E-Commerce Security COEN 351 Thomas Schwarz, S.J.

Amazon.com 1994: Bezos founds amazon.com 1995: Amazon opens for business; competes on prize, selection, convenience, service. Business model promises low overhead. 1999: Bezos is man of the year for Time magazine. 2000: 2.7 B$ revenue, 1.4 B$ loss starts search for profitability. 2002: First ever profits. 4B$ revenue 2005: First quarter net revenue 1.9B$, net income 78M$

E-Commerce E-commerce Use of the internet to transact business. E-commerce I 1995 – 2000: explosive growth, extraordinary innovation March 2000: dot.bust 2001 – today: solid growth, less hype

E-Commerce I Disintermediation Friction-free commerce Information equally distributed Transaction costs are low Prices are dynamically adjusted Goal of “First Mover” Successful first mover becomes new intermediary $120 B$ capitalization for 12,450 dot start-ups 10% survival rate, very few profitable

E-Commerce II Earning and profits emphasis Traditional Financing Stronger regulation and governance Strengthening intermediaries Imperfect markets Mixed “click and brick” strategies

E-Commerce Business Model Value proposition (Why buy from you?) Revenue model (How will you make money?) Market opportunity Competitive environment Market strategy Organizational development Management team

E-Commerce Business Model Revenue Model Advertising revenue model Subscription revenue model Transaction fee revenue model Sales revenue model Affiliate revenue model

E-Commerce Business Model B2C Portals E-tailers Competitive market because barrier to entry is low Content provider Transaction broker Market creator Brings buyers and sellers together Service Provider Community Provider

E-Commerce Business Model B2B E-Distributor (Sales of goods) E-Procurement (Fees, supply chain management, fulfillment services) Exchanges (Fees, commissions on transactions) Industry Consortia

Emerging E-Commerce Business Models C2C: eBay P2P: Kazaa M-commerce (mobile commerce), uses wireless E-commerce enablers

Internet Fraud Complaints 2003 Auction fraud 46.1% Non-delivery 31.3% Credit / Debit card fraud 11.6% Investment fraud 1.5% Business fraud 1.3% Confidence fraud 1.1% Identity theft 1.0% Check fraud 0.5% Nigerian letter fraud 0.4% Communications fraud 0.1%

Internet Fraud Statistics First Half 2005 Instance% compl.Average Loss Auctions44%$999 General Merch.30%$4,389 Nigerian Scam7%$11,370 Fake Checks5%$4,733 Phishing4%$298 Lotteries3%$3,953 Info / Adult services2%$277 Work-at-Home Plans1%$726 Computer Equip. / Software1%$608 Source: National Internet Fraud Watch Information Center Data is on complaints by consumers.

E-Commerce Security Integrity Non-repudiation Authenticity Confidentiality Privacy Availability

E-Commerce Security Threats: Malicious Code Hacking, Cybervandalism Credit Card Fraud Spoofing DoS, DDoS Sniffing Insider Jobs