Cryptography

Message

Sender

Original Message

Scrambled Message

Scrambled Message

Private Keysender

Original Message

Receiver

Public Keysender

InternetDigital

Signature

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Key Distribution ProblemKey Distribution Problem

Problem: how to get the key to the other party over an insecure network like the Internet?

Answer: public key encryption PKE uses two keys: whichever one is used to

encrypt, the other one must be used to decrypt Typically, one key is made public, the other is

kept secret. How does this help?

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Session KeysSession Keys

If the browser can get the public key of the merchant, it could encrypt a one-time session key and send it over.

Then the two sides could use the shared session key to encrypt and communicate securely.

To get the merchant's public key, the server could send it over to the browser when it first connects.

Problem: how does the browser know if it has the real public key and not a fraudulent one?

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Digital SignaturesDigital Signatures

A merchant's public key can be digitally signed. A digital signature is a token (a little bit of data)

attached to the end of the key. Using encryption technology, it is possible to verify the

authenticity of the key by examining the "signature". If you trust the key signer, you can trust that the key

is valid. Who can be trusted to sign (vouch for) a merchant's

public key?

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Certificate AuthorityCertificate Authority

A certificate authority is a trusted third party that is in the business of signing public keys. A key signed by a CA is called a digital certificate.

A merchant purchases a certificate and puts it on his server.

When a browser makes a connection the certificate is downloaded. The browser verifies the signature on the certificate and extracts the public key.

The browser encrypts a session key and sends it to the server. Both sides can now securely communicate.

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Digital CertificatesDigital Certificates

Certificates are available from a number of certificate authorities. One of the first, and biggest, is Verisign (www.verisign.com)

Certificates start at about $150 and go up from there, depending on the expected use of the certificate.

A certificate is dated and is only good for a certain time period. After that date a browser will reject it.

To keep current, a merchant will need to purchase new certificates just before the old ones expire.

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Name : “Richard”key-Exchange Key :Signature Key :Serial # : 29483756Other Data : 10236283025273Expires : 6/18/96Signed : CA’s Signature

CertificateCertificate

Identifying the holder of a public key (Key-Exchange)

Issued by a trusted certificate authority (CA)

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Securing Your SiteSecuring Your Site

Disable all nonessential services, programs and user accounts

Use complex passwords and change them reasonably often

Keep up with the latest security bulletins (CERT) and software updates

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Monitor logs for suspicious activity Consider installing a firewall, monitoring

software and/or secure communications software

Have a periodic professional security audit Does your “Host” provide all of this?

Securing Your SiteSecuring Your Site

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Customer PrivacyCustomer Privacy

What does your company do with the data it collects from customers?

Does not release customer data outside the company, under any circumstances, except to legal authorities

makes names, addresses, etc. available to selected partners and third parties

sells customer data to marketers These are all valid policies! Need to be up front: formulate a privacy policy, post

it on your web site and follow it !

Payments Payments in E-Commercein E-Commerce

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Electronic Payment ProtectionElectronic Payment Protection

Secure Sockets layer (SSL) or Secure Electronic Transaction (SET) protocols

Certification Authority (e.g., http://www.verisign.com)

http://www.verisign.com/

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Secure Electronic Transaction Secure Electronic Transaction (SET) Protocol(SET) Protocol

Cardholder, merchant, CA, payment gateway

All entities have certificates

Cardholder keeps a security certificate with them

Either in their computer - not mobile - or In the form of an “electronic wallet”

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Cardholder requests purchase from merchant Merchant requests from payment gateway:

Payment authorization Payment capture

Payment gateway obtains Authorization from card issuer Payment capture information


Entities of SET Protocol in Cyber Shopping

IC CardReader

Customer xCustomer y

With Digital WalletsCertificateAuthority

Electronic Shopping Mall

Merchant A Merchant B

Credit CardBrand

ProtocolX.25

Payment Gateway

95

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Merchant sends payment capture request to CA

CA verifies information with acquiring (merchant’s) bank

Merchant receives settlement from acquiring bank

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SET SET vsvs. SSL. SSL

Secure Electronic Transaction (SET) Secure Socket Layer (SSL)Complex Simple

SET is tailored to the credit card payment to the merchants.

SSL is a protocol for general-purpose secure message exchanges (encryption).

