Chapter 4 E-Commerce Fundamentals E-commerce and Information Technology in Hospitality and Tourism Copyright 2004 by Zongqing Zhou, PhD Niagara University

4.1 The Internet and E-Commerce E-Commerce allows businesses to be more effective and efficient in responds to customers’ needs and wants as well as in conducting transactions with suppliers and within the company itself. It has changed the way that business is being conducted.

4.2 E-Commerce Defined The meaning of E-Commerce is not one simple definition it can mean many things to different people. One basic definition is a system of conducting business activities using the Internet and other information technologies.

4.2 E-Commerce Defined Common definitions include, but not limited to the following: Buying and selling online Selling through the Internet Customer service using the Internet Marketing and advertising through the Internet

4.2 E-Commerce Defined (cont.) Putting up a website for product and service information, together with an address for customers to in orders. E-commerce is creating a website that can accept credit card information to sell online directly to consumers. E-commerce involves 1) a website where customers can find information, place an order, 2) an order fulfillment center that tracks and ships the orders, and 3) a customer service mechanism where questions

4.3 Components of E-Commerce Our definition consists of three components: A. It requires a systematic approach in conducting business. It involves: research, planning, operation and selling, marketing, budgeting, customer service, and human resource management.

4.3 Components of E-Commerce B. E-commerce is a special type of business, but it is still a business. Just as there are all kinds of businesses, there are all kinds of ecommerce businesses. Some ecommerce businesses sell tangible products such as computers and clothes. Others offer intangible products and services such as providing information and reservation services. Most of the hospitality and travel ecommerce borders between these two, if tickets can be considered as a tangible product.

4.3 Components of E-Commerce C. Thirdly and lastly, e-commerce is conducting business using technologies. For a company to be successful in ecommerce, it has to understand these technologies and make the best use of what is available to the business.

4.3 Components of E-Commerce Types of E-Commerce B2B- between businesses B2C- between business and consumer C2C- between two or more individuals C2B- consumer initiated interactions and transactions.

4.4 Classification of E-Commerce Online-only businesses- Base the entire operation online. Direct sellers- sell directly to the consumer Intermediaries- the middleman Fee-free-and-as-based- free to the consumer and paid by advertisers, who then advertise on the site. Fee-based- Charged a fee to use their service.

4.4 Classification of E-Commerce (Cont.) Bricks-and clicks businesses- Operation both online and in a physical space. Full-engaged models-product or service is available online to sell directly to the consumer. Partially-engaged models- Some of the product or service is available online, but not all only the products suitable to be sold on the internet are available. Same-line business- Can be full or partial but sell the same line of products online. Expanded models- See E-Commerce is a way to expand their business.

By operation Mode By transaction parties Online-only business Bricks-and-clicks business Buyer BusinessConsumer Business Consumer Seller Direct Sellers Intermediaries Fee-free-and- ad-based business Fee-based business Full-engaged models Partial-engaged models Same-line models Expanded models B2BB2C C2B C2C

Process of simple e-commerce operation Establish a Web presence Provide information (online catalog and product information.) Get the customers (marketing) Fill the order (secure payment methods and fast shipping service) Provide customer support and service (communications through both Web and traditional means)

4.5 Establishing Web Presence To establish an e-commerce presence on the Web: Apply for a domain name or use a third party domain name Find a server to host the domain Create Web pages and load them to the server Set up a payment method to receive payment of the internet.

Applying for a domain name Website and homepage are interchangeable. Domain name is a convenient way to recognize the homepage and to locate information on the internet. What’s Needed: IP address DNA domain name system- distributed base. TCP/IP Transmission Control Protocol/Internet Protocol- map between hostname and IP address

Domain name continued… Registering a domain name Go to an ICANN-accredited registrar. ICANN- Internet Corporation for Assigned Names and Numbers Can rent a cyber home on other people’s domains Benefits Credibility on the Web More power in marketing Better control Professionalism and security Branding opportunity

Domain Name.com.edu.gov.mil.net.org.int.biz.info.name Meaning Commercial Organization Educational Institutions Government Institutions Military groups Major network support centers Organizations other than those listed here International organizations Business Unrestricted use For registration by individuals

123 Registration, Inc. (US) Capital Networks Pty Ltd. (Australia) Domaninfo AB (Sweden) DomainRegistry.com, Inc. (US) Go Daddy Software, Inc. (US) Internet Domain Registrars, d/b/a (Canada & US) Key-Systems GmbH, d/b/a (Germany) Melbourne IT Limited, d/b/a Internet News Worldwide (Australia) Mr. DomReg.com, Inc. (Canada) Namebay (Monaco) Network Solutions, Inc. Registrar (US) NORDNET (France) Register.com, Inc. (US) Xin Net Corp. (China) Source: UCANN ( For complete list, see ICANN’s Website.

Finding an ISP or Web Host Website is a series of WebPages (HTML files) that reside on a server Two ways to host a Web site: Purchase your own server, set it up, and manage your own site. Find an ISP or Web hosting company without having to invest in the server hardware and software.

Creating Web Pages and loading them to the Server Depending on the ISP you may need to create your own Web files and then load them up to the server. Web host companies will create the Web files for you based on the information you provide. Software needed: FTP- file transfer protocol- allows one computer to transfer files from another computer over the internet.

Allocated Server Storage Space Shared hosting or dedicated server accounts Service and technical support Online Security

Purpose of your Web site Determine who your customers are Avoid excessive use of graphics and animations Put yourself in the visitor’s shoes when designing a Web site How to make visitors repeat visitors

Setting up Payment Methods Concerns: Secure transmission Safety of information Who has access to the information Solutions: SSL (Secure Sockets Layer)- encrypts data transfer Encryptions: Asymmetric or public-key Symmetric Digital signature Certificate Authority

Issues Security Privacy and Identity Solutions SSL, SHTTP SET, digital signature, digital certificate

Figure 4.1 Typical Offline Payment Process

Figure 4.2 Typical Online Payment Process

Payment continued… Means of online payment: Traditional Credit Cards E-money eCash PayPal Billpoint Smart Card PowerWallet

Major criteria For dominant payment systems Security Reliability Privacy Convenience User friendly Universality Cost free

Security Issues SSL (Secure Sockets Layer) asymmetric encryption, also called public-key encryption digital signature digital ertificate Certificate Authority (CA)