Published on January 30, 2008
Slide1: Overview of E-COMMERCE Electronic commerce (e-commerce, or EC) describes the buying, selling, and exchanging of products, services, and information via computer networks, primarily the internet. Types of E-COMMERCE Business–to-business (B2B) : Two or more business make transactions or collaborate electronically. B2B is the major current type of electronic commerce (as measured by monetary volume). Collaborative commerce (c-commerce) : Business partners collaborate electronically. Such collaboration frequently occurs between and among business partners along the supply chain. Business-to-consumers (B2C) : In this case the sellers are organizations, the buyers are individuals. Consumers-to-consumers (B2C) : In this case the sellers are organizations, the buyers are individuals. Slide2: Types of E-COMMERCE (continue) Consumers-to-consumers (C2B) : In this case, consumers make known a particular need for a product or service, and organizations compete to provide the product or service to consumers. Consumers-to-consumers (C2C) : In this case, an individual sells products (or services) to other individuals. Government-to-citizens (G2C) and to others : In this case, the government provides services to its citizens via EC technologies. Governments can do business with other governments (G2G) as well as with businesses (G2B). Mobile commerce (m-commerce) : When e-commerce is done in a wireless environment, such as using cell phones to access the internet, it was called m-commerce. Intrabusiness (intraorganizational) commerce : In this case, an organization uses EC internally to improve its operations. A special case of this is known as B2E (business to its employees) Electronic Commerce. Slide3: A framework for e-commerce MANAGEMENT (1) Common Business Services Infrastructure (Security smart cards/authenticationelectronic payments, directories/catalogs) (2) Messaging and Information Distribution Infrastructure (EDI, e-mail, Hypertext Transfer Protocol, Chat Rooms (3) Multimedia Content and Network Publishing Infrastructure (HTML, JAVA, WWW, VRML,XML) (4) Network Infrastructure (telecom, cable TV wireless, Internet) (VAN,WAN,LAN,Internet, extranet) (5) Interfacing Infrastructure (The database, logistic, application People: Buyers, Sellers, Intermediaries, Services, IS People Management Public Policy: Taxes, Legal, Privacy Issues, Regulations, and Technical Standards Marketing and Advertising: Market Research Promotions, and Web content Supply Chain: Logistics and Business Partners Electronic Commerce Applications -Direct Marketing -Stocks Jobs -Online Banking -Procurement and Purchasing -Malls -Procurement -Auctions -Online Publishing -Customer Services -E Government C2C Slide4: Benefits of E-Commerce Expands a company’s marketplace to national and international markets. With minimal capital, a company can quickly locate more customers, the best suppliers, and the most suitable business partners worldwide. Enables companies to procure material and services from other companies, rapidly and at less cost. Shortens or even eliminates marketing distribution channels, making products cheaper and vendors’ profits higher. Decreases (by as much as 90% ) the cost of creating, processing, distributing, storing, and retrieving information by digitizing the process. Allows lower inventories by facilitating supply chain management. This reduces inventory costs. Helps small businesses compete against large companies. Frequently provides less expensive products and services by allowing consumers to conduct quick online comparisons. Enables customers to do transactions 24 hours a day, from almost any location. Slide5: Direct Sales over the Web Manufacturers can sell their products and services directly to retail customers, bypassing intermediaries such as distributors or retail outlets. Eliminating intermediaries in the distribution channel can significantly lower purchase transaction cost. Manufacturer Manufacturer Manufacturer Distributor Retailer Retailer customer customer customer Cost/Sweater $48.50 $40.34 $20.45 Slide6: Limitations of E-Commerce Lack of universally accepted standards for quality, security, and reliability. Insufficient telecommunication bandwidth. Still-evolving software development tools. Expensive and/or inconvenient internet accessibility for many users. Unresolved legal issues. Lack of national and international government regulations and industry standards. Customer resistance to changing from a real to a virtual store. People do not yet sufficiently trust paperless, faceless transactions. Perception that EC is expensive and unsecured. Slide7: Service Online Selling tangible products on the internet may reduce vendors’ selling costs by 20 – 40 %. Further reduction is difficult to achieve because the products must be delivered physically. Only a few products (such as software or music) can be digitized to be delivered online for additional savings). On the other hand, delivery of services, such as buying stocks or insurance online, can be done 100% electronically, with considerable cost reduction. Delivery of services online is growing very rapidly, with millions of new customers added annually. The major online services are banking, trading of securities (stocks, bonds), job matching, travel, and real estate. Slide8: Electronic banking or Cyber banking Electronic banking includes various banking activities conducted from anywhere instead of a a physical bank locations. Electronic banking can expand customer base and saving the cost of paper transactions. In addition to regular banks with added online services, virtual banks, dedicated solely to internet transactions, are