SET protocol hides the customer’s credit card information from merchants, and also hides the order information to banks, to protect privacy. This scheme is called dual signature.

SSL protocol may use a certificate, but there is no payment gateway. So, the merchants need to receive both the ordering information and credit card information, because the capturing process should be initiated by the merchants.

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Electronic PaymentElectronic Payment

Debit cards Used in B2C

Electronic funds transfer (EFT) / E-checks Electronic version of paper checking Combines certificates and signatures with payment Used in B2B ePay by Visa, SafeCheck (see www.echeck.org)

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eCheck Process FloweCheck Process Flow

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Stored-value cards, e-cash (e.g., Mondex, CyberCoin, VisaCash)

permit cost-effective “micropayments” mondex smart cards

• battery operated card readers• swipe card• value transferred to retailer’s terminal• no authorization required

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Electronic wallet (Fujitsu, Mondex) can be used for Internet transaction settlement handheld terminal values are transferred from customer’s account to

customer’s card or to merchant’s account via either the card or a Web

connection can store values for different currencies http://www.mondex.com/

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Closed e-cash system Values recharged (transferred) only by bank VisaCash

Open e-cash system Values can be transferred between cards Mondex

eMail-grams Pay money to or receive money from anyone with email e.g., www.Paypal.com

Marketing Issues Marketing Issues in E-Commercein E-Commerce

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Marketing Your Web SiteMarketing Your Web Site

One-to-one marketing Customer service Banner ads Search engines

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One-to-One MarketingOne-to-One Marketing

Relationship marketing “Overt attempt of exchange partners to build a

long term association, characterized by purposeful cooperation and mutual dependence on the development of social, as well as structural, bonds”

“Treat different customers differently” Able to change the manner its products are

configured or its service is delivered, based on the individual needs of individual customers

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Customer loyalty Purchase behavior One of the most significant contributors to

profitability Increase profits; strengthen market position; become

less sensitive to price competition; increase cross-selling success; save cost, etc.

Real world examples• 1-800-FLOWERS • Amazon.com• Federal Express (FedEx)

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Building and maintaining customer loyalty Maintain continuous interactions between

consumers and business Make a commitment to provide all aspects of the

business online Build different sites for different levels of

customers Willing to invest capital, both human and financial,

in the information systems, to insure continuous improvement in the supporting technology as it becomes available

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Building and maintaining customer loyalty Make a commitment to use the information collected

about customers in an ethical manner Realistic managerial expectations in the payback

period and cost recovery Set acceptable standards for response time in

customer service (24-48 hours); Use intelligent agents to expedite and standardize responses whenever possible

Ability to change and customize information and services quickly and inexpensively is a must

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Customer service A new look and feel

Install Web serverswhich allow eachcustomer to create

individual web pagesthat can be customized

to record purchasesand preferences

Put the burden on thecustomer to treat a

problem or inquiry andreceive information

bit by bit


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Customer service Information can be directed to the customer efficiently Creation of a database which records purchases,

problems, and requests is facilitated Information can now be traced and analyzed for

immediate response If customer service options and solutions do not

maintain the same level of excitement and interaction as the advertising and sales presentations, the level of intensity declines and the vendor runs the risk of losing customers

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Implementing Customer Service Implementing Customer Service in Cyberspacein Cyberspace

Product Life Cycle Phase 1. Requirements : assisting the customer

to determine needs Phase 2. Acquisition : helping the customer to

acquire a product or service

Phase 3. Ownership : supporting the customer on an ongoing basis

Phase 4. Retirement : helping the client to dispose of a service or

product

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Types of Customer Service Functions

Answering customer inquires Providing technical and other information Letting customers track accounts or order

status Allowing customers to customize and order

online


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Doingbusinessvia Web

Companiesunderstand theircustomers’ needsand buying habits

better

Companiescustomize their

future marketingefforts

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Tools of Customer ServiceTools of Customer Service

Personalized Web Pages Used to record purchases and preference Direct customized information to customers efficiently

Chat Room Discuss issues with company experts; with other

customers

E-mail Disseminate product information, conduct customer

inquiry correspondence FAQs

Not customized, no personalized feeling, no contribution to relationship marketing

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Tools of Customer ServiceTools of Customer Service

