e-Commerce Reality and myth T.N.C.Venkata Rangan CMD, Vishwak Solutions Pvt. Ltd.

Agenda  Competitive advantage of going online  e-Commerce myths  Security & Payments aspects

Darwinism on the web Every invention of man has gone through phases of: Fear Fear Experimentation Experimentation Confidence and Trust Confidence and Trust Innovation Innovation

Trust Trust is the current step as ecommerce is booming. Trust is the current step as ecommerce is booming. Innovations will decide the future of the web. Innovations will decide the future of the web.

Innovation In the old corporate scenario, innovations were coming from all corners, but only those with good financial backup survived. In the old corporate scenario, innovations were coming from all corners, but only those with good financial backup survived. In this digital era, good innovations are capable of surviving on their own with little or no corporate back up In this digital era, good innovations are capable of surviving on their own with little or no corporate back up

Advantages of going Online Lowers Entry Costs Lowers Entry Costs Reduces Transaction Costs Reduces Transaction Costs Provides Access to Global Market Provides Access to Global Market Provides for Online Distribution Provides for Online Distribution Secures Market Share Secures Market Share

Challenges of going Online Unmatched Scale Issues Unmatched Scale Issues  A large enterprise application has thousands of concurrent users  A Large commerce site might have 10s of thousands of global, concurrent users Rapidly Evolving Technologies Rapidly Evolving Technologies  New Applications of Technology Major Security and Privacy Issues Major Security and Privacy Issues

Internet Myths - 1 Users are sold when they see a video on your site Users are sold when they see a video on your site Reality: Online Travel Shoppers Don't Want to See Your Video Reality: Online Travel Shoppers Don't Want to See Your Video

No Video please!

Internet Myths - 2 Modem is dying Modem is dying Reality : majority of Internet usage is through dial-up modems Reality : majority of Internet usage is through dial-up modems

Internet Myths - 3 Established e-commerce players are invincible Established e-commerce players are invincible Reality: Ubid is under tremendous pressure to improve their support and fulfillment processes. Egghead has been sold to Amazon Reality: Ubid is under tremendous pressure to improve their support and fulfillment processes. Egghead has been sold to Amazon

E-Commerce Myth – 1 Its cheap, Easy and Lucrative Its cheap, Easy and Lucrative Reality: Reality:  It will become lucrative, but it isn’t now  Many organizations simply “Webify” their bad manual business process  Very difficult to integrate front end website with back end processes

E-Commerce Myth – 2 Everyone’s Doing it Everyone’s Doing it Reality: Reality:  Giga Groups’ Bartel says that 90 percent of large companies websites are just more than “Brochure Ware”.  Only 5% are using it to automate their supply chains.

E-Commerce Myth – 3 Middlemen Are Eliminated Middlemen Are Eliminated Reality: Reality:  Infomediaries who provide information about products and who locate the best choice or price replace intermediaries

E-Commerce Myth – 4 All Products Become Commodities and the playing field is leveled All Products Become Commodities and the playing field is leveled Reality: Reality:  This is true to a point  But don’t expect “If you build it, they will come”  Consumers are still quaeasy enough about giving information over the web

E-Commerce Myth – 5 Brand Building Is Easy on the web Brand Building Is Easy on the web Reality: Reality:  Organisations that have brand strength and are well known are unlikely to go away  Products that can be delivered and described completely digitally can succeed faster over the Internet

Payment Aspects

Globalization and Growth Projections from the Boston Consulting Group predicted that U.S. shoppers have spent $61 billion on online shopping last year.(June 2003) Projections from the Boston Consulting Group predicted that U.S. shoppers have spent $61 billion on online shopping last year.(June 2003) Banking and financial services are forecast to grow from $3.6 billion in 1999 to $12.3 billion in Banking and financial services are forecast to grow from $3.6 billion in 1999 to $12.3 billion in The computer hardware/software, consumer electronics segment will lead the market with revenue projected to grow from $7.5 billion in 1999 to $59.7 billion in The computer hardware/software, consumer electronics segment will lead the market with revenue projected to grow from $7.5 billion in 1999 to $59.7 billion in E -commerce grew to $600 billion in 2001, a 68 percent increase over E -commerce grew to $600 billion in 2001, a 68 percent increase over 2000.

Globalization and Growth cont’d By % of internet users will be outside the U.S. and Canada. By % of internet users will be outside the U.S. and Canada. Today 43% of internet users are non- English speakers: Japanese, Spanish, German. Today 43% of internet users are non- English speakers: Japanese, Spanish, German. By 2005, China should be the 2 nd largest internet user. By 2005, China should be the 2 nd largest internet user. Note: Currently only 7% of adults in Germany own a credit card. Note: Currently only 7% of adults in Germany own a credit card.

Indian Examples IRCTC.CO.IN IRCTC.CO.IN  Sold nearly 7.3 lakh tickets in  Logged a sales volume of Rs.102 crore  Rs.30 Lakhs everyday, nearly 1 Lakh tickets everyday

Indian Buying patterns Baazee.com records following pattern: Baazee.com records following pattern:  Products priced up to Rs 3,000 - Credit Cards  Between Rs 3,000 and Rs 6,000 – DD/Cheque/CC  Above Rs 10,000 – DD/Cheque  Less than Rs 1,000 attract cash-on- delivery payments

Internet Payment methods - 1 Three different types of payment systems can be established on the Internet Three different types of payment systems can be established on the Internet 1. Post-Paid Payment solutions Credit card solutions Credit card solutions Invoice Invoice Internet Cheques Internet Cheques Cash on Delivery Cash on Delivery

Internet Payment methods Instant-paid payment systems  Direct Debit  Uses Bank account numbers and the bank code.  Requires proof either by physical signature or digital signature (which has to be approved by approved laws)

Internet Payment methods Pre-paid payment systems  Electronic cash  Smart cards

Threats on the Internet Loss of Data Integrity Loss of Data Integrity  Information is created, modified or deleted by an intruder Loss of Data Privacy Loss of Data Privacy  Information is made available to unauthorized persons Loss of Service Loss of Service  A service breaks down due to the action of a hacker Loss of Control Loss of Control  Services are used by Authorized persons in an uncontrolled way

Security Cryptography Cryptography  Secret key cryptography  Public key cryptography Digital signatures Digital signatures  Based on Public Key SSL (Secure Socket Layer) SSL (Secure Socket Layer)

Privacy Footprints on the Net Footprints on the Net  IP Number  Browser information  Cookies  Profile TRUSTe TRUSTe  An independent, non-profit organization, to build customers’ trust and confidence on the Internet  Website owners agree for third-party checks Anonymizer Anonymizer

Digital Payment Requirements –1 Acceptability Acceptability  In order to be successful, the payment infrastructure needs to be widely accepted Anonymity Anonymity  If desired by customers, their identity should be protected Convertibility Convertibility  The digital money should be able to be converted into other types of funds Efficiency Efficiency  The cost per transaction should be near zero Flexibility Flexibility  Several methods of payment should be supported

Digital Payment Requirements-2 Integration Integration  Support with existing applications via interfaces Reliability Reliability  Needs to be highly available and should avoid single point of failure Scalability Scalability  Allowing lot of news customers and merchants shouldn’t break the system Security Security  Should support financial transactions over open networks Usability Usability  Payment should be as easy as in the real world

Summary Competitive advantages Competitive advantages E-commerce - Reality E-commerce - Reality Threats Threats Privacy Privacy Payment categories Payment categories Payment models Payment models