emerged. Electronic bill payments : telephone, utilities, credit cards. Online payments are enable recipients to significantly reduce processing costs. Online securities trading : stock, bonds are increasingly traded via computers. Slide9: Auctions An auction is a market mechanism by which sellers place offers and buyers make sequential bids. Auctions are characterized by the competitive nature by which a final price is reached. Auctions are divided into 2 major types : forward auctions and reverse auctions. Forward auctions : Being used mainly as a selling channel. A single seller auctions item(s) to many potential buyers. Reverse auctions : There is one buyer, who wants to buy a product or a service. Suppliers are invited to submit bids. The supplier that submits the lowest bid wins. Several rounds may take place if the lowest bid is not satisfactory to the seller. Slide10: E-auctions started in the 1980s on private networks. The internet opens many new opportunities for e-auctions, and millions of sellers and buyers participate. Nowadays, auctions are used in B2C, B2B, C2B, e-government and C2C commerce. Auctions can be conducted from the seller’s site or from a third-party site. For example, eBay (ebay.com) offers hundreds of thousands of different items in several types of auctions. Auctions (ต่อ) The online job market The internet offers an environment for job seekers and for companies searching for hard-to-find employees. There are thousands of companies and government agencies that advertise available positions in all types of jobs, accept resumes, and take applications via the internet. Slide11: Internet Business Models They provide the customer with a new product or service. They provide additional information or service along with a traditional product or service. They provide a product or service at much lower cost than traditional means. Category Description Virtual storefront Sells physical products directly to consumers or to individual business. Information broker Provides product, pricing, and availability information to individuals and business. Generates revenue from advertising or from directing buyers to sellers. Transaction broker Saves users money and time by processing online sales transactions. Generating a fee each time a transaction occurs. Online marketplace Provide a digital environment where buyers and sellers can meet, search for or display products, and establish prices for those products. Online bidding, also known as dynamic pricing. Online service provider Provides online service for individuals and business. Generates revenue from subscription or transaction fees, from advertising. Virtual community Provide online meeting place where people with similar interests can communicate and find useful information. Portal Provides initial point of entry to the Web along with specialized content and other service. Slide12: Business-to-Business Electronic Commerce For business-to-business electronic commerce, companies can sell to other business using their own Web sites as electronic storefronts or they can execute purchase and sale transactions through private industrial networks or Net marketplaces. Private industrial networks focus on continuous business process coordination between companies for collaborative commerce and supply chain management. A private industrial network (or private exchange) typically consists of a large firm using an extranet to link to its suppliers and other key business partners. The network is owned by the buyer and it permits the firm and designated suppliers, distributors and other business partners to share product design and development marketing, production scheduling, inventory management, and unstructured communication, including graphics and e-mail. Slide13: Firm Suppliers Distributors A private industrial network, also known as a private exchange, links a firm to its suppliers, distributors, and other key business partners for efficient supply chain management and other collaborative commerce activities. A private industrial network. Slide14: Net marketplaces (e-hubs) Net marketplaces provide a single digital marketplace based on internet technology for many different buyers and sellers. They are industry-owned or operate as independent intermediaries between buyers and sellers. Net marketplaces are more transaction-oriented (and less relationship-oriented) than private industrial networks, generating revenue from purchase and sale transactions and other services provided to clients. Participants in Net marketplaces can establish prices through online negotiations, auctions. Slide15: Net Marketplace Catalogs Sourcing Automated purchasing Suppliers Buyers A net marketplaces are online marketplaces where multiple buyers can purchase from multiple sellers. Buyer firms can benefit from competitive pricing among alternative suppliers, and suppliers can benefit by having stable long-term selling relationships with large firms. A Net market-place Slide16: Business-To-Consumer Applications Electronic storefront : IT may be general or specialized. Directories and hyperlinks from other web sites and intelligent search agents help buyers find the best stores and products to match their needs. Electronic malls : An electronic mall, also known as cybermall or e-mall, is a collection of individual shops under one internet address. The basic idea of an electronic mall is the same as that of a regular shopping mall – to provide a one-stop shopping place that offers many products and services. Each cybermall may include thousands of verdors. Slide17: An overview of the key information flows in electronic commerce. Buyer Retailer ------------------- Information