Help Desks and Call Centers A comprehensive customer service entity EC vendors take care of customer service issues

communicated through various contact channels Telewebs

• combines Web channels, such as automated e-mail reply, Web knowledge bases and portal-like self service with call center agents or field service personnel

Internet• a medium of instant gratification• demand for both prompt replies and proactive alerts

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Marketing Your Web Site: Marketing Your Web Site: Banner AdsBanner Ads

People don’t scroll sideways Get everything on one screen width

Studies find the lower right corner to be most effective location for an ad

http://www.webreference.com/dev/banners/ Placing banners last is more effective than

first Placing banners top and bottom is more

effective than just top

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Marketing Your Web SiteMarketing Your Web Site

Web malls Host sites and provide shopping “portals” e.g., http://store.yahoo.com/

Search engines Passive strategy – “meta” tags

• e.g., www.sba.gov Active strategy – submit site to search engines

• e.g., http://www.submitit.com/

E-mail list rental Opt-in mailing lists (direct marketing) e.g., http://www.netcreations.com/main?page=welcome

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Publicizing your sitePublicizing your site

Simply registering your domain name will not bring people to your “door”

The ugly reality of search engines: pay to play How to get found in a billion web pages? Get

mentioned on TV Use your “bricks” to promote your “clicks” Develop relationships with other online sites

Infrastructure Issues Infrastructure Issues in E-Commercein E-Commerce

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Infrastructure RequirementsInfrastructure Requirements

Internet service Site content Site Design Site / Commerce functionality Database

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Client(Browser)

Web Server

Commerce Server(Storefront)

ProductDatabase

Shopping Cart

Secure Transaction

Server

Dynamic

Static

PagesPagesPages

Pages

Back to Hosting

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Web Hosting IssuesWeb Hosting Issues

Bandwidth Capabilities and specifications Firewall system Wireless delivery Buy, rent, or lease Maintenance, upgrade, and service of the equipment

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Developing E-Commerce Developing E-Commerce InfrastructureInfrastructure

Hosting the site Obtaining a domain name Graphics design and web site design Web site programming Secure transactions and purchasing

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HostingHosting

Where will the site be hosted? Your premises Leased space at an ISP Rack mounted server at a professional hosting

company Managed host at a hosting co. Custom outsourced site “Template” outsourced site (e.g. Yahoo

storefront)

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Hosting: Doing it YourselfHosting: Doing it Yourself

Buy servers and network equipment and lease bandwidth (“pipes”) from Telco

Advantages: Complete control over all aspects of site, including security,

functionality, integration with existing business systems Cost savings once level of online commerce reaches a

certain threshold Disadvantages:

IT costs to manage equipment, systems Initial capital investment Physical infrastructure impact

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Hosting: Lease Space at an ISPHosting: Lease Space at an ISP

Rent space for your equipment to be hosted at an ISP Pay bulk bandwidth charges to ISP Advantages:

Complete control over site Smaller start up expenses

Disadvantages: Must manage your own systems, usually remotely Cost of purchasing equipment Harder to integrate with existing business systems

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Hosting:Hosting:Lease Equipment at Hosting Lease Equipment at Hosting

VendorVendor Rent equipment at a professional hosting

company Pay bulk bandwidth charges (sometimes rolled

into hosting package) Advantages:

Aging equipment is not your problem Smaller start up costs

Disadvantages: Must manage your own system

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Hosting: Hosting: Managed Host at Hosting VendorManaged Host at Hosting Vendor

Rent use of a system at a hosting vendor System is managed for you Can mix and match services (web, email,

ordering, etc.) You are responsible for site content Advantages:

System is managed for you You maintain control over site design, functionality

Disadvantages: Ongoing expenses

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Hosting: Hosting: Custom Outsourced SiteCustom Outsourced Site

Outsource the development of the web site May be a different entity than hosting co.

(e.g. consultant) Advantages:

Custom designed site No web development or system management

required on your part Disadvantages:

Less control over costs

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Hosting: Hosting: Template Outsourced SiteTemplate Outsourced Site

Use pre-designed “templates” for building site from dot-coms catering to small business owners

Advantages: Very low cost (some free!)

Disadvantages: Cookie-cutter feel to sites Little control over site or design Customer service?

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Web Programming: Implementing Web Programming: Implementing the Software Infrastructurethe Software Infrastructure

Most E-Commerce sites are not a static collection of web pages, but dynamic interactive systems

Need to develop the software infrastructure that drives the site: databases, business rules, secure ordering, web user interfaces, etc.

Q: Do you need to interface your site to your existing IT infrastructure? Database?

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There are “turnkey” solutions for implementing some of this software infrastructure

Unless you have a simple business, these probably won’t be satisfactory

Reality check: custom software development takes time and money

Programmers are not artists, and vice versa! Don’t hire programmers to write web pages and don’t hire webmasters to write sophisticated software.

Don’t hire either one to design your corporate image!

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Electronic storefront must contain: A merchant system or storefront that provides

the merchant’s catalog with products, prices and promotions

A transaction system for processing orders and payments and other aspects of the transaction

A payment gateway that routes payments through existing financial systems primarily for the purpose of credit card authorization and settlement


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Purchase a suite of software that claims to integrate storefront functions into a single box

iCat Corp.’s Electronic Commerce Suite and Commerce Publisher

Open Market’s Transact and LiveCommerce http://www.openmarket.com

Microsoft Corp.’s Site Server Commerce Edition IBM Corp.’s Net. Commerce Pro Saqqara Systems’ StepSearch Professional

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Electronic Commerce Suites• Offer merchants greater

flexibility, specialization, customization and integration in supporting complete front and back-office functionality

Internet

CatalogApplication

CustomerManagement,Registration,

Profiles, Service

Order Capture,Completion Fulfillment

SystemsPayment

Processing(SET & Purchase

Order)

CatalogDatabase

CustomerDatabase

OrderDatabase

PaymentDatabase

FinancialNetwork

WebBrowser Web

Server

Open Market E-Commerce Server Architecture


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Making a Web catalog into a multimedia extravaganza Not easy and expensive Lower end systems : begin at $25,000 High end systems : $250,000 to $2

million

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Secure Transactions and OrderingSecure Transactions and Ordering

Payment handling: one of the easiest things to outsource

To handle it on your own web server, you need to obtain a certificate from a Certificate Authority (CA)

Certificates allow authenticated, encrypted, trusted connections

Certificates expire and must be renewed for an annual fee

You probably should be concerned about secure transactions even if payment handling is outsourced

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Review ofReview ofE-Commerce InfrastructureE-Commerce Infrastructure

Hosting the site Obtaining a domain name Graphics design and web site design Web site programming Secure transactions and purchasing

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Putting together a successful E-Commerce web site requires different skills from different people:

Graphics designer Webmaster Programmer(s) Other business entities: marketing, etc.

Few people have all these effective skills


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The good news:there are many choices for hosting and outsourcing the infrastructure development

Your choices will depend on: How central is the E-Commerce aspect of your

business to the core focus of your business? What is your current investment in IT and existing

infrastructure? What are your available resources for capital

investment?


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Outsourcing: Pros and ConsOutsourcing: Pros and Cons

Pros Faster Resources readily available Competitive - many alternatives You can focus on what you do best You’ll learn as you go

Cons Can be costly Always risky – need to do research before and

monitor performance during and after

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Monitoring Website PerformanceMonitoring Website Performance

Log details Server log Access log

Visit details Hits What pages do they visit? How long do they spend on a page? What “areas” of a page did they scan? Relationship of hits/pages visited/orders

Feedback survey

Future Developments to WatchFuture Developments to WatchFor in E-CommerceFor in E-Commerce

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Future Developments in ECFuture Developments in EC

Public portals Content Community Commerce e.g., http://www.ivillage.com

Exchanges Industry sponsored Private Public

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Enterprise E-Portals E-Commerce systems and legacy systems focus

on transactions, Auctions focus on bringing together buyers and

sellers Operational systems track orders and inventory. E-Portals tie together all of these disparate

systems Enabling the flow of information to employees,

customers and partners

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Wireless / Mobile Web Access Technologies

• handhelds (e.g., http://www.palm.com/) Applications

• CRM, commerce Implications

• customer may shop your physical store, see long lines, order online for delivery to home (another state?)

• have to cross market EC capability (e.g., in store marketing)

Documents

Workshop in Electronic Commerce Presented by: Dr. Kelly Burke – UH Hilo School of Business Dr. Eric Jeschke – UH Hilo Computer Science Department Funded