Orders Service and support Manufacturers Suppliers, and Distributors --------------------------- Purchases Bids Banks ------------------------ Credit checks Payment Electronic payments transfer Business-to-Consumer Business-to-Business Individuals can purchase goods and services electronically from online retailers, who in turn can use electronic commerce technologies to link directly to their suppliers or distributors. Electronic payment systems are used in both business-to-consumer and business-to-business electronic commerce. Slide18: E-government : an innovative applications of E-Commerce E-government is the use of internet technology in general and e-commerce in particular to deliver information and public services to citizens, business partners and suppliers, and those working in the public sector. E-government can make government more transparent to citizens and improve delivery of public services. E-government applications can be divided into three major categories: Government-to-Citizens (G2C), Government-to-Business (G2C), and Government-to-Government (G2G). Slide19: Infrastructure and E-Commerce support services E-Commerce Infrastructure E-Commerce infrastructure requires a variety of hardware, software, and networks. The major components are networks, Web servers, Web server support and software, electronic catalog, Web page design, construction software, transaction software, and internet access components. In addition, special software and sometimes hardware is needed for conducting auctions, e-procurement, and m-commerce. The key infrastructures that are needed to support electronic transactions, communication, and collaboration include: networks, Web servers and supporting software; web page design software, transactional software. Slide20: Electronic Payments Acceptable means of payment : electronic checks, electronic credit cards, electronic cash, smart cards, person-to-person, electronic funds transfer, and purchasing cards. Electronic checks (e-checks) are used mostly in B2B : Step1: The customer establishes a checking account with a bank. Step2: The customer contacts a seller, buys a product or service, and e-mail an encrypted electronic check. Step3: The merchant deposits the check in an account; money is debited form the buyer’s account and credited to the seller’s account. Like regular checks, e-checks carry a signature (in digital form) that can be verified. Properly signed and endorsed e-checks are exchanged between financial institutions through electronic clearinghouses. Slide21: Electronic credit cards Electronic credit cards make it possible to charge online payments to one’s credit card account. It is easy for a buyer to e-mail a credit card number to the seller. The risk here is that hackers will be able to read the credit card number. Sender authentication is also difficult. Therefore, for security, only cards with encrypted information should be used. The data associated with such cards are scrambled so that only those recipients with a key to the coding can retrieve the data. Credit card details can be encrypted by using the SSL (Secure Socket Layer) protocol in the buyer’s computer, which is available in standard browsers. ขอใช้งาน SSL แสดงใบรับรอง ข้อมูลที่ส่งจะมีการเข้ารหัส มีความปลอดภัย และเชื่อใจได้มากขึ้น ผู้ซื้อ ผู้ขาย 1001101001110101100010010000010000010111101010 Slide22: Electronic cash Cash is the most prevalent consumer payment instrument. EC sellers and some buyers prefer electronic cash (e-cash) which appears in 2 forms. Electronic cash in a PC. Step 1: The customer opens an account with a bank and receives special software for his or her PC. Step 2: The customer buys “electronic money” from the bank by using the software. The customer’s bank account is debited accordingly. Step 3: The bank sends a secured electronic money note to this customer. Step 4: The money is stored on the buyer’s PC and can be spent in any electronic store that accepts e-cash. Step 5: The software is also used to transfer the e-cash from the buyer’s computer to the seller’s computer. Step 6: The seller can deposit the e-cash in a bank, crediting his or her regular or electronic account. Slide23: Electronic cash (ต่อ) 2. Electronic payment cards with e-cash. Electronic payment cards have been in use for several decades. The best known are credit cards, which use magnetic strips that contain limited information, such as the card’s ID number. A more advanced form of payment card, known as a stored-value money card. Slide24: Electronic funds transfer (EFT) Electronic funds transfer is the electronic transfer of money to and from financial institutions using telecommunication networks. EFT is now widely used-with funds, debits and credits, and charges and payments electronically routed via clearinghouses among banks and between banks and customers. EFT is fast; it reduces delays associated with sending hardcopy documents. It has become the only practical way to handle the large volume of financial transactions generated daily in the banking industry. Slide25: Security in Electronic Payments Security requirements for conducting EC are: Authentication. The buyer, the seller, and the paying institutions must be assured of the identity of the parties with whom they are dealing. Integrity. It is necessary to ensure that data and information transmitted in EC, such as orders, reply to queries, and payment authorization, are not accidentally or maliciously altered or destroyed during transmission. Non-repudiation. Merchants need protection against the customer’s unjustified denial of placing an order. (Such denial is called repudiation). On the other hand, customers need to protection against merchants’ unjustified denial of payments made. Privacy. Many customers want their identity to be secured. They want to make sure others do not know what they buy. Some prefer complete anonymity, as is possible with cash payments. Safety. Customers want to be sure that it is safe to provide a credit card number on the internet. Slide26: Security protection Several methods and mechanisms can be used to fulfill the security requirements. One of the primary mechanisms is encryption, which is often part of the most useful security schemes. Encryption is a process of making messages indecipherable except by those who have an authorized decryption key. The key is a code composed of a vary large collection of letters, symbols, and numbers. For example, the letter “A” might be coded as: ABQ8iF 1 73 Rjbj / 83 ds 1 22 m 3 3 SP 5 Qqm2z. Every letter and number in the encrypted data would have similarly complex coding, which may include as many as 128 characters for each letter of number. There are 3 types of encryption : Single-key encryption Two-key encryption Public key infrastructure Slide27: Single-key encryption. In early encryption technologies only one key was used. The sender of the electronic message (or payment) encrypted the information with a key. The receiver used an identical key to decrypt the information to a readable form. Therefore, the same code had to be in the possession of both the sender and the receiver. A problem is , if a key were transmitted electronically and intercepted (ดัก) illegally, it could have been used to read all encrypted messages or to steal money. Slide28: Two-key encryption. This method uses 2 different keys. One of the keys is called public, the other one, private. Many people may know the public key (it may be posted on a Web site), but only its owner knows the private key. Every user of the system has one private key and one public key. Encryption and decryption can be done with either key. If encryption is done with the public key, the decryption can be done only with the private key, and vice versa. Message Text Message Text Ciphered Text Encryption Decryption Public Key of Recipient Private Key of Recipient Sender Receiver Slide29: Message Text Signature Message Text Signature Ciphered Text Encryption Decryption Public Key of Recipient Private Key of Recipient Public Key of Sender Sender Receiver Private Key of Sender Public key infrastructure (PKI). Is a security system based on use of the two keys, and also including a digital signature and a certificate. For example, Susan wants to assure David that she is the author of a message. She encrypts the message with David’s public key. In addition, Susan encrypts a signature with her own private key. The signature, called digital signature, is attached to the original message. David uses Susan’s public key to decrypt the signature and his private key to read the message. Slide30: Electronic certificates Electronic certificates are issued by a trusted third party, called a certificate authority (CA), in order to verify that a specific public key belongs to a specific individual (or organization). In addition to a name, a certificate may verify age, gender, and other attributes of the individual to whom the public key belongs. Certificates are signed by the CA and are valid until an expiration date. Slide31: ผู้ประกอบการรับรอง (Certification Authority) เป็นบุคคลที่ 3 ทำหน้าที่ 1. สร้างกุญแจคู่ตามคำขอของผู้ขอใช้บริการ 2. ออกใบรับรองยืนยันตัวบุคคลผู้ขอใช้บริการ 3. จัดเก็บกุญแจสาธารณะในฐานข้อมูล 4. เปิดเผยกุญแจสาธารณะต่อสาธารณชนที่ติดต่อทางเครือข่าย 5. ยืนยันตัวบุคคลที่เป็นเจ้าของกุญแจสาธารณะตามคำขอของบุคคลทั่วๆไป 6. ให้บริการอื่นๆ Slide32: The PKI is the backbone of the various payment mechanisms described earlier, including e-check, e-cash, and wireless payments. However, to ensure the acceptance of payments anywhere in the world, it is necessary to have some universal protocols. Protocol is a set of rules and procedures that governs the transfer of information on the internet. It is software that also helps in authentication, security, and privacy. Two major payment protocols are used in e-commerce: SSL and SET. Secure Socket Layer (SSL) : Secure Electronic Transaction (SET) protocol : Payment protocols in E-commerce Slide33: Secure Socket Layer (SSL) : The main capability of SSL is to encrypt messages. If we order merchandise on the internet, our order is encrypted automatically by the SSL in our computer browser before being sent over the internet. ขอใช้งาน SSL แสดงใบรับรอง ข้อมูลที่ส่งจะมีการเข้ารหัส มีความปลอดภัย และเชื่อใจได้มากขึ้น ผู้ซื้อ ผู้ขาย 1001101001110101100010010000010000010111101010 Slide34: Secure Electronic Transaction (SET) protocol : A more comprehensive protocol for credit card processing is SET. It is not used much due to its cost and complexity. However, it is designed to allow consumers to shop securely as possible by incorporating digital signatures, certification, encryption, and an agreed-upon payment gateway (to banks). While SSL protects only integrity and safety, SET can provide protection against all security hazards. Slide35: The future internet-driven supply chain operates like a digital logistics nervous system. It provides multidirectional communication among firms, networks of firms, and e-marketplaces so that entire networks of supply chain partners can immediately adjust inventories, orders, and capacities. Virtual Manufacturers Distributors Customers Retailers Logistics Providers Manufacturer Contract Manufacturers Logistics Exchanges Suppliers Private Industrial Networks --------------------- Net Marketplaces The future internet-driven supply chain
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